Good morning, and welcome to the GameStop Corporation's -- GameStop Second Quarter 2013 Earnings Conference Call. [Operator Instructions] I would like remind you that this call is covered by the Safe Harbor disclosure contained in GameStop's public documents and is property of GameStop. It is not for rebroadcast or use by any party without prior written consent of GameStop. At this time, I would like to turn the call over to Mr. Parr Raines, Chief Executive Officer of GameStop Corporation. Please go ahead.

Thank you, operator, and welcome to the second quarter earnings call for GameStop. As always, we are grateful to our associates around the world for their performance and dedication to customers this quarter. They are the secret to GameStop's success. Joining me today on our call are Rob Lloyd, Chief Financial Officer; Tony Bartel, President; Mike Mauler, Executive Vice President of International; Mike Hogan, Executive Vice President of Strategic Business; and Matt Hodges, our Vice President of Investor Relations. The second quarter exceeded expectations with earnings per share beating the high end of our guidance by $0.02. We also produced another strong quarter of margin expansion of 130 basis points. GameStop has now grown margin rate for 9 consecutive quarters, reflecting ongoing strength of the new businesses we are building. Comparable sales came in better than our guidance, but still challenging as we close out the current console cycle. Although the second quarter is the lowest volume quarter of the year, we set aggressive execution goals for our teams around the world, and I'm pleased to say the team delivered. The hard work of controlling costs and managing expenses is just as important as the exciting work of driving sales, especially at the end of a console cycle. Rob Lloyd will share details of our performance in his remarks. We continue to gain market share this quarter and our Digital and Mobile businesses continue to perform well. We are positioned well for the upcoming console launches and expect to be the dominant player during this cycle. The unique value of the buy-sell-trade model has been reaffirmed by our partners and will bring over $1 billion per year of trade currency to consumers for their new console purchases. Tony Bartel will share some of the highlights of our U.S. performance with…

Thanks, Paul. Good morning. I'd like to begin by reviewing our second quarter results. GameStop's consolidated global sales were $1.38 billion, down 10.7% from the prior year quarter, with comps also down 10.7%, down 10.2% in the U.S., and down 11.6% internationally. Our same-store sales were better than the high end of the range we outlined in last quarter's call. We stated in May that there were few major releases in the quarter. We were very pleased with our performance on The Last of Us, which was the best-selling title during the quarter. As a result, new software sales declined 9.3% compared to a 19.4% decrease in the U.S. market. Overall, we gained 290 basis points of new software market share in the quarter. Our hardware sales outperformed the U.S. market, leading to a hardware share gain of 380 basis points. Preowned sales decreased 6% compared to the prior year quarter. The U.S. was down 7.7%, and international was down 1.5%, excluding currency movement. Our preowned business outperformed the overall video game market, which declined more than 19% in the U.S. Our Digital business increased 18% over the second quarter of last year, with growth in PC digital and international console digital. Our digital receipts for non-GAAP revenue totaled $158 million, with GAAP revenues totaling $50 million. Tony will have more color on digital growth. Our mobile revenues grew 121% to $55 million, from $24.9 million in the second quarter of last year. Our trade traffic continues to accelerate and we continued the international rollout of stores selling recommerce products and tablets. Consolidated global net earnings were $10.5 million, and diluted earnings per share for the quarter were $0.09, exceeding our guidance range. Gross margins for the quarter were 34.8%, up 130 basis points from Q2 last year, driven by…

Thanks, Ron, and good morning, everyone. Today, I'm going to provide you with color on the upcoming console and title launches, and update you on our digital and mobile second quarter performance and full year forecast. We are optimistic and ready for the upcoming console launches and the strong software lineup. The software slate is as strong as it has been in years and the launch of the new consoles is seeing strong consumer demand. Key launch titles in Q3 are Electronic Arts Madden 25, FIFA 14, and Battlefield 4. Disney's Infinity, which is off to a very strong start exceeding our expectations, Take-Two's Grand Theft Auto 5, Activision's Skylanders SWAP Force, Nintendo's Pokémon X and Y, Warner's Batman: Arkham Origins, and Ubisoft's Assassin's Creed: Black Flag. Our software market share grew 290 basis points during Q2, and we are at record highs on both PS3 and Xbox 360 software share. So we're launching these strong new titles at our peak. Our deep and long-standing relationships with the publishers allows us to offer intriguing and unique exclusive digital and physical content with each launch. This, along with the close customer relationships that we have with our 31 million PowerUp Reward members and through our knowledgeable associates, provides us with the ability to maximize physical, digital and ancillary revenue at the time of launch. For instance, in the recent Disney Infinity launch, we offered customers the opportunity to preorder and purchase over $400 worth of characters in a single transaction. Similarly, on the upcoming launch of Grand Theft Auto V, we are the only U.S. retailer to sell the exclusive $150 collector's edition. Our buy-sell-trade model continues to make us the most affordable place to buy games, systems, digital content, consumer electronics and accessories. Along with having trade-in deals on both…

Thanks, Tony. Good morning, everyone. In the second quarter, our international same-store sales declined 11.6% versus Q2 of 2012, with results varying by segment. While sales were challenging, we saw a major increase in preorder activity during the quarter. International reservations increased significantly over the second quarter of 2012, driven by consumer excitement around the upcoming console launches and outstanding new releases. This reservation growth was a direct result of GameStop's global merchandising teams coordinating with our publishing partners to develop exciting exclusive content and create innovative trade-in promotions, which help drive the significant increase in reservations for the back half of 2013. The success of these efforts was a 14% increase in trades during the quarter, as customers took advantage of GameStop's buy-sell-trade model to secure reservations at an unprecedented rate. This increase in trades provides us with significantly more preowned inventory heading into Q3. During the quarter, we continue to expand and improve the flexibility of our buy-sell-trade model. We expanded our multichannel capabilities, introducing Web in-store to new markets and launching GameStop's Digital Wallet in Italy and Germany. Through our loyalty program, the GameStop Digital Wallet gives our loyalty members the flexibility to use their trade credits, both in-store and online, to make e-commerce purchases of games, systems, digital content and accessories. This functionality will be expanded to additional markets in the back half of 2013. Our efforts to increase customer engagement continue to take hold with loyalty members in Europe now topping 4 million, and Australia, above 2 million members. The increase in loyalty membership in new markets has also driven the global expansion of Digital Game Informer, where in Europe, we now have close to 300,000 subscribers. Our powerful loyalty programs combined with an active social media plan allows us to be closer to and…

Thanks, Mike. My first topic this morning is an updated look at the GameStop market model. This is GameStop's proprietary forecast model for the North American new console gaming category, console gaming includes console hardware, console software and console digital. The modeled inputs include external research, information from video game publishers, console manufacturers and our own internal data. In total, over 20 external sources are used. Key factors that drive the model include new console price points, hardware adoption relative to last cycle, software attach rates based on current trends and the prior cycle, historical growth curves for console launches, digital content availability plus attach rates and subscriptions and projections of future sales of the existing consoles. Over the past few months, we've gotten a significant amount of additional information regarding the new consoles and their likely impact on a category. We know there will be 2 new consoles launched in 2013. Exact details on launch dates, available inventory and new titles are still pending, but the fact of 2 launches in 2013 is significant. At one point, there was some concern that console manufactures might attempt to limit consumers' ability to share, trade or resell games, and our research demonstrated that, that would seriously limit purchase interest in the new consoles. This has since been clearly resolved in favor of the consumer, which is a significant positive for new console demand. Through our PowerUp Rewards consumer panel, we continue to monitor consumer awareness and purchase interest for new consoles. Among PowerUp Rewards members, awareness of the PS4 and Xbox One continues to build, and is now over 90%. Interest has also risen considerably since the spring. This high level of interest is further supported by the over 2 million PowerUp rewards members that Tony mentioned who have signed up…

Thank you, Mike. These are exciting times at GameStop. As you can hear, we know we have lots of work to do between now and the console launches in the fall. We will now open up the call for questions.

[Operator Instructions] And we'll take our first question from Anthony Chukumba with BB&T Capital Markets. Anthony C. Chukumba - BB&T Capital Markets, Research Division: I have a couple of questions. So the first one, I'm very interested in the fact that you now are projecting positive comps for the third quarter. This will be the first positive comp in 9 quarters as you said. Obviously, a lot of this is driven by the strong title lineup, but I guess, I have 2 questions. One, how much of that is Grand Theft Auto V, because a lot of it -- I mean, I guess, the majority of titles you mentioned, you are anniversary-ing up year-over-year and, I guess, the exception is being Disney Infinity and Assassin's Creed: Black Flag. But I'm just wondering how much of that is being driven by Grand Theft Auto V? And then, related to that, does that give you even more confidence in the next generation of consoles, given that people are still very excited about buying tentpole titles for this generation?

Thanks, Anthony. Thank you for recognizing 9 quarters of negative comps. It's a remarkable industry and it's been a remarkable story for us. It's been a very tough cycle as everybody knows. Rob, you want to start that off, and then go to Tony?

Yes, sure. Anthony, I can't clarify exactly what the impact on the comp is of Grand Theft Auto V, but obviously, it's going to be a huge title. I think one other thing I'll note in there is that Battlefield 4 is an every other year title from EA, and performs much more strong when -- the off-year title, which is Medal of Honor. I'll let Tony talk a little more about some of the others that we're seeing that are also driving that comp.

Sure. In addition to the 3 that you mentioned and Battlefield 4, you have SWAP Forces, we see strong reservations for that, and you have from Warner, you have Batman: Arkham Origins, which is another rollover. So you have, really, what we consider to be 6 very strong titles that really have no rollover components and then you add in the Assassin's Creed flipped from our fourth quarter to our third quarter, gives us strong confidence in the comp guidance. Anthony C. Chukumba - BB&T Capital Markets, Research Division: Okay. And then, the second part of that question is just does this give you even more confidence about the next generation? I mean, typically, this late in the cycle, I mean, game sales usually just kind of falls off a cliff because everybody is sort of saving their money for the next console. So I guess, I'm just wondering, does this make you even more confident?

I think, guys, and maybe Tony can add to this, Anthony, the thing that we talk a lot about here is innovation, and there's a big focus on technology, which is important, but innovation is really what drives the consumer in. And so, I mean, I look at things like just Infinity last weekend, we were all in stores on Sunday, new customers who haven't been in our stores in a long time coming in to look at new IPs. So I think it does give us confidence, the level of innovation reentering the category is pretty exciting. Fair to say, Tony?

Fair to say. And again, we've got 2.2 million people that are still not -- that we haven't been able to satisfy with reservations, so you have a lot of people that are very interested in the new consoles. Well, I think, it's also interesting to note that when we put out the announcement that you could upgrade from Xbox 360 to Xbox One at $9.99, we saw a significant acceleration in some of those tentpole titles, which indicates that people are very much planning to buy them for Xbox One. And now, we've made it simple to go ahead and buy the Xbox 360 version so you're seeing an increase in reservation. So I think there is tremendous demand for the tentpole titles. And there's some great ones coming like Titan Fall and Destiny as well that are ahead of us.

And we'll take our next question from Colin Sebastian with Robert Baird. Colin A. Sebastian - Robert W. Baird & Co. Incorporated, Research Division: First off, on the next-gen console supplies, is the better visibility on the launch related to overall hardware production and availability or is this more specifically around your allocation? Because I know there's been some concern about other retailers focusing back on the games category this holiday. And then, secondly, Rob, on the operating expenses, you've been controlling that well. I'm curious how much more room for rationalization you see or is -- with the ramp of the next-gen, you end up spending a little bit more on marketing and other perhaps store-related costs?

One thing, Tony and Mike Mauler are close -- they're talking daily practically with console makers, but one thing I would point out to investors is remember that we're not jumping into this console launch sort of like right now beginning to think about quantities. We've been at this now through PowerUp Rewards, through our international programs, we've been at this now for well over a year planning this launch and communicating privately with consumers. So these guys will tell you a little bit about what they see on quantities but what I like about this is we're deeply involved with consumers on an individual level, thanks to our loyalty programs well in advance of these launches. Tony?

Yes. And I don't have visibility to what the -- obviously, to what the other retailers are getting so I can't determine what our share is of the allocated quantities. And I really don't want to share, for competitive reasons, what our increases are, but suffice it to say that we -- as Rob said earlier, it is above what we had originally forecast. So clearly, they're exceeding our expectations from a launch standpoint. And I think they also understand that launching at GameStop, you have the affordability of buy-sell-trade, which is why you're seeing some of those programs come out and they also understand that our attach rate of titles and accessories is going to be higher than our competition.

You want to talk about the international?

Sure. I think, internationally, we are seeing much stronger reservations as well compared to the last cycle. And it's really driven by a couple factors, I mean, the excitement around the consoles itself, but also really strong usage of our loyalty programs in the markets where we have a loyalty program and we have a large number of members, but also very strong trade-in promotions, and we saw customers take advantage of that in Q2, taking the ability to trade in their old games or old consoles and be able to afford the next-gen console and that drove a lot of reservations for us.

Bob, you want that second piece?

Sure. We continue to focus on how we're spending money and as we talked about earlier, we were able to reduce our SG&A in the second quarter from last year. And I think, as we look ahead, we'll continue to focus on it, we'll continue to come up with new programs that allow us to do that. But as we've said before, there is no better time to leverage your SG&A than during a console launch cycle. The amount of hardware that you move through the store and the size of the transaction really allows us to gain leverage off the payroll cost and the fixed cost in the stores.

One of the things, Colin, and you know this, and many investors who followed us for a while know this, we had to make a series of foundational investments through 2010 and early '11. Top among those was PowerUp Rewards. We had to build out technology, all of the things we did. In many ways, that asset now is going to be leveraged across these launches, just as it was leveraged in the launch of the mobile business, the launch of the DLC business, all of these are acquiring customers via that big asset that we spent the money on. So as we said a couple of years ago on our yearending call, the goal was to build those assets and then hold SG&A and lever them across the future launches. So that's what you're seeing, I think. Colin A. Sebastian - Robert W. Baird & Co. Incorporated, Research Division: Paul, maybe just one quick follow-up then. You announced this Simply Mac investment. Is there a plan there to make incremental investments in that business? Or is this something perhaps where you can convert some of the GameStop stores that you closed into another format or how should we think about that investment going forward?

Yes, it's a good question, Colin. I think, we have a high rate of sort of intellectual curiosity. We're trying to drive a high rate of change. Simply Mac is a premier authorized reseller of Apple products and services with 12 or 13 stores in Utah, Colorado, Wyoming, and now in Texas. And the goal here, we met them and became acquainted with them and we're a minority owner of that business. Steve Bain is the President, CEO and founder of that business, and Steve and his team in Salt Lake City do a great job of providing an Apple experience with great support from Apple in secondary markets. So towns like we just opened in Midland, Texas, we're open now in Tyler Texas, Fort Collins, Colorado, and different towns of that kind, secondary markets that don't have great access to that high quality Apple service, that's where Simply Mac is. If you look at what we bring to the party, we bring common platforms, real estate, we're one of the -- and certainly, especially retail, we're one of the strongest teams in the United States. If you look at our talent sourcing organization and the human resources area, we have tremendous access to talent and staffing. And of course, buy-sell-trade, we bring a significant capacity. So I think you're right. I think, if you are look at the things we do, we also have that BuyMyTronics store here in Dallas and in the Bronx, that is a similar case where we're leveraging. So the idea is that we have built common platforms and competencies and what other electronics categories can we bring to them, and that's what Simply Mac is all about and we're very happy with where we're at there.

And we'll take our next question from Curtis Nagle with Bank of America Merrill Lynch.

Just a couple of quick questions. I was just wondering what kind of demand you guys were seeing for accessories for the new consoles in the preorder. Preorders that you've gotten to date, if you could elaborate on that a little bit?

Tony, you want to talk about accessories?

Sure. We have a high attach rate of the accessories we know about, but they are rolling out, so I -- we'll continue to roll out accessories here. The beauty though of our system, Curtis, is that every time that we take a reservation, typically, with the PowerUp Rewards members so we already have a relationship or we -- even if it's not, we have a way of contacting them, so as these come out in realtime, we're talking to our customers about them and these new systems are very innovative, and they are going to require additional accessories so there's -- our people next week are going to go through one day of training each on the Xbox One and the PS4 so they know exactly how to guide customers. They hear everything you're going to need to put underneath the tree or to play immediately so that you have a great experience.

I think, one of the things that is an emerging trend for us, Curtis, is that we have a very significant Web in-store capability. Because of our small footprint, because of our limited ability to stock a lot of inventory, you see us offering accessories more and more through a Web in-store process. That is becoming very meaningful for us. And Tony and Mike and Bob Purzon, who runs our merchandising, and Michael van den Berg, who runs the international merchandising, and they sit down with the publisher, they're able to bring the publisher more and more ideas around accessories, right? And these are accessories that we don't have to push through our supply chain. We can offer them in-store visually or add them at POS and ship directly to the consumers. So that whole world of accessories is going to get -- is going to change significantly in this platform launch.

Great. That's very helpful. And then, just the other question I had was I was just curious how you guys are thinking about the current generations of systems, the Xbox 360 and the PS3, kind of going after, I guess, launch of the new consoles and how do you see GameStop positioned with them kind of versus peers?

I think Mike Hogan had some data on that. Mike, do you want to share that on the last consoles?

Yes, sure. So your question is what happens to the existing systems once the new systems are launched? We certainly expect Sony and Microsoft to continue production, much like happened with probably in the PS2. The best piece of data I can give you here is that 61% of the PS2 units that were sold like to date were sold after the PS3 was announced. So we would expect that there will continue to be a robust market for each of those products following the launch this fall.

And we'll take our next question from Brian Nagel with Oppenheimer. Brian W. Nagel - Oppenheimer & Co. Inc., Research Division: The first question I have, maybe go back to one of the -- it's kind of a follow-on to one of the prior questions but I just wanted to understand better this current demand dynamics, you look at -- so Q3, you indicated sales should tick up significantly on sale -- on better sales with software to the existing devices, but at the same time, we've seen really strong initial demand for the new consoles. So the question I have, as you look at your PowerUp Rewards data and the customers have signed up for both the softwares and hardwares, is it 2 distinct groups of gamers or is it indications that and maybe the gaming community is going to operate on both the older systems and the newer systems going forward?

Mike, what kind of insights do you have on that? Do you have any data surrounding sort of people's multi-console behavior?

Yes. I mean, there's a lot of things we could tell you. First is that well over half of the people that we have in our database are multi-console owners today. And we certainly expect that as people move to new console, obviously, some of those people are going to trade in the existing console, but that also means that there's other people that are going to come into the category through the preowned business, particularly as it becomes a really affordable option. I think, I would also take you back to Tony's comments about the first to know list, and the demand that we're seeing today for the consoles, I mean, our biggest challenge is going to be getting enough product to keep up with the demand that's there. So we're going to obviously be able to move every console that we can get our hands on, but the vast majority of the market is still going to be people who are still in the existing consoles and we'll have a tremendous amount of people coming and buying games for those consoles.

And Brian, the other issue that was in Tony's remarks or Mike's remarks was the affordability issue. GameStop is just uniquely positioned on this affordability dimension. We compete on the value dimension, we compete based off trades, we don't compete based off discounting. And our ability -- and this is one of the reasons, frankly, that we expanded the universe of trade and recommerce into electronics a couple of years ago, because we saw consoles coming a couple years out and said how do we create more value for consumers so we can take smartphones and tablets and so forth. So this innovation versus affordability question, I think, is what will play out here and define how much consumer adoption we get on the consoles. Brian W. Nagel - Oppenheimer & Co. Inc., Research Division: Got it. It's helpful. And then, maybe the next work -- going to kind of a follow-up I had, as you've been talking, it looks like the -- until you mentioned the allocations of the new hardware devices in your press release and your comments today, it seems like production numbers maybe could be higher than in prior cycles, so as you're talking to the Sonys and Microsofts of the world, is there any indication of getting that maybe not just only the initial launch but through that first year you're going to see much better shipment type numbers?

What do you think, Tony?

I think there's a lot of optimism that, that will be the case. That being said, it's very early in the production cycle. And so I think that we're getting definite desire from the publishers that, that would be the -- or the platform holders that, that would be the case. And I think it all depends on the yields as they begin to produce these products. So -- but again, based on Rob's comments earlier, what we have received in terms of allocations from the launch quantity we would assume through the balance, at least our fiscal, they did exceed our expectations.

And we'll take our next question from Arvind Bhatia with Sterne Agee. Arvind Bhatia - Sterne Agee & Leach Inc., Research Division: A question on the market model. The plus 20% to plus 30% in 2014, I was hoping you could maybe provide a little bit more color how that kind of breaks down between hardware and software, even if it's very general or directional? And then, also, I want to make sure I got this right, that in 2015, you have increased your growth assumptions to 10% to 15%, and previously, it was 8% to 12%. Are those apples to apples numbers?

Mike?

Sure. So as far as the total model, the 20%, 30%, what's included in that number is console hardware, console software, console digital, and I don't believe we've broken that down by components within that. As far as your question about 2015, the numbers that we showed last time, the 10% to 12% was the number that was just included console hardware and software, we expected console digital to grow at a higher rate at that and that's what drives the higher rates that you hear. So the range we're giving you there is apples to apples with '14, it's console category including console hardware, console software and console digital. Arvind Bhatia - Sterne Agee & Leach Inc., Research Division: Okay. And then, just a small question, I guess, on the hardware margins this quarter being higher than normal, is there anything going on there that we should be aware of?

Rob? Arvind Bhatia - Sterne Agee & Leach Inc., Research Division: I think, it was like 10 point -- almost 11%, usually it's around 8%. Anything unique there?

Hardware margin, software margins as well, can move around from quarter to quarter based upon what we're doing in terms of selling extended warranties. It also has to do with the kind of cooperative advertising dollars we're getting from our publishing and console partners. And so I wouldn't say there's anything more going on there than what's normal. Arvind Bhatia - Sterne Agee & Leach Inc., Research Division: Okay. And then, last quick one for me. You're seeing a lot of success with Infinity. You've done really well with titles like Skylanders. I assume that you're going to come back with the GameStop Kids store concept again this holiday, and if yes, what are the plans in terms of how many you'll be opening?

Well, Arvind, we don't disclose those kinds of things. As you know, competitors are eager to know what our plans are. We are excited about Infinity and Kids, and Tony knows exactly which SKUs he needs to go order more of, right, Tony? We know exactly [indiscernible] Infinity, we know -- we have a lot of insight. I think we're still planning what we do here, Arvind, in terms of holidays, so nothing to disclose at this time.

Rest assured that it will be given more space in our stores during the holiday, so there will be kids' sections at every one of our stores.

The intersection, we had, I think, 2 or 3 calls ago, the intersection of toys and software, in toys and games, is an interesting space for us. Our challenge, of course, is the physical space in the stores. So that's what -- the battle we fight every day is that one. Our service levels are superior to everybody else, but our challenge is always space. So that's the battle we fight and that's why you see us do things like the GameStop Kids last year.

And the biggest thing that we offer on Infinity is instead of having people having to run all over town trying to figure out where the characters are, we allow them to reserve all of the characters at our stores and come pick them up, which is a great benefit and which is the main reason why we were able to exceed our expectations on that launch.

And we'll take our last question from Seth Sigman with Crédit Suisse. Seth Sigman - Crédit Suisse AG, Research Division: There was a comment earlier that preowned trade activity has started to increase and there may be better preowned inventory now hitting the shelves. What's been the consumer's response, that used game customer, what's been their response? And would you be expecting used game sales to accelerate at some point? And I guess, it makes sense that consumers will trade in their old stuff but just trying to understand the level of confidence that there's a segment of the market that's still maybe interested in those last generation used products?

Maybe, Mike Hogan, you could start that, and then Mike Mauler add some comments on that.

Yes. Sure. I think, that, again, the best data we can give you here is history from the last console cycle. Certainly, we do expect to see an increase in trades because not only do you have the innovation of new consoles but there are consoles which won't be backward compatible. We've got some -- obviously some great value offers for consumers to trade up whether they're buying the current generation and going to the next one. If you look at the history we had last time, the preowned business grew dramatically in the first 2 years following the launch of the PS3 and the Wii. It grew 20%, followed by 27%. So we are being very aggressive about trades. We always like to increase our preowned inventory, and that's because we would have very, very high expectations for our preowned business next year following the launch of the consoles.

Mike Mauler?

Sure. I think, one of the drivers, Seth, was what we saw in Europe was, this year, this time versus the last console cycle, we have very strong promotions on the reservation programs for the new consoles and some of the key new releases. So what we saw in the second quarter was a 14% increase in trades as consumers traded product in, in order to secure those new console reservations. And so that does have us ending Q2 with higher used inventory than we did last time, last year. Seth Sigman - Crédit Suisse AG, Research Division: Okay. That's helpful. And just a follow-up question on the gross margins. I guess, first, how do you think about the margin profile of some of the next generation products? And then, related to that, from a mix perspective, I know in the first couple of years, you typically see some overall margin compression. But you have some other drivers there today between digital and just greater used penetration than maybe a few years ago, so I mean how do you think about margins and how those drivers can maybe offset the mix of hardware?

Seth, this is Rob. We're very proud of the fact that we've expanded our gross margins by 400 basis points since the peak of the business in 2008. And a part of that is the mix of product that you sell when the console cycle is on a downward trend. So the expectation would be that you're going to sell a lot more hardware, you're going to put some pressure on those margins. So we've talked about them being comparable for 2013. But as we move into 2014, I think that you can expect the margin rate to come down a bit. The good news is the businesses that we build in digital and mobile and the rollout of best practices on preowned throughout the world and the improvements we've seen there will prevent it from going back as far as it was in 2008. So it will come down some, but not nearly to where it was.

With that, we will wrap up the call. And I want to thank all of you for joining the call. Thank you for your support of GameStop. We believe that ours continues to be a compelling story and a great investment. Goodbye.

And that does conclude our conference. Thank you for your participation.