Good afternoon, ladies and gentlemen. My name is Kevin, and I will be your conference operator today. At this time, I would like to welcome everyone to the Gap Inc. Fourth Quarter 2013 Conference Call. [Operator Instructions] I would now like to introduce your host, Katrina O'Connell, Vice President of Investor Relations.

Good afternoon, everyone. Welcome to Gap Inc.'s Fourth Quarter 2013 Earnings Conference Call. I'd like to remind you that the information made available on this webcast and conference call contains forward-looking statements. For information on factors that could cause our actual results to differ materially from the forward-looking statements, as well as reconciliations or descriptions of measures we're required to reconcile to GAAP financial measures, please refer to today's press release as well as our most recent annual report on Form 10-K and our subsequent filings with the SEC, all of which are available on gapinc.com. These forward-looking statements are based on information as of February 27, 2014, and we assume no obligation to publicly update or revise our forward-looking statements. Before we begin, I also want to mention that Sabrina will be using slides to supplement her remarks, which you can view by going to the Investor Relations section at gapinc.com. Joining us on the call today are Chairman and CEO, Glenn Murphy; and Executive Vice President and CFO, Sabrina Simmons. Now I'd like to turn the call over to Glenn.

Thank you, Katrina, and good afternoon, everybody. The February call is traditionally one that is pretty heavily skewed towards financial information, so Sabrina will be coming on in a minute to talk about Q4 '13 results, full year results and to give guidance for 2014. So with that as our backdrop, what I want to do is 2 things: I want to take you through what I believe were the accomplishments that Gap Inc. had in 2013 and then speak to our 4 global strategic priorities for this current fiscal year. In 2013, we had a number of accomplishments that contributed to our performance of an increase of 18% in earnings per share, and some are more culturally based. The fact that we comped in every quarter, we felt good about. It was a very consistent year. The numbers had a little bit of variability into them, but we comped every single quarter. While the market numbers are not available just yet, we're pretty confident we can say we gained share again for the second year in a row. We gained share, especially in our domestic market of North America. One of the things I feel good about when I think back on 2013 is, culturally, the business pivoted towards digital. This business is building a bridge between its physical stores and the digital world in which we operate. We know that's the winning strategy for us. I've been in retail 25 years. I grew up with the bricks and mortar side of the business. We have 3,600 stores, if you include our Franchise business. It takes a company like ours a long time to make that mindset shift, but in 2013, we made it. We made it through some of the exciting investments we've made in the digital side…

Thank you, Glenn. Good afternoon, everyone. Overall, we're pleased with our performance in 2013. We achieved our stated objectives, namely growing sales, delivering operating margin expansion, growing earnings per share and returning excess cash to shareholders. And we met our goals despite facing significant headwinds from foreign exchange and a shorter fiscal year. Here are some for full year highlights. Net sales grew 5% on a constant currency basis, as we continued to gain momentum in growing globally through all of our channels, especially online, which grew 21% for the year. In line with our strategy, our revenue mix shifted to our higher-return channels, with online penetration growing 2 percentage points to 14%. Full year comp sales were positive 2%, driven by Gap at positive 3% and Old Navy at positive 2%. Operating margin expanded 90 basis points to 13.3%. Earnings per share grew 18% to $2.74 on top of last year's strong 49% growth. And finally, we distributed $1.3 billion of cash to shareholders through share repurchases and dividends. Moving to fourth quarter and full year financial results. As a reminder, both fourth quarter and full year results are negatively impacted by the loss of the 53rd week. Sales for the fourth quarter were $4.6 billion, with comp sales up 1%. For the full year, reported sales were up 3% to $16.1 billion despite the negative translation impact from foreign exchange of about $240 million. Moving to gross margin. Fourth quarter gross margin was down 280 basis points to 34.8%. Merchandise margins were down 220 basis points for the quarter, driven by the unusually promotional holiday season. And as we expected, rent and occupancy deleveraged 60 basis points, driven by the lack of the 53rd week. For the full year, gross profit dollars grew by 2% to $6.3 billion,…

Thanks, Sabrina. That concludes our prepared remarks. We'll now open up the call to questions. [Operator Instructions]

Our first question comes from Oliver Chen with Citi.

Regarding the guidance going forward and the look forward to the healthy merchandise margin rate, what are the main drivers for you to achieve that in your view, given that we've come off of a mixed and challenging kind of holiday environment and you guys sailed through it with flying colors? And if you could spend a little just time talking about your assortment planning and your biggest opportunities there in terms of what you see in the marketplace and how you're executing by banner.

Okay, great. I'll start off, Oliver. I would say that our goal as the year progresses is certainly to bring our inventories even more in line with our total sales growth. So that's number one. Number two is, in the back half, we should begin to realize some benefits, albeit modest. But we definitely should begin to realize some benefits from our supply chain initiatives that we've been talking about for some time, like fabric platforming, as well as vendor-managed inventory. So that, together with what we believe will be solid assortments, is why we feel that delivering underlying healthy merchandise margins is certainly realistic for us. And I'll turn it over to Glenn.

On the assortment planning, I'd say there's 2 -- I will not go in brand by brand. There's 2 changes, one that applies to Gap and Banana Republic, you'll see our assortment become much more global. So this is the balance that the business has to strike. If you're going to have a global label and a global fit, then what follows that is more global assortment. So the change there is that our local teams will be more involved in buying depth of differentiation as opposed to breadth of assortment. That's a pretty big change for us. And actually, from my perspective, it simplifies the business. It makes it faster. It provides more continuity across all of our stores of Gap in our 50-odd countries; and Banana Republic, in close to 30 countries. And the reason I don't mention Old Navy is that Old Navy just added Japan just about 18 months ago and Old Navy started off with a global assortment, global label and a global fit. And the second thing I'd add is that in order to really get the full value that a responsive supply chain, the assortment mix has to shift somewhat when we do our assortment mix, what's right for customers and how do we make sure it supports the brand and what the brand stands for and how do we gain share, but also the mix can change a little bit towards longer-living styles. So more styles that last 52 weeks. Now within that style, you can have a change in color. You can have a change in print. You can even have a small change in the style itself. But in general, using the fabric platforming, more longer-living styles, 52-week styles, more styles will last 24 weeks and then you'd have a few, percentage-wise, a little less on the 12 week or less. And these are nuances. We're not talking about 10 full percentage point changes but nuances that fit with the response in supply chain needs the company has.

Our next question will come from Lorraine Hutchinson with Bank of America Merrill Lynch.

It's Paul Alexander for Lorraine. Guys, can you just tell us a little bit about how you're thinking about the environment in 2014? As Oliver just said, we're coming off of a very promotional holiday and fall. But do you feel like things are getting better in that regard? And you do you think recent weakness in the mall is temporary like that or perhaps, something more secular? And how does that impact how you're planning inventory and promotions for 2014?

I'd definitely say the mall traffic, for a number of years, if that -- has been slowing down. If that's the definition of secular, then we're definitely preparing for mall traffic to not robustly turn back upwards all of a sudden. So whether it continues to decline somewhat over time, I think that's realistic to assume. But that's part of our thinking of the omni-channel work we're doing. And the question for us we don't have just yet -- was early indications but they're not worth commenting on until we have more and more evidence. But we're -- as I said in my opening comments, this notion of getting people's eyeballs, which is greater than 50% of the engagement in our brands right now, start on a smartphone or an iPad or a desktop, how do you get that customer, getting them into the physical store and that's that bridge between digital and physical. And Reserve in Store is one of the tools to make that happen. Now we're only one player in the mall. So one set of brands or portfolio of brands with one tool called Reserve in Store is not necessarily strong enough to change the overall shift that's going on in frequency of visits or mall traffic. But for us personally, we're doing it because we have a category that people, at the end of the day, they want to buy it in the store. And absolutely, people buy our category and our brands online, but the vast majority of that number really hasn't changed in 5 years, would prefer to get engaged online and even bring their smartphone into the store so they can get into social media while shopping our store. But they want to buy the product, they want to have the shopping experience inside the store that involves fitting room service, looking at different choices so there's digital bridge of the digital environment in which we continue to invest in, and our physical stores is critical for us. The promotional environment, I think I kind of answered this the same time for the last 5 or 6 years, I mean, the environment has been promotional since 2008. There was promotions in 2007 but it picked up in 2008. Our way of dealing with that is we have a very strong outlet business. We have a very strong brand in Old Navy that are really are value brands. And we got to continue as a business to be innovative and creative and bring reasons for people to engage in our brands, either online or in our stores, that are not rooted in promotions and discounts with the frequency in which they're rooted in today. And sometimes we do that very well but, in general, I think that's a huge opportunity for us and one that our brand presidents are very focused on in 2014.

Our next question comes from the line of Kimberly Greenberger with Morgan Stanley.

I'm wondering, Sabrina, you mentioned that you found some, let's say, an unlock and additional SG&A savings opportunities in the back half of the year. Can you just help us understand where those came from? And I'm not expecting the same challenges necessarily to persist in the second half of the year here in 2014. But if they did, do you have incremental opportunities beyond the SG&A savings you secured last year?

Yes, sure. Kimberly, for the most part, I think you've seen us pretty consistently show a lot of discipline and flexibility around our expense structure. And that's because over 50% of our expenses are store-related, and then over 50% of that is variable. So we know how to sort of flex our expense structure quite nimbly, I'm proud to say. With regard to the end of this year, I mean, for the back half, in total, of course, we benefited from the lack of the 53rd week. So expenses would naturally, some portion of them will just be down. We also benefited from the translation of expenses from foreign currencies coming in less. But we did, in fact, for sure, have old-fashioned discipline around store expenses were a big lever in that. Because again, they're largely variable. And then secondly, our overheads, in total, we also experienced quite a bit of good discipline around that. Looking forward into 2014, it is always our goal to remain disciplined and try and leverage expenses. If we achieve our goal, of course, of increasing revenues and delivering modest positive comps, we would expect our expenses to increase on a nominal basis but always leveraged. And we'll use many levers within that large expense area in order to deliver that. What I will say is it's likely -- given that we just delivered 130 basis points of leverage in 2013, it's likely that our 2014 leverage won't be quite as large. We guided to reported operating margins being about flattish, and so that's why you probably wouldn't expect quite as much leverage. And but yet, we will still be very, very focused on it.

Our next question will come from Adrienne Tennant with Janney Capital Markets.

Glenn, I was wondering if you can give us some more color on the analysis that went behind the decision to raise minimum wage to $9 this year and then $10 in the out-year. And is that, in effect, right as of -- as we speak? Or is that going to be in effect? And if so, at what point in time? And along with that, are -- is there additional training or responsibilities that accompany those higher wages?

Well, the analysis was -- it was fairly extensive. It was more -- what we said in our releases on Wednesday was a strategic decision that we were looking at for a period of time, and that was a little bit grounded in the launch of Reserve in Store back in November of last year. And staring at our roadmap, and I just mentioned on the call that we're looking at order in store, we're looking at other initiatives that are going to support the omni-channel roadmap for the company. So as we look at all those initiatives, start off with "ship from store," "find in store" is really dependent on store associates explaining that to customers, selling that, comments [ph] that benefit that Reserve in Store is step-up above that. Order in store is another step. So the management team, we sat back, talked to the brand presidents, and we just came to realize that, in spite of what other people may be thinking about stores and their future, we're actually looking at the role of store is going to incrementally increase as more and more of these initiatives and these ideas and these convenient services get provided to customers. In terms of the economics, we have always changed our rate of pay in June of every year. So the $9 for 2014 is going to start in June of 2014, and the $10 will be effective in June of 2015.

And our next question comes from the line of Simeon Siegel with Nomura.

I was just wondering if you could parse out the strength of the online business. Were there particular areas of strength there by geography or concept? And then just out of curiosity, when you report the online sales, does that include the omni-channel purchases?

I'll answer the -- well, I know the answer to both, but yes to the second one. But the first part, I mentioned in the opening comments, we've been very pleased with our International growth when it comes to online. And now that we're into multiple years, it's really -- it's not only the growth but it's the penetration to our total store sales. And so good -- very good numbers in the U.K. Although we have the service in France and Italy, as well for our other European stores. But very strong in the U.K., continue to be strong in Canada -- it's been strong in Canada for 3.5 years now since we've launched it. We're in Japan just about a year now, which is a "ship from store" model, which we're going to move to ship from distribution center but penetration is really beyond what we thought it was going to be. And we've opened in China, day 1 in November of 2010, with our stores. We did a test. Now which I'd like to see us roll out, but I'll be talking to our Head of Franchise for Gap this weekend. But we did a test in our Turkey franchise market, where, again, that was a ship from their distribution center. It's a turnkey online that we brought to them, and we feel very good about the results so far. So -- I'm sure all of our franchisees, knowing that the corporate market strategy for us is this multi-channel, multi-brand approach. And I've talked to a lot of our franchisees and they're also interested in the specialty stores, which they all have now moving quickly. If this Turkey test continues to go where it's going right now, moving that to the other franchise markets and looking at outlet stores. So International market is very strong and no real need to report anything by brand. I think we've been pleased with all business performance by brand, except for maybe a little bit stronger than we thought it was going to be in 2013 with Athleta. And the reason behind that is when you take a fleet from 35 to 65, even though our strategy is to not have a level of cannibalization in our online business, we've been pleased about how strong their online business continues to be with Athleta as we add the physical presence to that brand.

And just to underscore what Glenn said, the revenue is booked where the transaction takes place. So our "ship from store" sales, because they're made online, they're all booked as part of the online sales. And those have been robust, especially as we brought more of our fleet on to "ship from store" and has certainly helped our growth rate online this year as well.

Got it. And then just quickly, Glenn, to your points about the opportunity to improve the promotional dependence, do you see opportunity on the AUR front this year? Or to your point of about the healthy merch margin, is that much more sourcing, I guess, Sabrina?

I think we look at it this way. We look at -- there's a number of initiatives that I talked about in the opening call. One of the ones worth highlighting was responsive supply chain. And the purpose behind that is customer first. So when we talk about AURs, it's really about top line growth. And that could be driven by AUR. But what we're really looking for is through a responsive supply chain, and I covered it off at the beginning and Sabrina added some color behind in her comments. I think that is a path to get better top line growth, which is then better market share growth. And we believe that one of the metrics that will drive that top line in the back half when responsive supply chain starts to kick in should be some improvement in AUR. And that's what our brand presidents are accountable for and that's what they're executing towards for the back half of '14.

[Operator Instructions] Your next question comes from the line of Matt McClintock with Barclays.

Glenn, I was wondering if you could focus a little bit more on your earlier comments on personalization. It seems like that has been an idea that's been talked about in the industry for several years now but always seemed longer term in nature. I was just wondering if now with -- 2014 might be the year that we start to see meaningful impact on your business from personalization. And how should we think about the growth in the development of that capability relative to other omni-channel capabilities that you have, such as "ship from store," Reserve in Store, which you rolled out pretty quickly?

Let's say, Matt, that it's on the roadmap that we have. 2012 was really the beginning of "ship from store." And I said, we're now looking at, in Q2, to start to put into our stores the capability of order from store and that could be -- that can be a do it on your own. That could be a self-order from store, whether that's through some kind of kiosk we're going to put in. But we've been testing a lot of different tools or whether that's actually with the aid of the service. That's the reason why the wage strategy is so important. Personalization, we've really only been working on for the last 3 months, and there isn't a day that goes by that we're not testing a personalization idea on the web. Now it's -- we've been big fans for a long, long time, getting away from this macro approach to consumer communication and getting into person casting, and we have the data and we've been fortunate, given our geographical location, to really put investments that are -- were in our P&L in 2012, were in our P&L in 2013 to build the big data environment we need in order for personalization to begin on the web, first and foremost, that's serving up web pages with the goal of getting a higher click-through. And that could be by category. That could be by certain promotions. Customers, historically, have reacted better than other customers. And I think it's the -- not to use the bridge analogy again -- I think it's a stepping stone to loyalty. And that's what everybody wants. Again, it's our definition of loyalty. This is not -- loyalty is sometimes seen in different sectors where for you, you pay $0.99, you have a card, you…

And our next question will come from Paul Lejuez with Wells Fargo.

Glenn, as you think about all the ways that you're growing the business these days, what are your current hurdle rates that you set for the company from a returns perspective? And then I'm just wondering, can you rank which projects you believe will be generating the highest returns? Will they be Gap China, Old Navy Japan or China, Athleta in the U.S.? Just wondering how you're thinking about where the real high-return projects are.

Yes. I'll start, Paul, with that. So Glenn and I, obviously, work very closely and spend a lot of time on capital allocation. Our starting point is to sort of look at our long-term, weighted-average cost of capital, and our hurdle rates are going to be several points above our weighted-average cost of capital. Because projects we approve, we want to make sure, even if they have some variability to their pro formas, that they're going to deliver for us. So we have pretty high bars with regard to returns. And then with regard to our priorities, that's precisely how we set them is we look at the ranking of the various business cases and geographies that come to us. But importantly, we take a long-term view. Or certainly, you would never have launched something like China, which is going to provide us with an enormous runway in the long term, especially in terms of revenue. It already is contributing significantly to revenue but takes a longer time to return because of the uniqueness of the market and the infrastructure needs. So there is a lot of discipline internally around looking at returns and prioritizing our initiatives around them.

And I'd say, in some kind of order, and I think this is being repetitive, Paul, from maybe a few calls ago, our Franchise business has the highest return and will continue. And that's why you see Old Navy are going to do 5 to 6 stores in the Philippines in 2014, and that's the beginning of the Old Navy franchise rollout. It takes almost no capital from us, a very small amount. But the returns have been phenomenal, and that -- it's a -- we always try to -- to build on what Sabrina said, we'll try to look at capital holistically, and we try to look at every year as a pool of capital like this year and what are the right decisions for the company strategically, but then how do we make those calls to get a good blended capital? Franchise, global outlet and factory stores, global online. That's why my opening comments, talking about these very strong growth rates in the U.K., in Canada, in Japan, in China with, not a lot of investment, but yes an investment that's returning multiple times over. Then I'd say from a brand perspective, yet to be proven, but if you're just asking me sitting here today, what do I think we're going to feel really good about in the next 2, 3, 4, 5 years to come it's going to be Old Navy International. I think that, that business -- if we go into the right countries as we have in Japan, as we will in China and then the Franchise business, the real estate opportunity in those countries we can get really a percentage rent that's super attractive and get sales per foot better than we get in North America and get an economic model that I really think we can have where the percent of business on promo and the depth of discount is not as large. I think that business has the potential, assuming we execute and that Stefan and his International team stay on that business, and its true potential, I think that really has great return for us. Two other projects I mentioned upfront that are not growth-based, omni-channel, which have a very good return on capital for us; and seamless inventory, when it gets going in the latter part of 2015.

Our next question comes from the line of John Morris with BMO Capital Markets.

Glenn, can you give us a quick holiday postmortem x weather and mall traffic, what could you have done better so we can set our sights on opportunities for next year? And then also, just a quick follow-up on Athleta, the growth there really meaningful now, approaching 100 stores by the end of the year. So beyond your previous remarks, share with us the performance there. Is it balanced regionally? What are the strengths and challenges?

Yes. John, the holiday question, that -- we could be on here for a long time. I mean, there isn't a holiday or actually any month that goes by where I don't think the company's trying to learn what could we have done better. We came out of Thanksgiving and realized that December was not likely going to play out as we'd planned many, many months ahead of time. So it became a little bit more with some traditional ways of communicating and engaging customers and trying to get them either in stores, online and get the conversion in our business to produce the one comp we had. Look, I think holiday has changed, and we need to look at it differently. So we've had -- to say we've had multiple meetings would be an understatement since the 1st of January for all of our businesses. This is the benefit of having a portfolio, is how does Old Navy approach it? How does online, Banana Republic and Gap, in particular, how do they approach the holiday business for the benefit of Gap Inc.? So there's some lessons where it starts earlier. There's been -- there's lots of ways in which we looked at it and said if we could do it again, what we'd do differently? It all starts with product. And I think that I would just say from my perspective, just to give you one lesson, it wasn't at the top of my list but it's probably one I can say on the phone, is that as you move into December and more and more people are looking at gifting as opposed to self-purchasing, that our industry and us, in particular, really don't offer as much gifting choice as we should. And I think that's a design issue.…

And our next question will come from Omar Saad with ISI Group.

You guys talked about, I think, 2.5% square footage growth. I think that you've mentioned the highest rates since '07. I know a lot is coming internationally. What's really giving you the confidence overseas? Is there an inflection in the brand awareness? I know you threw some numbers out on China? Are you going to require greater levels of marketing just to enhance the brand awareness in some of these new markets? It seems like a pretty big inflection.

Well, I would look at it a number of different ways. If you just look at international markets, we'll open at least between 70 and 80 franchise stores in 2014. So that's a little bit of Old Navy coming in but filling into just in countries -- introducing new countries. We understand the franchise market really well and that's leading with Gap, following Banana Republic. And Gap has very strong awareness around the world, and we only put disproportionate amount of capital when the awareness is below a certain threshold we find acceptable. Then I -- if you start in some kind of order, our global outlet business continues to be really strong, a little bit domestically but really filling in, in international markets. It's the only investments we're really making in Europe right now. We're happy with our specialty fleet. We've closed what we needed to close in the U.K. We had the right store fleet in France. We're just on hold in Italy, waiting to make sure we get clarity on the economy and the marketplace. But we continue to fill in with a global outlet. So there, in Japan and China, I think that's sort of the first area where we're putting money. And then here comes China for Gap specialty. And look, what we -- Sabrina said earlier, we have treated China in a different way than we treated any other country, and we continue to make investments in marketing that are appropriate because the long-term benefit to anybody going to China is to really establish a strong brand and a bond with the Chinese consumer. And communication and standing for something, that's important everywhere in the world. But it's particularly important to newer brands. We've only been there 3 years in a country like China.…

And then briefly on the marketing side, we haven't said anything explicitly about '14. But I think 2013 is good evidence that we were growing internationally while we held our marketing dollars. We actually brought them down slightly from 2012. So I think that we're holding to the discipline that our marketing levels are very healthy, and we can look to reallocate and reinvest in those areas that are going to support our future growth the most.

Our next question will come from Brian Tunick with JPMorgan. Brian J. Tunick - JP Morgan Chase & Co, Research Division: I guess, Glenn, we haven't really talked about merchandising at all, and you guys are still an apparel retailer. So just wondering, as you have a cohesive team now, maybe for Gap and Old Navy, can you talk about which categories you see as opportunity to drive the business in 2014? Are there any big businesses out there you're excited about, to rebuild productivity at both Gap and Old Navy? And for Sabrina, 2013, I guess, you ended the real estate cleanup process. So wondering, what kind of store comp you need domestically to get ROD leverage going forward?

Thanks, Brian. We -- look, we'll answer any questions if somebody wants to ask about product or merchandising, I mean, we're only as good as the questions we're asked. So from a category perspective on Gap, not a big change. But I would say that the team is focused on a couple of areas. One, we've seen a change and a shift in our Baby business and -- not at the expense of Kids but more powerful Baby business than Kids. And I think you're seeing that team that we have in New York under Rebekka's leadership, putting some investments whether that's in new categories or that's just in the inventory going out. I think the Baby business is going to play a much more prominent role in Gap brand going forward. So that's a merchandising change for sure. And the other one, and this has nothing to do with Athleta, I'm sure the Gap team would have landed there themselves, but as the -- as more and more trends start to push women, in particular, towards street attire, we start looking at the balance between the athletic part of our business and the going-out part of the business and sort of the -- as a lot of people have been talking about, this is the new denim. Well, Gap is very well situated with its Gap Fit product as the foundational product to build into this new trend that's going on in the marketplace. So if you go to any of our stores, you'll see that business being pulled out of Gap Body's traditional space in the store and brought more and more closer to the front of the store. And I think that trend that's going on that fits with Gap and its American casual style and how…

Yes. And then with regard to rent and occupancy, it's a great question, Brian. To leverage rent and occupancy, we definitely need positive comps. And I think for one of the reasons you mentioned, the leverage in our future will probably be more modest than it was in the past. And there's really 2 reasons. One is what you mentioned, that we have a lot of the cleanup of the North America optimization behind us. And that, in past years, really while we were closing a lot of unproductive square footage helped us leverage quite a bit a broad per point of positive comps. Secondly, while we remain focused on leveraging ROD within every country, as we enter some of these International markets, the rent per square foot generally is higher than it is in North America. So when you look at the mix growing that way, all in, it's a little bit of a headwind to leveraging ROD. So we still feel good about leveraging on a positive comp, but the amount of leverage for each positive comp point will likely be more modest in the future.

And our final question today will come from Lindsay Drucker Mann with Goldman Sachs.

I just wanted to follow up on, Sabrina, the discussion about underlying x some of the currency issues, some healthy merch margin behavior, can you talk about how much of that is AUC based on some of the fabric platforming and other initiatives versus less markdown focus and where you think that's really come from? And maybe just give us an explicit AUC outlook for the full year.

Yes, it's a good question. I think that the broad answer, Lindsay, is we're looking to get improvement in both areas, AUC and AUR, as the year progresses. So we're not giving any explicit guidance on AUC. It hasn't been a headline either way in 2013, nor do we expect it to be any dramatic swings that would have it be featuring as a headline in 2014. But as I said, as the year progresses and we start to see benefits from tools like fabric platforming, that -- as we consolidate fabrics and continue to negotiate with our vendors, that certainly, it's rational to believe that, that should bring us some costing benefit more in the back half as we implement that to a higher degree than in the front half. And then -- and I think as Glenn explained in an earlier Q&A, because of these supply chain tools, we should actually be able to do better in terms of assorting what we put into the stores and get a higher probability, whether it comes from a true reg [ph] or less of a markdown margin, any of the combination of those will take. But certainly, we believe the tools in place are increasing our probability of getting better yields on the product we assort to.

And just to follow up on the seamless inventory comment, Glenn, I think you talked about seamless inventory being in place for fiscal '15, but I know you have "ship from store" capability in the U.S. and have already -- or North America and have already started to prosecute that. Where are you in how nimble you are with your inventories in-store and the ability to service adeptly online demand versus in-store demand? How much more of an unlock is there from an inventory turn and efficiency perspective?

Lindsay, I'd say that we're "ship from store" enabled in every store. And the issue is that -- is how many orders do they -- does each store receive on "ship from store." So we've gone from thinking of it and -- let me just step up for a second. You're right, the "ship from store" was the precursor that opened up the thinking in the strategic decision to go with seamless inventory. Now back to where we in "ship from store." Start off as satisfying customer unmet demand online that we thought was at a higher service level but it turned out to be based on the fact we operated only 2 DCs for our online business versus the stores that serve our customers in our stores. That's how it started. And then we got benefit from achieving a higher service level for online customers by exposing all of our store inventory to that unmet demand online. And then it's graduated now to what is the yield management benefit of "ship from store." So right now, when there's demand that comes online, could that be directed -- even if the inventory is available in the distribution center, could that be directed to less productive markets or less productive stores where we have a history or we currently know that, that ultimate AUR is going to be below -- significantly below where we're currently the consumer is demanding and willing to pay on an online order? So the sophistication has changed, and that's a little bit in place in Q1, but more will be rolled out. And it's just our view of going -- let's just expose our inventory in a seamless way, and let it go to the highest AUR we can get. And if that's online and it's…

Great. I'd like to thank everyone for joining us on the call today. And as a reminder, our earnings press release, which is available on gapinc.com, contains a full recap of our fourth quarter results, as well as the forward-looking guidance included in our prepared remarks. And as always, the Investor Relations team will be available after the call for further questions. Thank you.

Ladies and gentlemen, this does conclude today's conference. We thank you for your participation. You may now disconnect.