Oona McCullough - Director of Investor Relations Eric Artz - Chief Financial Officer Richard A. Hayne - Co-Founder, Chairman of The Board of Directors, Chief Executive Officer and President David W. McCreight - Chief Executive Officer of Anthropologie Group Margaret Hayne - President of Free People Brand Tedford G. Marlow - Chief Executive Officer of Urban Outfitters Group Calvin Hollinger -

Adrienne Tennant - Janney Montgomery Scott LLC, Research Division Michelle Tan - Goldman Sachs Group Inc., Research Division Kimberly C. Greenberger - Morgan Stanley, Research Division Stacy W. Pak - Barclays Capital, Research Division Brian J. Tunick - JP Morgan Chase & Co, Research Division Paul Alexander - BofA Merrill Lynch, Research Division John D. Morris - BMO Capital Markets Canada Dana Lauren Telsey - Telsey Advisory Group LLC Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division Neely J.N. Tamminga - Piper Jaffray Companies, Research Division Samantha Panella - Raymond James & Associates, Inc., Research Division David Weiner - Deutsche Bank AG, Research Division Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division Paul Lejuez - Nomura Securities Co. Ltd., Research Division Janet Kloppenburg

Good day, ladies and gentlemen, and welcome to the Urban Outfitters Inc. Fourth Quarter Fiscal Year 2012 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce Oona McCullough, Director of Investor Relations. Ms. McCullough, you may begin.

Good afternoon, and welcome to the URBN Fourth Quarter Fiscal 2012 Conference Call. Earlier this afternoon, the company has issued a press release outlining the financial and operating results for the 3- and 12-month periods ending January 31, 2012. The following discussions may include forward-looking statements. Please note that actual results may differ materially from those statements. Additional information concerning factors that could cause actual results to differ materially from projected results is contained in the company's filings with the Securities and Exchange Commission. We will begin today's call with Erik Artz, our Chief Financial Officer, who will provide financial highlights for the fourth quarter. Richard Hayne, our Chief Executive Officer, will then comment on our broader strategic initiatives; followed by our 3 group leaders, David McCreight, Meg Hayne and Tedford Marlow, each of whom will provide commentary on their businesses. Following that, we will be pleased to address your questions. As usual, the text of today's conference call along with detailed management commentary will be posted to our corporate website at www.urbanoutfittersinc.com. I'll now turn the call over to Erik.

Thank you, Oona. Let's begin with a summary of our fourth quarter fiscal 2012 performance versus the comparable quarter last year. Net sales for the quarter increased 9% to $731 million. Noncomparable sales drove the increase, contributing $73 million to the consolidated net sales increase, including 21 new stores opened during the quarter. Comparable Retail segment sales, which include our Direct-to-consumer channel, increased 2%, including increases of 1%, 9% and 3% at Anthropologie, Free People and Urban Outfitters, respectively. The total company comparable store net sales decline of 1% was driven by a 5.2% decrease in average unit selling prices, a 1.5% increase in the average number of units per transaction and a 2.5% increase in total transactions. Direct-to-consumer comparable net sales increased 14% to $167 million with the penetration of total net sales accelerating 110 basis points to 23%. These results were largely driven by a 34% increase in website traffic to over 47 million visits. European sales increased 33% due to the addition of 6 new Urban Outfitters stores and comparable Retail segment sales increases of 11% and 28% at Urban Outfitters Europe and Anthropologie Europe, respectively. Gross profit in the quarter decreased 17% to $220 million. This decline was primarily due to increased markdowns to clear slow-moving women's apparel inventory. Total selling, general and administrative expenses for the quarter, expressed as a percentage of sales, decreased by 37 basis points to 21.3%. This improvement was due to a onetime nonrecurring $6 million net benefit primarily related to equity compensation expense reversals. This benefit was partially offset by deleveraging our direct store controllable expenses driven by negative comparable store net sales. Operating income was $64.5 million or an operating margin of 8.8%. Net income was $39 million or $0.27 per diluted share. Turning to the balance sheet. Ending…

Thank you, Erik. Good afternoon, everyone. For those of you who don't know me, I cofounded Urban Outfitters 42 years ago and have been actively involved ever since. When I stepped down as CEO in 2006, I remained on as Chairman and helped to set our strategic agenda. I'm now back as CEO and excited by the opportunity to lead and grow this company once again. I have a deep commitment to the company, its brands, the employees and the stakeholders. I think the new conference call format is worth a brief discussion because I believe it's symbolic of our company-wide culture. As Oona described it, the new format is a team effort. On a quarterly basis, you will you hear not just from Erik and me, but also from our brand leaders. You will hear the merchants describe their businesses, Erik review the financial results, Freeman present progress on our operating initiatives and I will talk about strategic vision and global initiatives. You will then be able to ask all of us questions. The team you will hear from is the primary reason I feel so optimistic about the company's future. I'm delighted that we now have a full complement of entrepreneurial brand leaders and seasoned executives. So let me describe them and the opportunities I envision for our company. At URBN, we see ourselves as customer specialists, a collection of brands; each one specializing in one particular customer group, a particular lifestyle or a life stage. We offer her things she wants in environments that inspire her. We talk to her and listen to her ideas and opinions. In short, we have a relationship with our customer, and that relationship translates into sales. Each brand leader is focused on ensuring that the brand relationship with its customer is…

Thank you, Dick. Good afternoon, everyone. I'm honored to be with the URBN leadership team today representing the Anthropologie group. I have spent my first 3 months with the team touring stores; speaking with customers and long tenured team members; learning about our customer, culture, assortment, team, processes, resources and business model. While it has been a trying year for Anthropologie, I am very optimistic about our ability to once again surprise and delight our customer. We have a great brand with a deep relationship with its customer, motivated team members and a compelling business model, all of which fuel my optimism for the future. There remains a great deal of expansion ahead within our existing customer segment, existing distribution channels and existing geographies. Our recent issues have been largely self-inflicted. Amidst a great deal of organizational change, we drifted away from our aesthetic positioning and the merchandising disciplines that built our strong and unique relationship with our customer. We will recapture those essential qualities. This year, worldwide, we plan on strengthening our multichannel customer file, improving the productivity of our 4-walls, expanding retail square footage in the high-single digits and turbo charging our Direct-to-consumer investments. But most importantly, we expect to make progress throughout the year in regaining momentum in the design and merchandising of our product. We will move the ratio of full price and markdown sales closer to historic levels and focus on driving full price brand comp revenue growth. The Home business remains solid, and we have recently seen signs of improvement in some apparel categories like knits, dresses and casual bottoms. However, it will take time for our very new design and merchandising teams to align around the customer and learn our merchandising approach in order to deliver an offering that is both inspiring and financially sound. I look forward to speaking with you in the future to update you on our progress. I will now turn the call over to Meg Hayne, Global Brand President for Free People.

Thank you, David. Hi, I'm excited to speak to you about Free People. We have been focused on building our brand through talent development, compelling product and innovative marketing. The culture here in Building 25 is unique. We are proud of the team we built through specific recruiting efforts and more importantly, internal promotion. For instance, all of my directors have been with the company between 10 and 25 years. They continue to expand the boundaries of what we can do. At Free People, we love our customer. We understand her and cater to her desire for something special. With our attention to fabrics, embellishments, details and silhouette, we strive to make her happy. Our marketing efforts have seen a significant increase over the year due to our focus on social media, customer interaction and loyalty. We are very excited by the possibilities in this area. You can expect to see new ideas going forward. We had a strong quarter and year across each of our channels. Our Wholesale business grew double digits, driven by our strategy to align our product assortments, merchandising techniques and marketing efforts with our direct-to-consumer model. We finished the year with our strongest operating income margin in 5 years. Direct-to-consumer continues to be our fastest-growing business, fueled by our extended online product offering. It is the best way we can communicate our message to our customer and remains the driving force behind both our product and marketing. We successfully opened 20 stores, 4 of those in new states and the most ever in a single year. We have an even array of mall, lifestyle and streets stores. For spring in fiscal 2013, our priorities continue to be talent, product and marketing. Our retail team is working diligently to distort our store assortments by addressing different climates, as well as regional fashion trends. As of this quarter, we are fully staffed in operations, styling and visual roles while training new management in the field. Our momentum has continued into the spring season. Direct and Wholesale channels are off to a strong start. I'm happy to turn the call over to Ted. I'm sure you are all looking forward to hearing from him again.

Thank you, Meg. It is great to be back at Urban Outfitters and have the opportunity to be part of the exciting growth we envision for the Urban Outfitters brand. We believe an opportunity exists in our core businesses to improve top line performance along with margin improvement. Our sights are set on course correcting our shortfalls with improved content, inventory quantification and creative execution. Thus, our mission at the moment is to improve the performance of our core Women's business. In general, our Men's and Home businesses have performed well in North America and Europe, while our Women's businesses have underperformed. I view our shortfall in Women's as quite fixable. First, we need more balance across product attributes to reach a broader spectrum of our customers. Further, while certain businesses within Women's have performed well, other key categories have underperformed in relation to their historical contribution. And finally, opportunities in underdeveloped categories need to be further leveraged, while trending categories must be distorted. On a more positive note, our brand finished fourth quarter with clean inventories, thereby enabling us to chase in the trends that are currently working. Our direct-to-consumer growth continues to be strong in both North America and Europe. Our European business overall performed well despite the macroeconomic headwinds facing the region. This past year, we opened 8 stores in the European market and finished the fourth quarter and full year with positive comparable retail segment increases. I just returned from a quick trip to London to meet with our European team. I can assure you that they are focused on building Pan-European strength in design, merchandising and marketing to deliver on the broader market opportunity, be that through physical or digital retail environments. In closing, I want to reemphasize that the core talent of the Urban Outfitters brand is excited about the opportunity we feel is in front of our brand. We have a demonstrated track record of delivering on the promise of our brand, both qualitatively through customer experience, or quantitatively through growth and financial execution. I look forward to once again being part of our story and speaking with you about our progress and the realization of our goals. I will now turn the call back over to Dick for closing comments.

Thanks, Ted. And by the way, it's great to have you back in the business. To reiterate my earlier comments, our goal is to grow revenue at a pace significantly greater than our industry average and more commensurate with our historic average. We have all the key ingredients in place: Strong brands that resonate with the existing customer, the strategy to expand the reach of each brand, the capital to support the growth and the leadership to direct it. I am confident that given the continued hard work and dedication of our talented employee community, we will achieve our growth goals. I thank our employees and I also thank our shareholders for their continued support. At this time, I invite your questions. [Operator Instructions]

[Operator Instructions] And our first question comes from Adrienne Tennant with Janney Capital.

Actually, my question is for Erik. Can you talk about -- it sounds like the square footage growth rate is probably going to be in that high single, perhaps low double-digit range. We obviously don't know what the comp is going to be, you haven't given that guidance. But I guess my question is on the SG&A dollar growth, on the mid-teens starting off the year and then sort of accelerating into the back half of the year. And the thought that I -- the question I have is often times during transition, we see a little bit more control perhaps at the SG&A line items until we can see that momentum coming through on the top line. And I'm just wondering how much of that SG&A can you pull back if you weren't to see the progress that you wanted to on the top line?

Adrienne, I think I'll answer your questions from a numbers perspective. But I think I'll tee it to Dick first to talk a bit about our strategy, so I'll come back to you.

I think our concept here is one of investment. And we don't believe that it is going to be as easy to leverage the business as it was, let's say 10, 15 years ago when all we were doing is adding stores. As you know, there's been a fairly significant shift in consumer demand into the cliques area. And we feel that we have under-invested in that area. And so some of the investments that we intend to make this year, we're looking at as a catch-up to have proper investment in the cliques and we will be emphasizing that. We will also be investing more in international growth. So our old model, which was grow the top line by 20% or so and try to leverage the bottom, I think is going to be distorted for a time as we try to get that 20%-plus back on the top line, and we may need some additional investments on the bottom.

And, Adrienne, just to follow on that. If we're sitting here thinking about SG&A growth in the high-teens range, the areas of spend that we'll be looking towards in this year would be with our Direct-to-consumer fulfillment center on the West Coast. We have systems investments. We have talent investments relative to the expansion, our potential expansion of product lines being offered on the web. And we have additional marketing investments as well. So I think you opened your question with a comment about during transitions. I think some of the comments Dick made in his prepared remarks there would confirm that we don't have a change in strategy. We are looking to accelerate our investments in the Direct-to-consumer area. So we do have control over that spend if we should so choose. We did that this year during a period of decline in comp sales. So we clearly don't want to start the year with that mentality. But to give you a range in terms of how we think about it for if we're planning for high-teens SG&A growth, we have the ability to probably manage to mid-teens should the year -- not above but again, just as this year occurred, most of that difference would come from variable compensation and other direct store and web variable expenses.

[Operator Instructions] Our next question comes from Michelle Tan with Goldman Sachs.

Erik, I was wondering if you could just clarify one of your comments. And maybe Dick, you want to chime in as well. But you talked about seeing improvement in full price selling versus fourth quarter and also mentioned higher comparative markdowns in the first part of the year. How do we think about this? Do you mean that you're still expecting to see merchandise margin pressure through the first part of the year but less than fourth quarter with improvement in the back part of the year? Or are you able -- do you see improvement in the merchandise margin potentially coming with the inventory in a cleaner position in the first part of the year?

We're planning for merchandise margins in the first half of the year to improve sequentially from where we were in the fourth. So from the fourth to the first, from the first to the second quarter. However, when you look at it on a comparative basis, so Q1 last year versus Q2 this year, we're not planning for improvement at this time. I think we feel great about where we ended the fourth quarter with our inventory position. But the ultimate outcome of our gross margins through the first half here will depend upon the content and the productivity of our inventory. And clearly our comparisons are more difficult in the first part of the year, easing as we progress through the second half of the year. And to give you one more piece of information relative to our markdown history, I know we've spoken about this in the past as well. This past year, we're probably running between 200 to 250 basis points higher in our markdown rates compared to our historical averages. So on an annual basis, we'll be looking to get back more to our historical norms.

Our next question in queue comes from Kimberly Greenberger with Morgan Stanley.

I was hoping that you could talk about the level of full price selling versus markdown selling year-over-year. I know you commented in the press release that it certainly improved relative to fourth quarter. And if the brand presidents could perhaps address in their answer on the markdown selling versus the full price selling, what are the key categories they would like to see improve in terms of composition of selling here over the next 3, 6 months?

Okay, Kimberly. I think I'll just very briefly reiterate what Erik said. The improvement that we've seen in full price selling is over the fourth quarter. And I want to make that clear to everyone that on a year-over-year basis, it's still a difficult environment. And the improvement over the fourth quarter is one that we expect will continue as we get into the second quarter and then the third quarter, et cetera. So we are anticipating or planning for, as Erik said, sequential improvement. And I think that that's the key. Both Anthropologie and Urban are seeing this improvement. And I'll let both Ted and David speak to it specifically, although I'm not sure they're going to give you precise information on what merchandise is selling. Or I would encourage them not to do that. David or Ted?

Sure thing. Yes, that's -- the specifics on what we are and are not selling I'm going to have to once again avoid. The only thing I would say is that per my comments earlier, I'm really looking to get some steam back into our women's categories. And there are categories that are performing very well for us, but there are a couple of categories that are key to our overall performance. But right now, it's not so much an issue of content as it is quantity. We're running on very tight weeks of supply, and I feel like we have upside business opportunity with the receipt flow coming in those categories. So that's about as much as I really can share in that regard.

Kimberly, David here. For Anthropologie, our focus -- the Home business has been very solid for us as I said in my remarks, so most of our markdown issues have been in the apparel, intimates and accessories areas. And we're going to see that improve by rebalancing within our price point attributes, as well as within our various aesthetics, the women's jewelry merchandise, and we do expect to see that continue throughout the year. We are going to focus onto the high-quality revenue, focusing on full price and rebalancing that relationship with the customer instead of chasing markdown sales.

Our next question in queue comes from Stacy Pak with Barclays Capital.

Okay. So, Dick, I would love to hear your thoughts on how far away especially Anthro is, but also Urban from the core customer, whether you believe the organization has the right talent in place to generate a turn in the second half of the year or whether we could see a turn begin in Q2? Erik, I'd love to know if you would comment on quarter-to-date comp trends for Q1 or what we should think about there. And then Ted and David, I'd love to hear when you think the Women's businesses will be back on track. I understand you don't want to go through by category. But how far away are we on getting those Women's businesses back?

Okay, Stacy. I'll take a crack at your -- the first part of your question. I'm not sure how many parts of that one question we can answer. But I have complete confidence in the executive team that's assembled around the table here in Philadelphia. As I said in my prepared remarks that it is the single reason that I have confidence that this is going to -- to be optimistic about not only our long-term prospects, but our medium-term prospects as well. I cannot begin to tell you when the specific businesses will turn. I see momentum in that direction. And I assume you mean by turn that it gets back to sort of normalized comp increases that we have enjoyed over the last 15, 20 years. I do not know and I don't think anybody here can predict that and even if they could, I am quite sure that Mr. Bob who sits immediately to my right would put a muzzle on me so that I didn't say something. So I can't tell you. I feel confident that there is no -- I guess that I would say long-term damage done to any of the brands, I think they're all operating at a good level. That the customer really, really is excited about us returning to what we were because I think that she really likes us and wants us to succeed. I think it is not just a matter of product, but it's a matter of marketing as well. And getting back in that groove, I think, is a very important part. And I know that both Dave and Ted are working hard on that end. Do you -- either of you, David or Ted, have anything to add?

No, I think that, that just about does it. Stacy, if you have any other specifics, we'll be more than happy to talk to you offline.

Our next question comes from Bryan Tunick with JPMorgan. Brian J. Tunick - JP Morgan Chase & Co, Research Division: I was hoping maybe, Ted, you could talk about your view on either the landscape or positioning of the Urban business today, I guess, versus your last turn at the helm, sort of like what's going on out there and maybe give us your view of either price points or third-party versus private label penetration within the Urban Outfitters business.

Sure. I'll make a run at it. The top of mind thought would be a comment that Dick Hayne said to me about 10 years ago, and that has to do with when we're on our game, when we're doing what we're supposed to do within our brand, we don't necessarily see that we have head-on-head competition. It is a crowded space and it has gotten very price-sensitive in physical retail, as well as the notion of price sensitivity and comparison online. But when the businesses are executing in an experiential fashion as they are intended to execute, they can rise above that fray. I've seen it play out in that manner, and I'm confident that we can execute in that manner going forward. We have opportunities as it pertains -- as I mentioned in my comments, we have opportunities as it pertains to content. We have opportunities as it pertains to the story that we're telling at point-of-sale and store, as well as at through our direct vehicles in print and catalog and online. And we've had some good conversation here over the last few weeks with the group involved. And I feel we will be aligned to execute in that manner as we go forward to the balance of the year. So I'm feeling quite positive about it despite the competitive landscape being a bit more crowded.

The next question comes from Lorraine Hutchinson with Bank of America Merrill Lynch.

It's Paul Alexander for Lorraine. Dick, you mentioned faster international growth and establishing a retail presence in Asia. Could you give us a little more color on that? How many of the new stores this year are you thinking about opening abroad? And what's the latest planning for stores in Asia?

Well, we just had a group return from Asia in sort of a tour that is looking into not just retail stores, but the potential to launch Direct-to-consumer there and also the potential to enter that market, be it the wholesale market. So we're looking at Asia very closely. I believe that in some fashion, we should be in the Asian market in the next couple of years. I would -- I'm certainly putting some pressure on the folks here to make that shorter than longer. And I think that, that will indeed happen. And the other part of your question was what?

If the stores this year will be opened abroad.

Ted, in terms of Urban, how many stores are we planning?

8 to 10.

8 to 10, mostly in Germany now. We've had some pretty good.

Half of those in Germany this year.

We've had some good success in Germany and we feel good about that market. Anthropologie took a little bit of a hiatus while we realigned the product mix in Europe, but I would encourage and fully expect that Anthropologie would be opening more stores in Europe either by the end of this year or the beginning of next.

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

Yes. Your inventories look in very good shape. I'm wondering if that -- they were actually a little bit better than your original plan in terms of how you finished up. And then kind of a product question which is, well, we're seeing a lot of positive feedback on dresses at Anthro. You mentioned it's in dresses and very recently, we've seen good feedback at Urban as well. So I'm just wondering if you guys are happy with the improvements that you're seeing there at both of those divisions and specifically, what categories do you see the opportunity in going forward?

I'll try that. We're seeing good opportunity in dresses across the board, all of our brands. Of course, not Terrain. But other than that, dresses are doing -- performing quite well in all the brands. And we think there's lots of opportunity to continue that and even accelerate. We also see opportunity in bottoms and in certain of the top areas, but not across the board. We had a lot of problems over the fourth quarter in the area of sweaters, and that's an area that still presents some problems to us, I think, in all the brands. So as you might expect, sweaters, as we go into the spring and summer, become much less meaningful and that's fine with us. And we think, at least with a couple of the brands that the sweater assortment for the next high summer, fall looks pretty good. So we're encouraged in that area as well. But I think it goes more into the details, Ted talked about it. There's certain categories and certain areas that probably -- the best way to put it is they just -- they weren't particularly planned well. And if we get the assortment better, I think we'll see much better results.

The next question in queue is from Dana Telsey with Telsey Advisory Group.

As you talked a bit about international and the importance of it, how do you think about the economic model of international compared to the U.S. investment in return? And with that, the real estate in the U.S., how do you think about domestic growth and the current store basis potential? Does it change given the investment overseas?

Dana, I think that what we have seen in Europe is that the cost of doing business in bricks and mortar in 4-wall is somewhat higher in terms of occupancy cost than it is in the states. We also believe that there's more opportunity in terms of direct-to-consumer because of that higher level of occupancy. Asia, as I said, we are only beginning to explore. We know that the occupancy cost in terms of rent per square foot are high. But we're not confident yet about what we can expect in terms of sales per square foot to be able to figure exactly what we think the return will be. I think we are all of a single mind that our best efforts here in going overseas is to try to leverage all of the stores with direct-to-consumer penetration. So we are in the process of exaggerating our efforts in Europe in terms of direct-to-consumer. We may indeed launch our foray into Asia with direct-to-consumer, and then follow it up with bricks and mortar. So that's the way we're thinking about it. We expect that the returns, at least at first, may be less than we have here in the States. But we believe over the long term, particularly with the direct-to-consumer penetration, that we should be able to have a very respectable return on investment.

Our next question comes from Erika Maschmeyer with Robert W. Baird. Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division: Could you talk a little bit about how fast you can chase on the trends that are working right now at Urban and Anthro? And you also mentioned tight weeks of supply. Is your comp issue unlimited by current inventory levels? I guess any color you can give there would be great.

Okay. I'll just in general talk about how fast we can get back in, and that has to do specifically with what the item is we're getting into. If you're talking about mid-tops, it would typically take us anywhere from 4 weeks if we own fabric to 8 to 10 weeks if we didn't. If you're talking about something like sweaters where we have to purchase yarn and then knit and then go through that process, it could be as much as 12 to 16 weeks. And then shoes, it might be as much as 20 weeks. So it really is all over the board in terms of how quickly it takes us to get back in. I think that the categories that we're talking about in terms of bottoms and dresses, it's sort of right in the middle of those outlined time periods that I just discussed. So that will give you some flavor.

The next question in queue comes from Neely Tamminga with Piper Jaffray.

So my question is here for Ted. Ted, part 2. You're back in -- sometimes executives have the awesome opportunity to not be in the flow on the everyday. And I'm really more curious about how your time away has created obviously some reflection and how that may be flavoring how you come back into this role? I know it's somewhat of a philosophical question for an earnings call, but I would love to hear about that time of reflection and how that's flavoring your call.

Oh, my Lord. Maybe you would, but I don't know if the people I'm at the table with really want to hear about it. I would tell you this. I would have to confess to Sam and Calvin Hollinger, our head of the IT crew immediately to my left. I wasn't turned off during my time away from Urban in regard to my e-mail account. So I did check it, our case. I've watched a bit long without saying, I watched the business over 1.5 years that I was away. And then getting back together with the business I had seen things take place in the business that I obviously had a point of view on. And I feel pretty familiar with the business model that we are operating and the customer, more importantly, that we're serving in the market. And I think that we've made a lot of very nice headway in the time that I was away and some work that is very important to our overall brands' position in the market. At the same time, I feel that we did turn a couple of people last year in some of our -- a couple of our key merchandise roles. And in the interim period, with new people in place, I feel that getting up to speed on some areas that we're underperforming is the work of the work right now. The brand's in a great place. I've been out in the stores in North America as well as in Europe. I obviously watch it every single day online. And I feel good about what we're putting out there. I think we're really doing a little bit of course correcting right now, and that's essentially the mission. And we got a good -- I guess the good news is we're pretty much full staffed. We've got great group of people to do it.

The next question comes from Sam Panella with Raymond James. Samantha Panella - Raymond James & Associates, Inc., Research Division: Dick, can you talk about direct penetration? Where do you see this growing to? And then in terms of the investment that you discussed earlier, is most of this taking place overseas or also here in the U.S.? And is any one brand do you see more opportunity with than the others?

Okay. Let me take a shot at that. We believe that -- well this year, we hit slightly over 20% penetration; I think it was 22%. And in the fourth quarter, it was almost 24% penetration -- 23%?

Yes.

I would just correct it, 23% penetration. And we think that, that has grown every year consistently and the rate of increases had gone up slightly as well. So we expect it to continue to increase and we expect it to increase a bit faster as well. And I would say some time over the next 5 to 7 years, we all anticipate a majority of our sales coming from the Direct-to-consumer channel. Now that will probably be hastened, if we indeed launch the Direct-to-consumer in Asia and the growth of Direct-to-consumer in Europe, which is growing faster even than it is in the U.S. As to where we're making investments, we're making investments here in the States with a number of teams. And we're making investments through third parties around the world. So if you want to get into the specific areas of technology improvements, I would encourage you to call in and let Erik, Oona or either Freeman and/or Calvin go over that, review that with you. I think it may be a little boring for everyone.

Our next question in queue comes from David Weiner with Deutsche Bank.

So just, Dick, just a quick follow-up on your original comments about the long-term plan. I just want to make sure I understood. So I took kind of 2 things away from it. One, that it sounds like versus the original plan that you had of growing sales over the long term, revenues over long term by at least 20%, there's clearly going to be a mix shift more towards DTC versus brick and mortar. But on top of that, did you comment about the long-term operating margin potential? Is that still kind of at least 20%? Or 20%; is that still kind of the way you will operate from the longer-term perspective?

Okay. Like I said, I think that long term, I don't see any reason if DTC continues to advance in terms of penetration. I don't see any reason that we may not be able to get back to that kind of operating profitability. Over the short term, I think that there is some significant investment that we have to do in order to continue to be at the forefront. We look at the world and we say, "How are we doing versus other legacy brands?" And when you look at that, our penetration of DTC to brick and mortar is amongst the best. I think we ranked second or third against our legacy competitors. But we really take a look more at the pure play in Direct-to-consumer and see what they're doing and say, "That's really going to be the competition, and we shouldn't be so sanguine as to think that we're amongst the best." I would rank us more toward the middle of the pack when it comes to these direct-to-consumer -- the initiatives that we have already accomplished. When I look at the initiatives that we have yet to accomplish, I get really excited. I think that we have a lot of opportunity and that's what's going to grow this Direct-to-consumer business. And I think that's one of the great things that gets me up every morning.

The next question in queue is from Margaret Whitfield with Sterne Agee. Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division: I was wondering, Dick, with your comments about investments in Asia-Pacific, both direct and wholesale, whether or not the high levels of SG&A spending that we're going to see this year might continue into the new year. And also, I think Ted mentioned earlier that the marketplace has been more crowded since he’s returned and the consumer is more price sensitive. Is there any thoughts on the mix of price points that you have in both Anthropologie and Urban Outfitters, perhaps a need to add more opening price point items?

Yes, sure. Let me start with the last part of your question first. The customer, no question, has more opportunities to buy things cheaper. And at some point, she is doing that. But I would suggest to you that she is also buying stuff that is expensive. And you see the -- some of the luxury stores doing quite well right now and probably outperforming some of the price-sensitive stores. I don't think Wal-Mart is doing particularly well right now. And I look at it just like Ted said, that if we are on our game and give this customer the experience, and I'm going to say she even though I know we're going to have a lot of male shoppers, but if we give her the experience that she wants, we see the price component become less important. And we think that we can operate and operate very well in the price structures that we have set over time by giving her the kinds of stuff she wants and the experience that she wants. So I don't think that -- I do not feel that we are being unduly affected by some of the lower-priced stores that have popped up. And I never ever want to try to compete on that level.

And Margaret, your question about SG&A, what I would say there is we are investing this year, and we talked about a few of the initiatives that we're focused on. And clearly, perhaps we're investing ahead of the actual sales in some cases. So I think it's too early for us to comment on fiscal '14 and how we view SG&A in the long term. I think we're going to see how our investments and the impact of our actions play out this year, and then go from there as we move into fiscal '14 and beyond.

And Margaret, I have to say that if you take a look at Direct-to-consumer, in stores, we have capital expenditures in 4-wall and that's usually depreciated either over a 5-, 7- or 10-year period, and sometimes even a bit longer depending on the leases. We don't have that same opportunity necessarily in Direct-to-consumer. And a lot more of the expenditures in Direct-to-consumer is in technology, which is depreciated over a much shorter period of time and/or actually expensed because we're hiring more people to fuel that technological improvement. So while it may seem that the SG&A is skewed a bit, I think our operating profits over a longer period of time should be quite good.

The next question in queue is from Richard Jaffe with Stifel, Nicolaus. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: Just a thought about marketing initiatives. You guys talked about investing heavily and then reaching out to consumer, touching them in a variety of ways. Could you give us some examples of how this marketing initiative or how the dollars will be spent and how it will be different from what you've done in the past?

Okay, marketing initiatives. We have numerous ones. But just to give you some ideas, mobile technology. We think that we will be able to market via mobile much more robustly than we are doing today. Calvin, do you want to talk about any of them?

No, go ahead. I'll drop and discuss if a point is missing.

Okay. We think that through social media, Facebook, Pinterest, all those types of places that we have opportunities, we're doing something called social free shipping where we allow people to get free shipping if they pass along to their friends the fact that we are doing free shipping. And they're just -- I probably could go down a list of a dozen or so. I don't have more prepared right now in front of me, but things that we are doing to promote the social part of the shopping experience online.

And our final question for today's call comes from Paul Lejuez with Nomura Securities.

Dick, I'm just wondering if you're happy with how your concepts are positioned internationally and if there are -- how many stores in that international fleet do you wish you hadn't opened? And then just second, just wondering how you're going to balance the comps for gross margin trade-off? Are you comfortable planning for negative comps as you recapture gross margin?

Firstly, our stores overseas are performing quite well. And I have not seen all of them because I was -- I took a little rest as CEO, until I haven't - I didn't go over all the openings. But to my knowledge, they are all doing well. There is none that I can think of offhand that I wish we hadn't opened. There are a couple I can remember opening myself that I guess I wouldn't have minded if it had 1,000 square foot less than it does. So for occupancy cost purposes, I think that I tended to be a bit exuberant in the early years of Europe. But the stores themselves are doing quite well. And I think that we will continue to open stores. They may get slightly smaller overseas, and that's what we've done here actually domestically. So I don't think it's a different pattern. I think that one of the things that we have learned with the Anthropologie brand is that we do have to localize our assortments, and that may be a little bit different model than some of our competitors who want to try to drive their sales through marketing almost exclusively. But we think that the customers overseas, just like they are here, are pretty savvy and soon tire of that marketing effort and are responding more to the product they want, rather than a particular brand. So I think we're positioned well. I do think it takes some amount of capital and investment in terms of bricks and mortar overseas to start to be meaningful in a market and have the kind of brand recognition that we almost think as an assumption here in the states. So we will proceed slowly. We will proceed cautiously both in Europe, but particularly in Asia. But I have no doubt in my mind that we will indeed proceed and we will have presence in almost all the continents. And we will have it not only with bricks and mortar, but we will have it in direct-to-consumer.

Our final question will come from Janet Kloppenburg with JJK research.

Just a couple of questions. I'm a little confused on what you're saying about comps. I think you said that comps may have improved sequentially. I'm not sure if you said that. They may have improved sequentially from the fourth quarter and I think you had a 2% all channel comp and a minus 1% retail store comp. I would love it if you could comment on that, Erik, and also what the leverage point on comps might be. What level of comps you would need to leverage your SG&A forecast? And also for David and for Ted, I was hoping you could tell me whether your management teams were fully in place or whether you needed to make some key additions before you felt that you had a full house?

Janet, I'll take the first question. As you know, we don't talk about comps in the quarter. What I said was that full price selling has improved. The penetration of full price selling has improved over the fourth quarter. So we're selling more full price items as a percent than we did in the fourth quarter. And that is one of our goals for this year is to improve the penetration of full price selling, so we're happy about that. We don't talk about comps. We do believe that -- certainly the comps, when you look at both Retail and Direct -- well I shouldn't even go that far. I won't say anything about it because I really shouldn't on this call. But I'll hand it over to both David and Ted to talk about your other questions.

Janet, David here. With regards to the team at Anthropologie, I've been, I guess, very impressed with the quality of the team in the field. It's really remarkable, the experience we offer through our 100 stores, both in the U.S. and abroad. As it relates to the home office, we have some very challenging experienced senior people that are working very quickly to onboard some very passionate and talented people who are very new to the Anthropologie brand in marketing, merchandising and design. And so we'll continue to work through that for the balance of the year, and continue to work with the teams to really ramp up the learning curve.

Janet, it's Ted. In regard to the Urban senior team, we -- in senior roles, we are at full staff at the moment. We do have a couple of roles below the most senior group that we are looking to fill and we anticipate having those filled in the near future. That being said, I don't think that those roles at the moment being open are causing us unnecessarily any undue jeopardy. We have strength in place in the by team that report into the roles that are open. And I'm confident we can get the work done that we need to get done where we sit right now.

Okay. Well, thank you very much, and it's a pleasure talking to all of you again. I hope I get a chance to see you all in person in the near future.

Ladies and gentlemen, thank you for joining today's conference. This does conclude the program, and you may now disconnect.