Good morning, ladies and gentlemen, and welcome to the Sally Beauty Holdings conference call to discuss the company's fiscal 2014 first quarter results. [Operator Instructions] Now I would like to turn the conference over to Karen Fugate, Vice President of Investor Relations.

Thank you. Before we begin, I would like to remind you that certain comments, including matters such as forecasted financial information, contracts of business and trend information made during this call may contain forward-looking statements within the meaning of Section 21-E of the Securities Exchange Act of 1934. Many of these forward-looking statements can be identified by the use of words such as may, will, should, expect, anticipate, estimate, assume, continue, project, plan, believe and similar words or phrases. These matters are subject to a number of factors that could cause actual results to differ materially from expectations. Those factors are described in Sally Beauty Holdings' SEC filings, including its most recent annual report on Form 10-K. The company does not undertake any obligations to publicly update or revise its forward-looking statements. The company has provided a detailed explanation and reconciliations of its adjusting items and non-GAAP financial measures in its earnings press release and on its website. With me on the call today are Gary Winterhalter, President and Chief Executive Officer; and Mark Flaherty, Senior Vice President and Chief Financial Officer.

Thank you, Karen, and good morning, everyone. Thank you for joining us for our fiscal 2014 first quarter earnings call. I'll begin today's discussion with a high-level review of our financial results and business initiatives. Mark will then take you through the quarter in more detail. Overall, our fiscal 2014 first quarter results were solid. Sales growth in our Sally business showed improvement from the last several quarters and our BSG performance resulted in strong top and bottom line growth. On a consolidated basis, same-store sales increased by 2.2% representing the best comp we've achieved in several quarters. Consolidated gross profit margin in the first quarter was 49% versus 49.1% in the prior year quarter. This slight decline was principally due to product mix in the Sally U.S. business. Turning to Sally's performance. Same-store sales growth was for Sally Beauty was a positive 0.9%. I'm pleased with the sequential improvement when compared to the fiscal 2013 third and fourth quarters, which were down 0.8% and down 1.5%, respectively. The improvement over prior quarters was primarily due to better traffic trends. I am confident that the return to our targeted marketing approach and the introduction of new brands will continue to gradually drive improved traffic results. Net sales for Sally Beauty Supply reached $573 million, an increase of 2.6% over the prior year quarter. Sales performance at Sally was due to new store openings and same-store sales growth. Beauty Club Card sales increased 6.7% this quarter. Club membership grew 10.6% to reach 7.6 million members. Membership growth was boosted by BCC renewals, which topped 55% for the quarter. Gross profit margin for the Sally segment was 54.3%, a 10 basis point decline from the 2013 first quarter. This decline was primarily, driven by a higher percent of appliance sales coming from…

Thanks, Gary. Consolidated net sales for the first quarter were $940.5 million, an increase of 3.9%. This increase was primarily driven by 168 net new store openings and same-store sales growth of 2.2%. Consolidated gross profit was $460.5 million, up 3.6% over the prior year. Gross profit as a percentage of sales was 49%, down 10 basis points compared to the fiscal 2013 first quarter. This decrease was primarily due to product mix shift in the Sally U.S. business. First quarter SG&A expenses were $319.5 million, growth of 4.5% from the prior year. SG&A expense as a percentage of sales was 34%, an increase of 20 basis points over the prior year. We anticipated higher SG&A expenses this quarter due to expanded marketing initiatives at Sally, increased health care plan expenses and investments in Peru. Unallocated corporate expenses, including share-based compensation, were $37 million or 3.9% of sales versus the fiscal 2013 first quarter expenses of $33 million or 3.6% of sales. This increase is primarily due to the increase in health care. Consolidated operating earnings in the first quarter decreased 10 basis points to $121.8 million. Operating margin was 13%, down 50 basis points primarily due to the lower gross margin and higher SG&A expenses in the Sally business. Interest expense, including the amortization of debt refinancing costs, totaled $28.5 million, up $1.8 million or 6.6% due to a higher principal balance. The blended interest rate for the fiscal 2014 first quarter was 6.2%, approximately 10 basis points lower than the prior year. Adjusted EBITDA for the first quarter was $149.6 million, an increase of 1.2% compared to the $147.7 million in the prior year's quarter. For the fiscal 2014 first quarter, our effective tax rate was 37.8% versus 38% in the fiscal 2013 first quarter. We continue to…

Thank you, Mark. Our overall financial execution this quarter was good, with consolidated sales growth of 3.9%, same-store sales growth of 2.2% and earnings per share growth of 9.4%. Our BSG and Sally International businesses had a strong quarter, and in the Sally U.S. business, we are pleased with the improvement in traffic. We believe the return to our targeted marketing program is on track. I want to briefly comment on January same-store sales in our Sally and BSG U.S. stores. Ordinarily, I don't call out unfavorable weather as a contributing factor. But in January, we had a significant number of store closures resulting from severe weather. While I won't get too specific, I will say that our January sales were below expectations due to these store closures. We are hopeful that February and March will offset January's underperformance. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Meredith Adler with Barclays.

I'd like to start just to talk a little bit about sort of the promotional -- promotion is not really the right word, but the advertising you did and to what extent do you think that, that was a key driver of the sales. And now that you're talking about the 50 Years of Beauty event this spring, presumably there will be continued advertising. But I guess my real question is whether you see that the potential to drive profitable sales is really gone up as a result of what you saw on the fourth quarter?

I'm not sure I understood the last part. Are you saying the potential to drive profitable sales has gone up?

Yes. Yes, well, I mean, they were profitable but not as profitable maybe as one would have liked in aggregate.

I will say on the promotional front, we really didn't do anything differently in the first quarter. We did, as I said in our prepared remarks, we sold a lot of those Curl Geniuses, which were not at the normal margin of our electrical appliance category, primarily because we had to be at $99, which is where the market was. So that was probably the biggest single factor. And then CHI also is -- those 2 items are good gift items, appliances are good in December. And they were down, the margins on both those were down. Now conversely, OPI, which really is doing well for us, was not margin dilutive because it's about the same margin we get on the nail category. But getting back to, if you want to call it promotion, our customer acquisition mailings. We did increase those relative to last year in the first quarter. There were 3.5 million more mails. Now keep in mind that last year was when we were heavily doing the shared mail that we believe was a mistake. So when you're comparing the cost was not too much for this year, it was just the quantity that was mailed to that specific targeted customer was much more this year than last year.

And so -- but advertising as well, I guess, that's really what I was trying to ask is it did look like SG&A was up and there were a bunch of reasons for that, but some of it was clearly advertising and marketing. Do you need to continue that to continue to drive the sales?

Well, we're going to continue the targeted marketing, the customer acquisition program. But like I said, the dollars versus last year are not significantly more. It's the method in which we're mailing. We were actually mailing more pieces last year, but it was too -- a much broader, what I would consider, unqualified customer. So the answer to your question is, we are going to continue that program, we are going to continue advertising in People StyleWatch. However, a lot of that has, and will be in the future, shared expense with our suppliers. But other than that, we really didn't do any advertising differently than we've done in the past.

Okay. And then maybe just switching to BSG. Maybe talk a little bit more about this website, it's very interesting. And then, also, just kind of curious does the number of sales reps did go down and do you see that continuing to happen?

Well, we will continue to rightsize that sales force as sales dictate. And the other thing that we're trying to do, in some cases where we still have sales consultants from acquisitions that somewhat overlapped existing sales consultants, we are -- when we have turnover there, we are trying to consolidate those sales reps so that the person that's left has a higher revenue sales route and could make more money. This quarter being down like 43, that's about 4%, is probably a little more than normal. But like I said, and we've said all along, we will just continue to rightsize that sales force. One thing that you asked last quarter, Meredith, that I wanted to respond to, you were concerned about BSG's margin in the fourth quarter, gross profit margin. And we had said to you that a lot of that was coming back in the way allowances during the first quarter this year. And I just wanted to point out that, that did happen in the way that we told you that it would.

That's great. And just the website?

Yes, the website. This was an acquisition we made last fall, and it's a really neat little company that we're going to leave based in Indianapolis. They have this really unique website that they have spent years developing. And it's the only one that I know of, first of all, that can even think about compensating salon and stylists and time to sale to the salon and stylist, which is why the suppliers are pretty excited about it because they want their product being sold through salons. That's the proper channel. I don't believe any of them, I should say any of them, but I don't think the majority of them really like the diversion market on their product. But this will be so significantly different than buying diverted goods in a couple ways. First of all, the price will be what it's supposed to be because it's not going through 10 different hands to get a retail shelf. And secondly, the whole line will be available, for example on Paul Mitchell. Now when I say the whole line, obviously, I'm not talking about service products like hair color and so forth. But if you go into any of the retailers that might have 6 or 7 or 8 SKUs of Paul Mitchell on the shelf, that's not even 10% of the SKUs that they manufacture for retail sale through the salon. So this is going to be offered on the entire line, offer education on the entire line. And the nicest thing about it, we believe, is that you are able to go in there, actually, you have to go in there and select a stylist. And if you default on that, if the consumer defaults on that and doesn't select one, there's a stylist in that area that's going to get paid on that sale anyway. And then we will be communicating to try and help that stylist or salon actually turn that customer into a -- or turn that consumer into a customer for the salon.

Our next question comes from the line of Chris Ferrara with Wells Fargo.

I want to -- I know it's kind of hard to do, but is there any way you could try to sort of put context around what the drivers of the improvement was in Sally? I understand your traffic is a big piece, but the new brands versus the targeted marketing program, can you sort of put some context around each of those? Are you bringing in new customers sort of from different walks of life from having TIGI and OPI? Is it material at all or is it really more just the targeted mailer that are the major driver?

You're absolutely right. That's really difficult to determine. I do believe that, particularly with OPI, that we are bringing in a new customer. As I said, I think the last 2 quarters that we've talked about this, it was the most highly requested brand that -- in our stores for several years. So there's no question that when a customer sees our window banner that basically says we now carry OPI. Or on our customer acquisition mailings, we've obviously been using that as a big call out as well, I think there's no question. If I were to rank them, OPI is by far the strongest in bringing us a new customer. I would say that the other 3 being CHI, TIGI and -- well, actually, it's the other 2. We also have [indiscernible]. The Curl Genius is -- it's a new product, but it's not a new brand. I mean, we've carried Conair, BeLiss in the Sally stores for a very long time. And that was a great Christmas item. And we got a nice run out of it during the fall. But I would say in December, it generated some extra traffic for us. The interesting thing to me though is the OPI, for example, took the nail category for the first time in a while and actually got it positive a little bit. So that tells me that it wasn't all customers just switching from an existing brand to OPI. We did get some new customers there. The Curl Genius did get the appliance category slightly positive, but not to the degree, in either case, that you would think it was where you could say it's all incremental sales. So I'm not telling you that it's all incremental sales but I do believe, particularly the OPI case, that over time as more and more customers or potential customers realize that we carry the brand, it is going to be very helpful for us. Now Curl Genius, I think the business is going to continue. But I'll be the first to tell you that after the holidays, sales on that are dropping off, which you would expect. It also -- it's a bit of a fad item, but I don't think it's totally faddish where the business is just going to dry up and go away. But I don't expect it to maintain the kind of velocity that it had in November, December.

And I guess, any insight into the behavior of that new sort of OPI-driven consumer. It may be way too early, but are they as sticky? Do you think that consumer will be as sticky as a typical Sally Beauty supply consumer or is there a potential that this is someone who's been shopping at Target for beauty needs and really just kind of coming in temporarily checking it out. Like how do you think about that?

Well, one thing I can say is that -- that's really encouraging to me is the average ticket for the customer that's buying OPI is almost 50% higher than our normal average ticket. So that sort of -- and they're buying multiple bottles of OPI in that sale. So that kind of tells me that, at least that customer, is probably a new customer. And one of the things with OPI and one of the reasons that they wanted to start selling the product through our stores is -- one of their frustrations is, if you go into the average salon, they don't carry all 90 shades, which is understandable. And since that is their pretty much their only legitimate distribution, they never had a real good way of getting to the consumer with their full assortment. Obviously, BSG carry the full assortment, but BSG doesn't sell to the consumer. So it was a difficult thing for them and they saw us as being 2,500 doors where they could put the full assortment, displayed in a proper way, priced properly, and all of the ancillary products that they want to have sold with it. So I do think that, that customer -- well, I certainly hope that, that customer, since they are buying things other than OPI, will become just as sticky as a normal Sally customer.

Got it. And just one last quick one on the comps were up 2.2%. You'd said you thought 1% to 3% was a good range for the year. Then you talked about weather in January being weak. So the 2.2% this quarter was higher than the midpoint of the range and you're expecting improvement through the year, but the weather was sort of an offset. So where do you stand on that sort of 1% to 3% range that you talked about?

I wouldn't change that, Chris, at this point in time. And I think we did all of ourselves, including you, a favor whenever one kind of lowered their guidance last quarter. Obviously, I would much prefer to under promise and over deliver, that's sort of been the history of this company prior to the last couple of years. I do, as I've said for 2 quarters now, this is going to be a gradual return. It -- I believe, we've got pretty much what we expected in Sally North America. Now our comps from the Sally side were nicely held by our international business this quarter. So -- and conversely, they were whacked a bit in December with some bad weather. I've said to several people I wish we could have ended Q1 at the end of November, because between the condensed holiday season with Thanksgiving falling late and some really difficult weather on the first 2 weekends of December, it certainly didn't help comps. And I think they would have probably even did better. But I also think you're going to start hearing that from a lot of retailers. And man, when January comps come out, lookout. I would encourage the whole world to look through some of this weather because when I look at geographies that didn't have this ridiculous weather, our comps actually didn't look bad in January. But the areas that -- I'll through a crazy number at you. Last year in January, we had 240 stores approximately through the month that were closed -- 240-store days. You know what I mean? And this year of the South side alone, we had 2,200. Almost 10x as many store closure days. Now that only measures the stores that were actually closed. And when we look at that kind of number, we say okay, well, there's a bunch of stores in the area that probably were open but didn't do much business. So I don't -- like I said, it's not going to be us alone. I mean I'm sitting here in Dallas in February looking at about 1.5 inch of snow that's coming down, like this is February, almost the middle of February. And it's just ridiculous. But we'll get through it. All the other people out there that have the same situations that we do as for as customers trying to get to them, will get through it as well.

And our next question comes from the line of Olivia Tong with Bank of America.

Just one quick follow-up on weather. In years passed, do you end up making up a lot of weather-related weakness? Because my sense is your business is a bit more resilient. I mean, just because there is snow outside, women aren't going to walk around with white hair. So just kind of wondering if that -- if you do end up making some of it or does that consumer, they're already going to Target or Walmart and they're maybe not making another trip. So if you could just comment on that first, that would be great.

I think it's yes and yes. I do think that sometimes when a customer has to go out and -- no matter what the weather is, you've got to get out and get groceries at some point, but you certainly don't need to make others stops. Now if it's a Beauty Club Card customer or a pro customer and they're really looking for the specific product that they use from us, they're either going to delay that shop or they'll fight their way in. So I believe you get some of it back. But unfortunately, where it hurts us the most, is a customer that we're trying to get as a new customer. In other words, a retail customer who's never been a customer, they're not going to make that extra stop. They really don't even know who we are at that point. They might have our invitation to stop with them, but they're not going to make that stop. Now when you look at the BSG side, the compounding factor there is, obviously, the salons have the same issue we do. And a lot of people simply just cancel their appointment. And they may come back 2 weeks later or depending on when they can get in. So a fair amount of that just wash and set or style business in a salon, I'm not sure they recapture that. They obviously do the hair color and some of the services, but people can put off their haircut a couple of weeks if it's really bad out or if the people that come in pretty much weekly for a shampoo and set, if there's anybody that still does that, they can put it off.

Got it. And then on the Beauty Club Card customers, do you -- can you just tell us what percentage of sales came from BCC customers? And then also in previous quarters, you had attributed some of the slowdown in traffic to the overall environment. So can give us an update on what you think about the state of industry? And basically, how much of your improvement do you think is a result of you fixing your traffic and marketing issues, as opposed to whether underlying macros play a part?

Well, that's a loaded question. First of all, let me try to address the BCC -- where do we get that Karen? The BCC percentage was up nicely, Olivia.

The percent of retail?

Percent of retail? Okay. The percentage of our retail business for Beauty Club Card, this is -- that quarter was 55%, which is an all-time high. But again, that sort of makes sense, if you had made that call at the end of November, I think it would have been less than that. So it's what I said a few minutes ago when the Beauty Club Card customer is much more sticky, obviously, than a retail customer that's just wondering in even though we need that retail customer to convert. We, actually, also did an excellent job of -- in the first quarter. As you heard me say, we were up almost 11% in membership to over 7.6 million, and our renewals were at an all-time high. Coincidentally, also, it's 55%. So that part we're very pleased with Beauty Club Card. Sales were up from almost 7% and traffic was up very nicely. I apologize, what was the second part of the question?

About the state of the overall environment and how much you think that played a part?

Yes. I just got the professional '13 numbers and again, this is from really the only source that follows this. And it was down to 2.8% coming off 2012 of 4.8% or 5% something like that. So it was soft. I think, in general, what you're hearing from most retailers regarding their beauty and cosmetic business is it is also tough, particularly it was in the fourth quarter. So given all that, I feel even more encouraged about what our first quarter looked like.

Got it. And then just one last question, switching topics to the buyback. Can you talk about what your thoughts are for this year in terms of pace and cadence because it looks like you're off to a bit of a slower start than in previous years?

Mark?

Yes, we are. And if you look at the previous years, and we kind of had reiterated this a little bit in kind of our outlook for 2014 at the end of the fourth quarter, which was the beginning of our share buyback cadence back in the early part of 2013, was very opportunistic. And we were going to get to more of a very steady, very measured cadence that was very consistent with our financial policy, which was that we'd like to be kind of in that 2 to 2.5x levered range. And we're very comfortable operating at a very high end of that range. Currently, we're at about 2.7x right now. But that is kind of the range in which we would operate at. And you are -- our share repurchase program, we were kind of looking to go into the second year as being more of a consistent cadence. So I think that's what you will see in the quarters that will unfold over fiscal year 2014.

[indiscernible] We're not quite sure what it is yet.

The next question comes from the line of Taposh Bari with Goldman Sachs.

I wanted to ask you a follow-up on this whole appliances phenomenon, at least, in the first quarter. So clearly, a giftable item every first quarter, but it sounded like it was more so this year and it distorted your gross margin because of mix. But when you -- if I heard you correctly, you said you're appliances business was close to flat so it doesn't sound like mix would have really driven that big of a deal. So can you help me to better understand what's going on there? And if it actually drove your comp at all, because it looks it transitioned out of a holiday period, I'm curious to know what that may have -- what kind of impact that may have on the comp going forward?

Yes. Hang on just a second I'm trying to get you a number here. Yes, what you heard me say is correct. And that's why I don't think that, that business was just incremental. I think a lot of people that were coming and were looking for a curling iron, for example, saw this thing and bought it instead of a curling iron. So that's why I don't think it had a huge impact on our overall appliance category. Which, actually, I think is a good thing because if it was all incremental business, it would be very difficult to anniversary that. So I think a lot of people heard about it, saw it, either saw it on our website, saw it advertised someplace, came in and thought it was a neat item as a gift. And as opposed to buying a curling iron, they bought that instead of an iron.

So are the gross margins on the Curl Genius lower than a regular curling iron?

Oh, yes, yes, absolutely. That's what I said earlier. The Curl Genius, we -- basically we're at $99 on the Curl Genius because the retail version of it being sold by ULTA and Walmart and everybody else was $99. So we really had to be at that price point and that's not nearly the kind of margin that we would get normally on a curling iron or even on an item like that if it was under our private label brand. And the same thing with CHI, the flatiron, the margins -- it wasn't nearly the impact as Curl Genius, but it was an impact and the margins we make on CHI are not nearly as good as our appliance category in general, and in particular our private label and exclusive label brands.

Okay. And is the first quarter, the fiscal first quarter, I know that appliances are roughly 10% of the Sally business on a full year basis. But is it higher, materially higher during the first quarter holiday period?

Well, yes. Sure, it is higher. I mean, December is the highest month for electricals of the year. It's not like a lot of retailers would tell you that it's 50% of the business is in 1 month. It's not that at all, but it is higher -- it is the highest month of the year.

Okay. And then just a quick follow-up on the gross margin guidance. I think, last quarter, you had said 30 to 40 basis points of expansion for the year. I think you're saying still up. Are you still kind of committing to that 30 to 40 basis points for the year or can you -- do you care to kind of provide a more precise view?

We are still targeting that range. And the 50 Years of Beauty celebration that we are talking about, we have a lot of cooperation from our suppliers and coming across with some very attractive offers that will actually be -- we'll get to benefit from that in March, April and May. Those are the 3 months that we're celebrating the 50 years. And the good news is these promotions are not going to hit us on the margin line. They're very aggressive, very good promotions. But our margins are good on them. So we actually expect to see a little healthier margin, which is why I'm hoping that over the course of the year, we can offset the slight decline we had in Q1.

And our next question comes from the line of Oliver Chen with Citigroup.

Regarding the plus 0.9% comp, could you help us break that up between traffic and ticket? And just for us to understand the traffic trends. And then how should we think about what's sustainable going forward in terms of the next few quarters? Like, which comp levers are you most encouraged about as we forecast that business?

First of all, obviously, there is ticket and traffic involved. And when the BCC sales are up 6.7% and that customer spends roughly 20% more than the average retail customer does, that is going to take your average ticket up. Our -- actually, our professional average ticket was also up slightly. And I would -- we don't really have it well broken down that way, but I would tell you that, as I think we've said in the past, that it's pretty much 50-50 traffic and ticket.

Okay. And do you expect that trend to be the one we should extrapolate? Like is this -- we have the jitter with the weather, but what's kind of the sustainable run rate? Do you feel comfortable that there is a restoration in terms of what you hope to achieve with the revision in the marketing program?

Well, if you can tell me what the weather is going to do for the next 2 months here, I could better answer that question. What we've said for the last 2 quarters is we didn't expect much improvement in Q1, and we got what we expected. It was slightly better. I would have fully expected for this quarter to build on that. But I really don't know what to expect given the situation we have with some of this weather. I think once we're out of the weather, we will, number one, we'll be a little further along in the customer acquisition program and going back to the older marketing -- or the old marketing program, so I would hope that our Q3, since we shouldn't have any weather issues or anything else come Q3, should really start telling the story.

Okay. And it's encouraging that it didn't sound like you needed to be promotional, but the industry environment was heavily promotional and certainly other categories. Like what are your thoughts on what you're seeing in the promotional marketplace and if your inventory is outpacing your sales for some reason, is there an opportunity for that? It really sounds you're pretty optimistic.

Well, first of all, regarding inventories, as Mark mentioned in his prepared remarks, a lot of that -- a little bit of that inventory is still we're not running in the sales rate, particularly in December and January. But that's probably the smaller part of it. The bigger part of the inventory and it's primarily in the Sally segment is the build up for the 50th years of beauty sale, which is why Mark said that we really don't expect much to happen with inventory in a positive way or coming down until later in the year.

Okay. When we do our modeling for the gross margin upside, which quarter might that be in? And you're saying the March margin mix is one of the main drivers here versus occupancy leverage?

Yes. But keep in mind we only have one month of this promotion in Q2, that's March. What we see benefit-wise from the margin that we should see on a positive side because of the 50th sale, will be primarily in Q3.

And the next question comes from the line of Ike Boruchow with Sterne Agee. Irwin Bernard Boruchow - Sterne Agee & Leach Inc., Research Division: I guess, Gary, I mean, the big -- the biggest setback into the quarter, it seems to us like fundamentally the Sally Beauty Supply business seems to have turned a little bit of a corner and the marketing is picking up and the new products are resonating. And there's one big issue and it's weather. So I guess 2 questions to that. You kind of commented about, jokingly, that you wish the quarter could have ended at the end of November. I'm just curious, could you tell us Sally Beauty Supply comps maybe the monthly cadence or what you were kind of running before December when the weather started to become a headwind? And second to that in January, if you exclude the weather-affected areas or if you exclude where the store closures are, is the rest of the business that's not being impacted by the weather still performing well?

Well, we really don't get into the monthly comps. And again, one of the reasons we don't do that is we're not on our retail calendar, we're on a calendar month calendar. So you get a lot of distortion there. And if I start reporting that, you'll want it all the time. And even if we have no impact from weather, it varies just due to the calendar. So I really don't want to get into that. But I also said earlier, and I'm sitting here looking at January by geographic region, and if we could pull the weather out of this thing, I'd actually be pretty pleased with January's performance. Irwin Bernard Boruchow - Sterne Agee & Leach Inc., Research Division: So it mean -- so it sounds like, not mean, why you won't give specific numbers, it sounds like in areas that aren't impacted by the snow and the weather, you're very pleased with where the business continues to trend?

Well, let's not get carried away, I said pleased, not very pleased. And I really don't want anybody to take this 2.2% comp in the first quarter when we gave a 1% to 3% guidance for the whole year and start running this thing up and start adjusting your estimates to 3% and 4% and all that sort of thing, because it's doing what we expected it to do. But it doesn't come back in a wave. And like I've said for a couple of quarters when we ramped up this customer acquisition program back in '08 and '09, even though we're in the depths of a horrible economy, it worked for us and it's slowly worked better with time. And I expect the same thing to happen here. Also, I've talked about the CRM in the past, which no one has really asked about yet, and we haven't even started cranking that up. We're just in the process, right now, of starting to be able to use that. We haven't filled the CMO slot yet, but I think we're close. So there's a lot of things coming that I think they'll help enhance our efforts in this whole customer acquisition program. Irwin Bernard Boruchow - Sterne Agee & Leach Inc., Research Division: And just a follow-up, could you breakout the -- if you did, I missed it, I'm sorry, the International Sally comps in the U.S. comps in the quarter?

No. We really don't break those out. But I can tell you the International comps were very encouraging in Q1. They looked very good. Irwin Bernard Boruchow - Sterne Agee & Leach Inc., Research Division: Okay. And non-Beauty Club Card member performance versus the past couple of quarters, anything to call out?

No, not really. Like I said, we -- I think we've got some extra non-club. And I think we did a pretty good job of conversion, which is why our memberships were up 10.6%. We had a membership drive back in November, December that -- we did a nice job with. We do those probably twice a year. And that's just the promotion to try and get people over a fairly short period of time to join up.

The next question comes from the line of Joe Altobello with Oppenheimer. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Just a couple of questions. I guess, first, wanted to clarify, Gary, something you mentioned earlier or at least alluded to earlier. In terms of the 0.9% comp growth for Sally, traffic was about 0.5 point and ticket was about 0.5 point, is that a fair assessment?

Gosh. Yes. That's really when you throw all the different departments together, it's hard to break that down. And let me see if I could get anything that's a little more accurate than that. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: I just didn't think that, that ticket was positive but that was...

Joe, I think that you'll find is that, for the first quarter, is that although given the fact that we did have some new product launches and there was some promotional activity that was certainly centered around that, the real driver here in the real headline was more traffic than it was from a ticket perspective. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay. That's what I figured. And then in terms of margin, you mentioned the gross margins hoped to be up 30, 40 basis points this year. SG&A was up, it sounds like a lot of that was sort of temporary. Is that a fair way to look at that? And would you expect to get some leverage on that front in the second half this year?

Yes. When you look at, particularly the Sally segment, there is certainly a leverage story there, particularly as their comps start to gradually improve over the year, that there is a leverage story there. And that's pretty consistent with our guidance that we gave at the end of the fourth quarter. We expected to be, not to see a real leverage issue here this year, but more of it to be flat. And then also some of the our endeavors through country entries that we've done such us Peru. And the continued investment that we're making both in the U.K. with some of their new store openings, as well as in Central Europe with the continued openings of new stores in the countries we operate there. It's more of the operational aspect of kind of where that SG&A drag is coming from. Joseph Altobello - Oppenheimer & Co. Inc., Research Division: Okay. Got it. And just one last one in terms of square footage growth and you're take on the real estate environment. What should we expect for U.S. Sally square footage growth in 2014?

We usually -- we don't report that specifically. But it will be about the same as it was last year. And Sally was about 60 net new stores U.S.

About 2.5% U.S.

Yes. About 2.5% new stores U.S. And then, obviously, international is much higher percentage and that gets us in -- when you add BSG in there, it gets us into that for 4-ish percent range of new stores.

And our next question comes from the line of Jason Gere with KeyBanc.

A lot of the questions have been asked. But I guess, I just want to go back to an earlier question, thinking about the business and how you kind of think about BSG versus Sally, balancing sales versus kind of operating profit. Clearly, BSG is kind of -- it's hitting on all cylinders on both ends. And then Sally, there's the need to kind of lift the comps again. You've got a little bit of higher costs with some returning to the old mailers. So I'm just wondering if you could talk maybe on Sally, just about the cost of doing business, how you see that over the next couple of years. Will that kind of prohibit you from taking that already incredible operating margin of 18%, 19% to something over 20%. So I was just wondering if you could put a little context maybe around the Sally margin and where you think that could potentially go?

Well, I think you have to be a little careful because Sally is being more and more influenced by international. And we've been saying for years that on an operating percentage margin basis, at some point Sally will start to soften up as far as increases because international becomes a much bigger piece of it. And international, because of mix of professional and retail and the cost of doing business and everything else, is not going to be accretive to Sally U.S.'s operating margins. Now, I've always -- my response to that has always been, if we look at this -- if you look at Sally, for example, would you rather have 19% operating margins on a $3 billion business or a 17.5% or 18% operating margins on a $4.5 billion or $5 billion business? So I think that's the way we have to look at it. And you can't just keep -- unfortunately, there's no market like the U.S., especially for us. Now we do see those kind of operating margins, and we're getting close to that in Mexico, but the bulk of our international business is still coming out of the U.K. and Europe and we continue to grow that business. And those operating margins are significantly less, primarily because of the gross profit line where we have 80% of our business going to the professional. But also because it's just the cost of doing business in Europe and the U.K. is just much higher.

Okay. No, that makes sense. And just going back to the question on square footage in the U.S. and obviously, you're talking about that 2.5%. Have you -- can you talk maybe a little bit about where -- are there still markets out there that there is still opportunities to fill in? Where you -- are you starting to see some areas where there might be some saturation? I was just wondering, and it's a topic that I don't think has come up in a while, but I was would kind of wondering when you think about the retail landscape.

Well, we still believe that we can have somewhere around 3,100 stores in the United States. We're approximately 2,500 or 2,550, something like that on the Sally side. And like I said earlier, we're adding about 60 a year. Obviously, there's some states that are more saturated than others. And obviously, with the shift in population, that continues. We continue to see opportunities in states like Nevada and Arizona and Florida and even Texas, where you see some of the Northern states that are losing population, that you struggle to find places to put new stores when you have declining population. But overall, the population in the U.S. continues to go up. And for us, the Hispanic population in the U.S. is going up significantly higher than the overall population. And that's a wonderful customer for us. So one of the areas that we do continually look at as a place to put new stores is some of these states that have a very fast growth in the Hispanic population.

Great. And then just a housekeeping. I guess, I want to just clarify just on thinking about margins for this year. I think you're saying 30 to 40 gross margin. It sound like SG&A you're looking at to be kind of flattish for the year. So is that -- I guess, I just want to make sure I interpreted what you said correctly. And then the other question, Mark, did you say what interest expense would be for the year? If I missed it, I apologize.

To go back to your kind of your guidance question, your guidance is correct in terms of how you're viewing it and that's kind of what we reiterated. And then overall interest expense this year is about $116 million, in that neighborhood.

And our last question comes from the line of Jill Nelson from Johnson Rice. Jill R. Caruthers - Johnson Rice & Company, L.L.C., Research Division: I guess not to kill this question, but just on the Sally Beauty EBIT margin decline we saw in the quarter, could you maybe parse out just in the range of maybe some of the expense buckets between International investment versus marketing, just so we can figure out kind of what the onetime, what's an ongoing type trend?

Well, the one thing that we pointed out was the credit last year of $1.2 million, so that's a piece of it. Mark, do you have any specifics you might get into on international investment?

I would say it's just that the international investment, we have roughly just slightly under $1 million worth of expense that went through that was not in there last year. And then, also, we were -- our cadence of our advertising as a percentage of sales was slightly higher than what we have in the past. So that's predominantly as, as bad as Gary talked about earlier. We went back to a more surgical approach with our CRM initiatives and our mailers were about 3.5x more in terms of volume than what we did at the same period last year. So that also had an impact on it. And that's part of just kind of getting that machine back to its normal cadence, and to get the cadence of that new -- that list customer back in the door. And as we've said, over the last quarter or so, it's just that it's a slow march. So we've been trying to take advantage of opportunities with some of the new membership drives, some of the other periods of the quarter that we hadn't done that in the past. And have been very opportunistic in terms of our endeavors. But it has been a little bit of a drag on our EBIT margins. Jill R. Caruthers - Johnson Rice & Company, L.L.C., Research Division: Okay. And then just a follow-on to that last comment, just with your marketing approach. Could you talk about -- I think last call you talked about some incremental investments in the marketing team looking for a new Chief Marketing Officer. If you could give us any update there and how that's progressing?

As I said a minute ago, we -- I think we're close on a CMO. We have filled a couple of those positions. Our CRM Director position has been filled and a couple of others. But we're holding some of those because we really feel like it should be the CMO's decision to hire some of the people that would ultimately work for them. Thanks, operator. Our 2014 first quarter performance was solid. Sales performance at our Sally business showed improvement from the last several quarters. And BSG's performance resulted in strong top and bottom line growth. During the quarter, we repurchased approximately 2.4 million shares of our stock for $66.2 million. We continue to believe this is an efficient manner to reward our long-term shareholders. As always, thanks again for your interest in Sally Beauty Holdings.

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