Good day, ladies and gentlemen and welcome to the Lululemon Athletica Q3 2010 Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session with instructions following at that time. (Operator instructions) As a reminder, this conference call is being recorded. And now I’d like to turn the call over to Joe Teklits with ICR. Please begin, Sir.

Hey. Thank you. Good morning, everyone. Thanks for joining us again for Lululemon Athletica’s conference call to discuss third quarter 2010 results. A copy of today’s press release is available on the Investor Relations section of the company’s Web site at www.lululemon.com or furnished on Form 10-K with the SEC available on the commission’s Web site at www.sec.gov. Today’s call is being recorded and will be available for 30 days as a replay shortly after the call in the Investor Relations section of the company’s Web site. Hosting today’s call is Christine Day, the company’s Chief Executive Officer, John Currie, the company’s Chief Financial Officer and Sheree Waterson, EVP, General Merchandise Management and Supply Chain. Before we get started of course, we need to remind you of the company’s Safe Harbor language. Statements contained in this conference call, which are not historical facts, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results might differ materially from these projected and such statements due to a number of risks and uncertainties all of which are described in the company’s filings with the SEC. Now, we'll turn the call over to Christine Day, company's CEO.

Good morning, everyone. Our business momentum continued as we reported another strong growth quarter with total sales increasing 56% and our same store sales improving by 29%. All age classes are comping positive led by our 2008 and 2009 stores. I am also very pleased with the quality of our growth and our disciplined approach to building a strong and sustainable business model as demonstrated by our healthy earnings flow through. In Q3, we continued to focus on technical athletic products with yoga at our core and our success is evident in our latest results. Our floor technical products such as yoga pants and tops, including our new hot yoga line as well as our run line drove sales as well as our gross margin. This product carries higher merchandise margins when compared to categories like accessories and outerwear. We believe this product has benefited from innovation and diversified fabrics in our tank line and increased layers and technical features such as UV protection and reflectivity in our run line. During the quarter, we increased the number of events and ambassadors at our stores and also our tenured store managers improved store level execution. Our ability to stay focused on our brand strategy has resonated with our guests and is driving brand awareness and sales. So again, we consider this to be a very high quality increase in store productivity that validates our business model. Another big part of our third quarter success was our e-commerce business. E-commerce sales were up over 200% from the third quarter in 2009. We improved our inventory position to support sales in the back half of the third quarter, which allowed e-commerce to jump closer to a natural level for this early stage business. And since our site carries and sells a larger mix…

Thanks, Christine. I’ll begin by reviewing the details of our third quarter 2010 results, and then I’ll update you on our outlook for the fourth quarter and for fiscal 2010. Keep in mind as I discuss our results that the acquisition of the majority interest in our Australian licensee early in the second quarter now results in the full consolidation of Australian financial results, which has contributed to variances in operating results and balance sheet amounts compared to the prior year. So for the third quarter of fiscal 2010, total net revenue rose 55.7% to $175.8 million from $112.9 million in the third quarter of 2009. The increase in revenue was driven by comparable store sales growth of 29% on a constant dollar basis, the addition of 13 net new corporate-owned stores in North America, since Q3 of 2009, which includes the Saskatoon franchise we acquired during the second quarter. A consolidation of Australian operation which includes three showrooms and 11 stores, of which three have opened since Q3 of 2009, the addition of 33 net new showrooms opened in the U.S. since Q3 of 2009, e-commerce sales which increased by $9.2 million, a warehouse sale that we held in Hamilton, Ontario in September and a stronger Canadian dollar which had the effect of increasing reported revenues by $4.1 million or 2%. During the quarter, we opened three corporate-owned Lululemon stores in the U.S., and one store in Australia. We ended the quarter with 134 total stores versus 119 a year ago, 130 of which are corporate-owned, including the 11 in Australia and four U.S. franchise stores. There are now 101 stores in our comp base, 38 of which are in Canada, and 63 in the United States. Corporate-owned stores represented 81.5% of total revenue or $143.2 million versus 86.9%…

Thank you, John. In closing, we want to wish you all a happy holiday season and thank our store managers and hard working design, merchandising, supply chain and SSE teams for their contributions to our successful quarter. With that, we'll turn it over to questions.

Thank you. (Operator Instructions) Our first question is from Michelle Tan of Goldman Sachs. The line is open.

Great. Thanks. Hey, guys.

Hi, Michelle.

I was wondering if you could give us a little, maybe dig a little deeper into the new CIO and maybe give some specific examples of key processes that you think you can enhance with systems and also some kind of sense of the timing, Christine that you have in mind for some of these rollouts?

We put her to work right away. So really the first project that she's focusing on are really, are whole e-commerce transitions because she's really making sure that that platform is going to be ready to go for us, making sure that we work through any security business processes as well as profitable organizations. So she's really been tightening up our risk management, I guess all the professional systems that you need but really the other big project that we have underway is our PLM project, which is really critical to vendor management in the supply chain and really tracking everything from our fabric manufacturing forecasting base, final that together so that we can get even more efficient in our supply chain. And support Sheree with the information that she needs to continue to make great product decisions. So those are the first ones. We're also working on; the next pieces will be business intelligence so that we're really just getting more accurate data across our organization as we grow. We can't do everything by spreadsheets anymore. So that's another key focus of hers will be on that and ultimately gearing up for the next level of our financial systems and then we also launch our HR IS system early next year as well so we have a lot of your basic infrastructure systems still being built.

Great. Thanks so much and good luck for holiday guys.

Thank you.

Our next question is from Lorraine Hutchinson of Bank of America. Your line is open.

Hi, guys. This is Paul Alexander for Lorraine. Christine, you spoke a little bit about looking forward to international growth. Can you give us an update on sales to customers in Europe whether it be online or in stores that have tourists or the Hong Kong showroom and are you doing anything proactive to drive brand awareness specifically in Europe and Asia?

We're not yet. We're really just focused on serving the customer's that come in to our e-commerce line which right now counts for about 6%, 7% of sales. Kind of split between, top markets are U.K., Germany, Hong Kong, Singapore, Japan are really kind of the top market for us. And so right now because our existing platform really doesn't facilitate very easy sales for those guests, with the new platform when we're ready to start handling orders in a way that I think will satisfy the guest and until we have that in place it doesn't do much good to us to simulate a bad guest experience in our minds so we'll wait until we have that platform in a little more robust form and then we'll work on local pages and currencies by targeted markets as we go forward with the e-commerce platform. As far as showrooms, we are very pleased with the Hong Kong showroom performance. It tells us there's a lot of market demand in that market but we're not ready yet to take it to a full store rollout. And we really have just a very small presence in the U.K. with one primary wholesale account that we have there and we're just opening a few more wholesale accounts in that market. That's really about it right now.

Great. Thanks and just a follow-up John, you had mentioned a little bit of costing pressure coming up and you alluded to it last quarter, can you give us an update on that, if there's any change in outlook there?

Actually, our outlook is still pretty similar to what we talked about at the end of the Q2. For 2011, we see compression of our gross margin of about 150 basis points coming from various inflationary pressures, whether it's fabric pricing, labor in China, et cetera and that's still our outlook for next year. A little bit of that, we will start to see that in Q4, didn't impact us very much in Q3 of this year though.

Thanks, guys.

Thank you. Our next question is from Janet Kloppenburg of JJK Research. The line is open.

I wondered John if you could talk a little bit about the parameters of the cost sales growth, for instance AUR trends, (inaudible) value and perhaps can (inaudible) to what happened in the e-commerce channel?

Okay. Well looking at the comps, again this quarter it was driven by traffic and conversion. With the limited counting that we have traffic was up in the low 20s, conversion was up below 10%. That's what's driving the comp. It was not driven by pricing. The average transaction is about the same as it's been recently. Units per transaction up just slightly. I think that's maybe because we're a little better stocked on accessories, which are adding to but not the overall.

Okay, great and then at the end of the e-commerce, does it look about the same?

The average transaction is slightly higher on e-commerce. In terms of product mix, we tend to sell more of our core technical product online. I think because on e-commerce people are discovering the brand and establishing their wardrobe as opposed to adding their wardrobe.

Okay and Christine, I was wondering about your expansion plans going forward and if those plans would include a new prototype or evolution of a store design, as we now know it?

I think we're always interested in changing our game. I think we've begun a planning team for what we call stores of the future. I mean we're really looking at future lines, will have and how many square feet to carry everything but that's so, just basically the beginning of a concept team so it's going to be a couple of years before you see us do anything as we work through everything from the supply chain because it's not just about a store design, it's about how do you evolve your business. And that takes a lot more time to plan so (inaudible) but we are working on a short-term fixturing and other things as we kind of incorporate new lines. We've hired a very talented designer who works in house with us as well. And he's working on things like unique storefront. We do outsource the majority of the construction documents so we don't do that part of it but we definitely have increased our support for that future.

Okay and then as far as the sourcing question goes, I think John said 150 basis points gross margin pressure? Could there be any offset to that John for our comps being better than expected, or a percentage of something like that?

Think about it as the unmitigated impact of inflation and yes we continue to see opportunities for efficiency improvements. I mean, not material enough to call it in the comments but we do have our new U.S. DC in place now, which is delivering some savings. So that's the maximum impact and of course leverage on occupancy and depreciation and other fixed costs, dependent on what our comp store sales are going to be next year, hopefully we'll largely offset that inflationary impact.

Okay and just my last question, Christine. Is there a new design of the Web site coming up? I think you talked about some changes just going on for the first quarter of '11?

If you've been on it you've noticed that we did post a new skin and we did a (inaudible) testing on the existing site to make sure we survived the Oprah onslaught that we got with a lot of visitors. So we did some testing, put a new skin on there. You can see already that we have a lot of new photography on the site because we've taken that in-house so we can really control the quality. The models are more like our models and in terms of how we want to project the brand and the products shows up so much better. So we're really happy with either some short-term changes and then have more planned once we launch the new site. So we follow an, execute what you can well strategy, so we'll phase in some of the changes rather than try to go live with a big bang.

Okay, great and lots of luck for a great holiday.

Thank you.

Thank you, Janet.

Thank you. Our next question is from Liz Dunn of Friedman, Billings, Ramsey. Your line is open.

Hi, good morning. I guess just one follow-up on the sourcing cost pressure as it relates to fourth quarter. Are you expecting and I apologize if I missed it, are you expecting gross margin to be down slightly in the fourth quarter and then just wanted some update on running, where do you think it can go as a percentage of your business and how are you, how are you doing with the new sort of cold weather running product? I have certainly a lot of friends that are purchasing it.

Let me take the gross margin question and then maybe Sheree can answer your other question. In fourth quarter because of the seasonality we expect the leverage unfixed cost to give us versus stronger gross margin than Q3 and sourcing cost pressures again, they're impacting some of the inventory buys now but because it's taking an inventory turn for those to really come through the 150 basis points that we're talking about for next year, it might be a third of that that impacts Q4.

How far out are you bought, John?

We're now buying for the third quarter, right Sheree?

We just finished summer buy second quarter and we'll be placing third quarter in December and January.

Okay, great.

So to your running question, Liz. I think your friends are sort of describing what's happening with run overall. We're very happy welcome to the run penetration at 20%. What we currently have in stores has been very successful. The power of Cozy is winning so the running we want tops the EC has been extremely strong at retail because of their working capability and because they're so comfortable to wear. And that's both in men’s and in women’s and then the layering systems that our design team has created so there's a layer close to the body that's generally Silverescent so looking anti (inaudible) wear with a mid layer and also outerwear has proven to really satisfy our running guests needs. We also have running tights and son on and are running accessories to match for cold weather, caps, gloves, neck warmers, et cetera. and so the guest is really responding to have the whole layered look and that's for, it functions best that way and I think that our serious running customer is really responding very well. And the wool layer is fantastic if you haven't tried that yet, Liz.

Okay. Thank you.

Thank you. Our next question is from Sharon Zackfia of William Blair. The line is open.

Good morning. I have to say I'm calling from L.A. so I feel your pain at these early morning calls. Just a quick question. Growing SG&A at a very rapid clip this year and I know part of that is because you deferred a lot of SG&A expenditures last year to the infrastructure growth expenses. So I'm just curious as we go into 2011, kind of what's the more normal rate of growth in SG&A and are there still key investments that need to be made and key members of management that need to be added?

I'd say we're closer to having caught up on the underfunded areas that were the result of cutbacks in 2008 and 2009. But with the additions in 2010, just the run rate the new members of the team will increase SG&A next year and beyond that as I said, we're into the more discretionary investments and expenditures, discretionary but necessary to continue to grow the platform for the future. And again we're just at the point of working on and finalizing our budget for next year so I don't want a too specific guidance for SG&A levels next year but that's what we're dealing with. We're trying to continue to leverage the business model but make the right investments to make sure that the growth continues.

I think in terms of your questions on key members of the management team, we are just taking off a search for a head of e-commerce and we want to bring in somebody with some global experience in that position. We've done it to protect the brand and grow it from the brand base with our internal talent and with that move Deanne, who has been heading that has moved to head our global brand and we're very excited about that because she knows it. And we don't, as you know do marketing in the traditional way, so we need somebody who understands how to do that internally. And then we'll continue, we really feel like we've built a lot of our supply chain, came out this year but we do have a head of R&D coming in and a creative person in Sheree, so that we're continuing to really create the vision for the future and have innovation as a regular part. As you get bigger and the process part takes up a lot of your management time, you need to make sure that you have those centered innovations for the future. So definitely a slow down in terms of any kind of key positions at the executive level but you will see IT investments because we don't have a lot of the robust systems yet for the level of growth that we see coming in the complexity of the business and so those will be the major investments.

Great. Thank you.

Thank you. Our next question comes is from John Morris of Bank of Montreal. Your line is open, Sir.

My congratulations as well. Let me get a quick clarification out of the way for John and then a question. Gross margin earlier you were talking about Q4 and I think you talked about it being up relative to Q3? On a year-over-year basis would you also anticipate as a clarification that it would be up year-over-year?

Yes. Sorry let me just clarify. Yes, up slightly over last year. I mean we're getting into precision that's beyond the guidance that I want to give.

Yes, that's fine.

The margin for Q3 was 100 basis points or so higher than last year. We'll be in that range for Q4.

Okay, that's good. Now and then Christine in terms of the nice growth that we're seeing in terms of new stores and the plan looking out into next year, can you tell us regionally, geographically where we might see those store openings next year?

Well as you know we've got currently 48 showrooms out there right now and what we really do is watch them and we've got a very strong pipeline for next year, for the majority, like about 50% of over 605 of the deals are in the pipeline but we actually wait and vette them until the strongest of the showrooms. We then execute but you'll see about half of them will be from those new showrooms and about half will be in sale in existing markets. So kind of continuing with the strategy that you've seen us execute this year.

Okay and the new Aviva stores, where are those opening?

We are, let's see, Edmonton and Toronto.

Okay, good and then finally John, just quick thoughts about your inventory growth plans for Q4? Where would we expect to see inventory finish out on per square foot basis?

Okay and as I said on the last call coming into Q3 we were comfortable with our inventory levels of forward sales. I'd say the same thing coming into Q4. That would, this kind of relationship between inventory and forward sales we'd like to continue, of course it depends on whether we have outperformed. We could end up somewhat short but we're pretty happy with the inventory position coming into this quarter.

That's great. Stores look great, guys. Thank you very much.

Thank you.

Thank you, Sir. Our next question is from Erika Maschmeyer of Robert W. Baird. Your line is open.

Thanks and congratulations. On the gross margin front could you provide a bit more detail around the mix shift, your higher margin and core products, was that a conscious decision or are is this where you saw the greatest strength and then outerwear should be partially in Q4, kind of talk about your reasons for that and then also your performance for outerwear and I know you don't normally talk about weather but was there any impact from the weather during the quarter? Thanks.

Okay. Yes, the mix shift, I wouldn't say it was deliberate but we like it not just because it was a shift towards our highest margin products but it was a shift towards our core technical products. The real foundation of the company and as I said earlier I think it reflects the fact that we're attracting new guests. The shift in outerwear again, not anything dramatic or deliberate. It's just the drop of our outerwear which is again, this year for a brief period of time, came a little bit later so some of it was Q3 and some of it will be Q4 and the outerwear being a higher price point, slightly lower gross margin.

I would say that core is really where our guests were responding and just to echo what John was saying, our new guests that are adopting us particularly in the United States tend to love our core jackets and pants, like a groove pant, or designed jacket and so on and so forth and so it's just a natural mix shift, actually that's responding to demand and the great news is it's a very healthy shift for the business.

Great and then can you talk a little bit about the new stores you have that are in smaller markets and secondary cities? Are you seeing a different type of maturity occur for those markets or any learning’s there?

Well, I would just maybe call out our Nashville store opening which some people would consider, and second market probably one of our record store openings for the year. So having a showroom there, community response was fantastic. We just got a tremendous amount of loyalty in those smaller markets that make those stores for us very, very productive.

Great to hear. Thank you.

Thank you. Our next question is from Chi Lee of Morgan Stanley. Your line is open.

Good morning, everybody. John, I guess it sounds like you guys are maintaining most of the outlook on the cost inflation front. Are you still holding line in terms of keeping average until retails flat as you go into next year and at what point would you be willing to revisit that outlook?

Yes, we are. We're holding our retail strategies constant. We, our strategy is to maintain optimal value to our guests so that's what we're executing right now.

Got it and then John, can you quantify for us what the actual savings impact was in the third quarter from the new distribution center?

It was about 30 basis points and the gross margin or somewhere around $600,000.

And was that just the result of eliminating depletive costs or was that inclusive of efficiency gains as well?

Again, we're moving from a third party, DC so we're comparing a per item per touch, the arrangement to our own operation.

Last quarter we did have some overrun costs. We had costs but in the last quarter but this quarter would have been straight savings.

Straight savings. Great and then my last question just on the Australian stores, how are you guys now thinking about the productivity curve via Australia stores, can we start to see them narrow onto what we're seeing in the U.S. currently?

There is, typically about because it's an earlier stage market growth story, they're very much following the same curve as we saw in the U.S. market and we've really focused this last year on addressing the counter seasonal issue, improving their seasonal color and assortment and related fabric and that's really give them the ability to drive sales and once they've gotten to a certain level of sales they've also now focused much more on their community initiatives which are also really driving that so it's a great market, it' a very athletic women's market and we just had a recent visit there and very, very pleased with our operation there.

Perfect. Great. Thank you very much.

Thank you. Our next question is from Paul Lejuez of Nomura. Your line is open. Pardon me, Sir. Please check your mute button? We'll move to the next question. Our next question is from Taposh Bari of Jefferies. Your line is open, Sir. Taposh Bari - Jefferies & Company: Hi, good morning. Just a question on your international expansion strategy. Maybe if you could share your thoughts, and it's probably a little preliminary but what your preferred method of distribution would be, whether it would be similar to something you're doing here in North America, Australia in terms of owned operated retail stores? Would you consider maybe a franchise model or maybe possibly a wholesale method of distribution? Thanks.

Definitely roll out wholesale. I think that each market has particular circumstances where you use a different model and our preference would be to be at least in a majority ownership, operator role in key market and then there are other markets where I would prefer to have a licensed relationship with the right partner. That's the due diligence that we're working on now in terms of prioritizing markets, looking to the underlying business models but you know we haven't made the decision to go yet, but the decision that our board will make after we give them our roadmap and strategy. And the reality is we still have tremendous growth in the U.S. to focus on and that delivers the most short-term value to the shareholders so we want to make sure we protect and execute that in our e-commerce strategy first before we get distracted by the complexity of managing international. Taposh Bari - Jefferies & Company: And then just a follow-up on the running piece of the business, I don't know if you already mentioned it and if you did I apologize but can you just remind us what running was as a percentage of the total assortment in the third quarter of this year versus last and do you see that changing going forward as we head into 2011?

Last year was when we were, hi, this is Sheree. Last year was when we rolled out to all stores so we have been maintaining it at about 20% and the guests are responding in a very healthy way. Right now we're happy with that mix because yoga is still the core of our business and at any rate we're going to hold steady for the time being. Taposh Bari - Jefferies & Company: Thanks.

Thank you. Our next question is from Paul Lejuez of Nomura. Your line is open.

Hello?

Pardon me, Sir. Please check your mute button. We can hear you now.

So this is Tracy Cogan filling in for Paul. I had two questions. The first is just looking at your fourth quarter guidance, it seems like you're looking for a spread of 15 points between total sales growth and comp growth and I'm wondering what the driver is behind that being so much lower than the 27 point spread in 3Q? And then my second question is just wondering how sales trended through the quarter and maybe if you could quantify the Oprah impact? Thanks.

Okay, on your first question and again, I haven’t done the math to check my answer but of course e-commerce is a growing impact on the non-store part of our sales increase. Australia is now in there where it wasn't last year. Those are the big things that would, my answer without having a chance to think more about your question.

I guess I'm thinking why would it be lower than the spread and so much lower than the spread in 3Q unless maybe the growth in either of those categories is expected to be lower maybe?

I'm not sure on that.

Okay. I'll follow-up and you send then on the sales trend through the quarter in Oprah?

Very little Oprah direct, you saw a little bit of a bump in our e-commerce channel during that week but we already had a pretty strong ramp so I think it was hard to track the individual. We certainly did sell more of the relaxed fit pants during that week but we also saw sales of all pants go up so I think it had a halo effect. But we also then had an equally strong week the next week so I think it's just part of the overall holiday ramp. We of course only knew a few weeks in advance that we would be selected so we weren't able to certainly bring in any big product and she typically doesn’t' like it if you promote off of that which we didn't do and really honored the relationship we have with her which is important. So it was nice but the reality was it was a very smooth growing sales ramp so healthy, profitable quarter.

And in terms of comparison to last year, we were expecting month to month within the quarter to be, we were lapping more challenging comps because last year Q3 the sales ramped up each quarter. What we found in the end though was that our comp was fairly level throughout the quarter.

Great, thanks a lot and good luck.

Thank you. Our next question is from Howard Tubin of RBC Capital Markets. Your line is open.

Oh, thanks. Maybe just a question for men's. What percentage is the men's business now and are you happy with the penetration or is there opportunity to increase men into the brand?

Hi, this is Sheree. Men's is about, between 10 and 12% of the business. Men's is ramping at a slightly higher rate than women's currently but is on much lower base and some of that is due to our Canadian guests as opting at a more rapid rate than they have in the past. The mix, typically the technical mix in Men's has improved considerably and will continue to improve going forward and we'll base our judgment on our performance going forward. I would have to say though that men's is, men's although there is opportunity we are primarily a retailer to women at this point in time and we can look at other opportunities for the future for that gender.

Okay. Thanks.

Thank you. Our next question is from Richard Jaffe of Stifel Nicolaus. Your line is open, Sir.

Thanks very much and just some follow on to the e-commerce business and the rapid growth. If you could talk about some of the logistics behind it, inventory business are you working with a single pool of inventory or is it with distribution centers in Canada and the U.S. and the product offerings, do they duplicate what's in stores or is there an opportunity to test and have new product on line in small quantities? How do you see the Internet business developing for you?

Maybe I can start with the logistics question. Currently we're working with a fully out service model although we do keep the inventory and do our own distribution out of our Canadian EC for the Canadian market. In the U.S. it's a separate inventory held in the third party DC so it's as a result, more so in Q2 than Q3 you saw stock outs on line because we really couldn't shift inventory between channels very easily. That will be addressed as we shift to more of an in-house, e-commerce model, which as Christine mentioned we'll be doing in Q1 of next year and so the inventory for e-commerce, although we'll buy for it separately it will be held within the same EC as our inventory for store fulfillments so transfer between channels will become easier.

Regarding the product onsite it is all of the core product and it does receive all of the seasonal products as well. The buys are separate so it goes through it at a different rate than we see in the stores. There is a small and if (inaudible) mix shift a little more core product on that channel than we see in the overall stores which we feel very good. And we do some, occasionally some special things on the e-commerce site for that guest. We did a unique hoodie for them that went really well and then we do carry some shoulder items a little bit longer, are available on those after we pull them out of the stores. Some of the outerwear garments would be an example of that so there's minor differences but from time to time but the reality is it's probably about 98% of the core stock.

Okay. Thank you.

Thank you. Our next question is from Laura Champine of Cowen and Company. Your line is open.

Morning, you mentioned that your e-commerce business is a focus for your new CIO. What rate of revenues does that business need to achieve to be as profitable as your store channel?

Well, it's already there.

So it's a very, as we said earlier in my comments, a very strong contributor to gross margin and operating margin for the business.

And then John, you mentioned that your two-year comp kept accelerating in the quarter. Obviously you just beat guidance and gave revenue guidance, the guidance for Q4 that was ahead of our expectations. Anything more specific you can give us on what's driving that very strong, you're looking at 42% two year comp? I don't have any other companies doing that? What are the key drivers there?

I think it's really goes beyond what's happening in the macro economy. I think it's driven by more and more guests discovering the brand. It's driven by great products that keep getting better and it's very difficult to predict.

I think the number one thing I'd say is it a great product but it's also the great guest experience that happens in our stores. You know the community outreach that our managers do, our educators, they're so involved. And I think if you go into our stores you really experience a different experience as a guest and very friendly, happy, animated educators teaching you about the products and creating a great guest experience. And people are looking for that and I think that's another big part of what's driving our business.

Great. Thank you.

Thank you. Our next question is from Jennifer Black of Jennifer Black & Associates. Your line is open. Jennifer Black – Jennifer Black & Associates: Good morning. Let me add my congratulations. I have a few questions. I wondered if you could talk about the incredible (inaudible) line. What kind of start has it gotten off to? Are you keeping the line tight or will you be expanding it to different silhouettes? And I wondered what kind of price elasticity you have since it's higher priced? That's my first question.

Sheree's favorite topic. We don't have enough time to talk about it as much as I'd love to but anyway Silverescent is, Silverescent is a fantastic fabric for us. I fabric for us really understands the value of it and we are developing extensions of that line. Some of which you are seeing in the store right now so if you go over to our Lincoln Square store, in the front on the left you can see we have a new Silverescent line, jackets, pants, tank tops, et cetera, which are unbelievable performance garments and so we definitely see the possibilities there for Silverescent and other extensions to follow which we'll be able to announce in the future. But the price elasticity there, depending on what fabric it is, it obviously carries a premium. And so it's a very special yarn. Its yarn that is produced by a manufacturer that does hospital grade items highest and so it's of the very highest quality, which is why it's so difficult to find it. We're the only people that actually carry this yarn. Jennifer Black – Jennifer Black & Associates: Oh. Okay. It is a fantastic line and then I wondered if you could just speak to your limited edition product and special edition product? Are you happy with that? Will you be doing more of that throughout the year? Just any comments.

Sure, every year at this time we do special edition products. Our guests absolutely look forward to it and it also carries a premium in price because there's a very special design that goes into it and it's a very, very successful part of our line. Jennifer Black – Jennifer Black & Associates: Will you be doing more throughout the year or is just going to be holiday?

We will in our hoodie’s for sure and there's other core items that we're going to be doing special edition on. One of them was in the store if you could have gotten it in time which would have been, we have a cool razor back tank with ruffles on the back and it has been superb and really the fine jacket with ruffles and they, and one of our other jackets which also has been pretty unbelievable and has pretty much sold out. Jennifer Black – Jennifer Black & Associates: Okay, fantastic. I think that's it for my questions. Good luck.

Thank you so much.

Thank you ladies and gentlemen. We have no further time for questions. I would like to turn the call over to Management for any closing remarks.

I just want to thank everyone for joining us today and again to thank everyone who contributed to our success for the quarter and wish you all a happy holiday season. Thank you. Happy Holidays.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect and have a wonderful day.