Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Vera Bradley Year-End 2015 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up for questions. As a reminder, today's conference call is being recorded. I would now like to turn the call over to Stacy Knapper, Vera Bradley's Senior Vice President and General Counsel. Please go ahead. Anastacia S. Knapper - Secretary, Senior Vice President & General Counsel: Good morning and welcome, everyone. We would like to thank you for joining us for Vera Bradley's fourth quarter and fiscal year-end earnings conference call. Some of the statements made on today's call during our prepared remarks and in response (00:45-00:47) constitute forward-looking statements made pursuant to and within the meaning of the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 as amended. Such forward-looking statements are subject to both known and unknown risks and uncertainties that could cause actual results to differ materially from those that we expect. Please refer to today's press release and the company's Form 10-K for the fiscal year ended February 1, 2014 filed with the SEC for a discussion of known risks and uncertainties. Investors should not assume that the statements made during the call will remain operative at a later time. The company undertakes no obligation to update any information discussed on the call. I will now turn the call over to Vera Bradley's Chief Executive Officer, Rob Wallstrom. Robert T. Wallstrom - President, Chief Executive Officer & Director: Thank you, Stacy. Good morning, everyone, and thank you for joining us on today's call. With me today are Kevin Sierks, Chief Financial Officer;…

Thank you. We'll pause for just a moment to allow everyone an opportunity to signal. Our first question comes from Ed Yruma with KeyBanc.

Hi. Good morning. Thanks for taking my question. I guess, first on gross margin, obviously, you've spoken about reducing promos. But if you could walk us through your guidance and kind of the different puts and takes we should think about to get to your gross margin guide that would be really helpful. Thanks. Kevin J. Sierks - Chief Financial Officer & Executive Vice President: Sure, Ed, and good morning. This is Kevin. With regards to gross margin, we exited the year at 52.9%. There's four major things that'll impact gross margin next year. The first one is the MFO, that's our manufactured-for-outlet product. It's been a huge success for us this past year, and it'll be a higher percentage of our sales in our outlet stores this year. That's the single largest impact from a positive perspective on our margin this year. The second thing is we'll get volume efficiencies. So we managed inventory down significantly last year. You won't see that this year. In the back half of the year, you actually see inventory start to grow. We want to make sure we're well positioned for our factory stores as well as for the holiday. And so you'll start to see inventory grow in the back half of the year, and we'll get efficiencies there because we'll be able to spread our distribution cost among higher units coming in, which is a good thing. The third thing would be ATR. Unfortunately, we're eliminating our manufacturing here domestically. It was a high cost to us, and eliminating that helps us beginning in Q4, and because that's our largest quarter, you get a little more of an impact from a gross margin perspective. And then, lastly, it's due to promotions. So we've started to test that selectively here in the fourth quarter. We do believe there'll be an impact to margin from a positive perspective. Obviously, it's reflected in our sales guidance that might take down our sales a little bit. But those four things are the reasons for the improvement in margin this year.

Got it. And I know you've said that at least we're seeing higher velocity in some of the new product. But I was wondering if you could quantify, maybe, the performance of new product versus the old, I don't know if it's core versus fashion and kind of what percentage of the assortment is kind of the new product being touched (34:07) versus what is the legacy piece of the business? Thank you. Sue Fuller - Chief Merchandising Officer & Executive VP: Yeah, Ed, this is Sue. Thank you for the question. We are seeing about 30% of our assortment that we exited the year with. We are seeing that the productivity on that assortment is up anywhere from 2 times to 3 times our core product in terms of SKU productivity.

Great. Thanks, guys. Robert T. Wallstrom - President, Chief Executive Officer & Director: Thanks, Ed.

Our next question comes from Ike Boruchow with Sterne, Agee. Ike B. Boruchow - Sterne, Agee & Leach, Inc.: Hi. Good morning, everyone. Thanks for taking my question. Two. I guess, first for Kevin. Maybe I missed this. The comp guidance for Q1, can you breakdown what that implies for store comps and then e-com? And then, Rob, when we think about new customer, is there a way for us to think about maybe the penetration of new customers you saw this year and what you're trying to grow that penetration to for 2015? Is there any other numerical way we can kind of think about that? Kevin J. Sierks - Chief Financial Officer & Executive Vice President: Yes. First, I'll start with comps, Ike. We expect Q1 to be down in the mid-teens and that's the consolidated comps so that includes the web. We do expect the web to perform better than the stores in Q1. We're not separating that guidance but we expect the web to perform better. But as we reduce promotions, especially on the web, we expect that to be part of the impact on why the web is going to be down in Q1. Robert T. Wallstrom - President, Chief Executive Officer & Director: And then, regarding customers, few comments. First of all, one thing has been encouraging through last year is that a retained customer has been holding up both from a customer count standpoint as well as a sales standpoint. The issue that we've been facing is really attracting the new customer. And we believe there's been a couple of reasons for that. One, we have underinvested for the last few years in marketing. And two, our Indirect channel used to be a primary marketing arm for us. And as we reduced the Indirect channel, the marketing that they were doing for us also obviously became less. So, we needed to spend more money in marketing and really improve our reach, which that is really what Angel has been working since he joined the team. And as we spoke about, we're going to go ahead and invest close to $10 million more in advertising alone to attract the new customer in and improving our reach from 8 million to 85 million next year. So, we do believe that that's really the critical nature. The next piece to getting the comps driven is just get the new customer back in our store. And we also believe that the distribution growth with the department stores is also critical to get a new customer because they have a different customer that's going through their stores and we believe this relationship, for example, with Macy's expanding up to 250 stores really gives us an opportunity to bring a new customer into the brand. Ike B. Boruchow - Sterne, Agee & Leach, Inc.: Got it. Thank you.

Our next question comes from Randy Konik with Jefferies.

Hey. Great. Thanks a lot. Can we just, I guess, kind of elaborate on the distribution strategy, if you will? I think in previous calls we've had more of a discussion that we have committed to our openings for 2015. And then on the call this morning, I believe we talked about more of a further commitment longer term to continue to open stores yet the comps are getting worse. And it sounds in contrast that the department store business actually – or Indirect business sounds better and you're getting traction on, I guess, some of these factory outlet stores. So, kind of – I guess what I'm curious in how do – what's the kind of the pull point where you're like you're going to say to yourself, we're not going to open more stores because these stores are hurting us rather than helping us, and to think about potentially more wholesale or Indirect channel distribution? And how does the factory play into how you're thinking about taking the brand more, I guess, a little more up market versus down market? Thanks. Kevin J. Sierks - Chief Financial Officer & Executive Vice President: Thanks, Randy. A couple of things. So, first of all, from a store standpoint, our Direct store standpoint, as we talked about that we did have the stores committed for this year, as we look into the next fiscal year, as we're beginning to look at the real estate, we definitely are taking a more conservative approach next year until we see a turnaround. So we do expect a slowdown in new store growth next year. But in terms of long-term guidance, we still believe there is really an opportunity to grow our stores. If we look at our stores, the first thing we started to…

Great. And then, just if I could follow up real quick. Are you seeing different types of SKU velocity across the different channels, meaning are there certain products selling on the wholesale side of things versus – that aren't selling in the retail side of things or vice versa? I'm just trying to get curious – like just very curious about what is the difference in the patterns of these different channels of distribution and why there's – it seems like there's such a disconnect there? Sue Fuller - Chief Merchandising Officer & Executive VP: Yes. So, as you know, we really started our channel segmentation. It's still in the very preliminary stages. One of the consistent piece that we are seeing across the channels is that solids are starting to take off across all channels of distribution. There are nuances within the fabrications themselves. A good example of that is we are seeing the velocity, for example, of leather in our Direct business, trending a bit faster than, for example, what we had put out in some of our very select specialty accounts. But the good news is that a fabrication such as microfiber, which was a major investment, a major strategy for us this year, were actually seeing check in all channels. And then in terms of faux-leather, the good news there is that we saw that actually check in our own stores, but also it really significantly, from a velocity perspective, we did see a pickup in our specialty businesses. We also think that as we move forward this is why it's a major strategy for us to continue to really – seek to understand what those consumers are valuing in each channel of business and that's why we are moving forward with the product segmentation strategy really starting this year, in fiscal year 2016. Robert T. Wallstrom - President, Chief Executive Officer & Director: One more thing, Randy, I did not fully answer your question on factory. And I did want to address that as we talk about becoming more of a full-price business. The number one area that we're focused on is reducing what we call the hyper-promotional activity online. That we do believe that running a off-price business online and marketing that aggressively can damage the full price validity of the brand. So, the number one area we look to take it down to off-price activity is going to be online as we go through this year and next year. We believe that that is a critical, critical step that we need to take.

That's helpful. Thank you.

We'll go next to Oliver Chen with Cowen & Company. Courtney Willson - Cowen & Co. LLC: Hi. This is Courtney in for Oliver today. Thanks for taking our question. Could you just comment on your free cash flow profile and working capital profile and also maybe what types of leverage do you have that you can pull to kind of protect cash flows and margins going forward? Thanks very much. Kevin J. Sierks - Chief Financial Officer & Executive Vice President: Sure. If you look at operating cash flow, it's fairly high this year at over $100 million, and that was primarily – that's operating cash flow, so $102.8 million. That was primarily due to managing inventory as well as we did. If you look at the prior year, we're about $88 million. There was a couple reasons for that, managing accounts payable and some other things impacted that. Historically, from an operating cash flow, they're around $50 million, so we trended up the last two years which has been nice to see. If you look at cash flow over the last two years, this year was about $37 million, so that puts about $66 million of free cash flow this year. Last year, relatively consistent. We had about $23 million in CapEx, or $65 million from a free cash flow perspective. If you look at fiscal 2016, we do plan on growing inventory some and you obviously saw our earnings guidance, so you would expect some of those numbers to start to come down. However, we don't give guidance on our cash flow number for the current year, but you could probably do the math based on their earnings and based on the CapEx and based on where we think inventories are going to trend up. There's four things that we can manage. We're definitely looking at a lot of things to be able to manage from a sourcing perspective in terms of working with suppliers on lowering cost. We're also negotiating with vendors, and we're looking at a whole host of cost containment measures that we can use. That being said, a lot of what we'll find in terms of savings, we believe, we'll reinvest in marketing in the web to be able to attract new customers. Courtney Willson - Cowen & Co. LLC: Okay. Thanks very much. Good luck. Kevin J. Sierks - Chief Financial Officer & Executive Vice President: Thanks, Courtney.

We'll go next to Eric Beder with Wunderlich.

Good morning. Robert T. Wallstrom - President, Chief Executive Officer & Director: Good morning.

Can you talk about – when you look at your department store channel, could you talk about where you want that to be in the longer term in terms of maybe the amount of different department stores and kind of the amount of doors you wanted to be in terms of importance? And how are you going to judge whether this new strategy in terms of marketing such as going to be a success in terms of driving traffic? Is it traffic? Is it conversion? How should we start to think about when the turn is going to start to come? Robert T. Wallstrom - President, Chief Executive Officer & Director: So, from a department store channel, a couple of things I would talk about there is that, one, we have not put a specific store count on the department store channel. But what we have spoken about is that we do believe there's an opportunity to be in multiple department stores. We are really focusing on kind of that near, that mid-tier to Macy's tier in terms of the primary targets and above. We're not looking at going into the Penney's, Kohl's level, but we're staying at the Macy's level on up. And we do believe there's opportunity to continue to expand and two ways to expand. One is to expand within the doors we're currently in. So if you add the Dillard stores and the Macy's stores together, particularly when we target that250 doors we'll be in in Macy's, we'll be over 500 doors in the department store channel. We want to increase our volume within those doors. And we believe by enhancing the digital presentation and the initiatives we have in place and building our marketing initiatives with those key partners, that we will expand our business inside those existing doors as well as continue to look for other opportunities. In terms of the second question, in terms of marketing, the key for us in marketing, the key measurement that we're looking at is driving new customers through our doors. That's the number one thing that we're looking at. When you build an impression campaign and you have a marketing campaign, it definitely builds out over the quarters. And it's important to keep those impressions building upon each other. But we expect to see traffic being driven into our stores, particularly as we get towards the middle to back half of this year.

Great. Thank you.

We'll go next to Dana Telsey with Telsey Advisory Group.

Good morning, everyone. As you think about distribution, the margin equation from the department stores, how do you see that developing and adding to the total? And lastly, with the domestic facility closing, how does that adjust your ability to chase trends, be flexible, how do you see the whole sourcing chain? Thank you. Kevin J. Sierks - Chief Financial Officer & Executive Vice President: Good question. From a margin perspective, we've been fortunate that our department store margin has been pretty close to the Indirect segment margin, so we haven't seen a degradation in margin from department stores. And as we look at that segment and look out the years, we don't expect a ton of growth from that segment, so we don't expect the margin to erode due to department stores. We actually expect it to be relatively flat within that segment. Sue Fuller - Chief Merchandising Officer & Executive VP: And then from – this is Sue – from the ability to chase trends, we had been proactively working on this over the last 12 months with our vendor community. And we have set up chase lines in order to make sure that we are able to capitalize on those items that are working for Vera Bradley and to make sure that we have separate lines set up so that we can make sure that the items that are working are flowing through at a faster rate.

Thank you. Sue Fuller - Chief Merchandising Officer & Executive VP: Yes.

Our next question comes from Janet Kloppenburg with JJK Research.

Good morning, everyone. Rob, it sounds like you're having some success in the department store channel. And I'm wondering if that is coming largely from the core more traditional product line or if it's coming from a combination of that and the new silhouettes. And I'm wondering what learnings you can derive from that channel to perhaps expand into your own stores to drive higher productivity there. Thanks so much. Robert T. Wallstrom - President, Chief Executive Officer & Director: Thank you, Janet. A couple things from the department store. What we are seeing is that the newness, particularly like our solid microfiber business, in the department stores is performing very well. If anything, some of the performance in our department store is, well, say, it's following ours – we're actually further ahead in penetrating our new categories into our assortment in our Direct stores. But the department stores are seeing the same type of performance. So we feel really good about how the department stores are growing. We do believe that the opportunity for the department stores now is for us to even focus on the merchandise presentation, particularly in Macy's, and we're really making stronger branded presentations within the department store space.

So is it just the fact that the traffic there is so much more pronounced than in your own stores that's fueling better results there than in the directly operated stores? Robert T. Wallstrom - President, Chief Executive Officer & Director: You're exactly right. So in the department store world, their traffic is holding up much better than what we're seeing in our own Direct stores. And so that's part of what gives us the confidence too is we market and get customers into our store and get more feet going through our store that we believe we will get the business turned around sand back on track because we are seeing with the department store partners that since they have traffic that they're having a better overall performance.

Okay. And it sounds like the Indirect channel is stabilizing. Is that how you're looking at it with the gift channel? How should I be thinking about that? Robert T. Wallstrom - President, Chief Executive Officer & Director: I would say we're beginning to see encouraging signs based upon our early order period, so there is a lot of excitement from that channel in terms of the new product direction. What they're seeing in the product, what they're hearing from their consumer, they're excited about the future and we're seeing that in the early order period. At the same time, what we've heard from that channel is that they've been telling us that it's taking them some time just to get the customer back in and excited. So we have not seen a stabilization yet in re-orders.

Okay. Robert T. Wallstrom - President, Chief Executive Officer & Director: So we still are seeing some challenges in that business, but the future in terms of the forward-looking is much stronger and, as Sue commented earlier, a lot of excitement from them. And they continue to tell us they're very excited about the newness. We've asked them, do they want us to focus more on core and they've really said, no continue to focus on what's new. We're very excited about where you're going. And we believe that's going to be a much brighter future. It's just taken us a little bit of time to get customers used to new look.

Okay. Great. And lots of luck. Robert T. Wallstrom - President, Chief Executive Officer & Director: Thank you.

Our next question comes from Evren Kopelman with Wells Fargo.

Great. Good morning. My question is about... Robert T. Wallstrom - President, Chief Executive Officer & Director: Good morning.

...e-commerce, can you discuss the dynamics in that business a little bit more? It sounds like you're seeing maybe a little pressure from the lower promotions or moving the sale items off of the initial site people get to. But what's the trend maybe excluding that, and when would you lap that? And also, are margins improving with the new strategy? Thanks. Robert T. Wallstrom - President, Chief Executive Officer & Director: So a couple of comments, Evren, regarding e-commerce. You're right that as we've been pulling down the promotional activities at the very end of last year. Really as we got into January, we have seen a negative impact to our e-commerce business. Part of what we've seen also, though, in e-commerce is less clearance inventory available for sale. As we cleaned up our inventory levels and pulled our inventory levels down, we've had less liquidation and hyper-promotional inventory available to sell on our website, and that's what's really been hurting us. Traffic overall on our website has been holding up much better, but because there's been less clearance inventory, it definitely impacted the sales on e-commerce. So we're definitely having to rebalance our e-commerce platform to become much more focused on regular priced product as we go forward and really enhancing that customer experience, which is part of the reason that we also have this transformation underway on e-commerce in working through new search, site design, and platform over the next 18 months, because we have to really move that business from an off-price business, which it historically has been to a full-price business. And that is definitely one of the major undertakings that is underway. Kevin J. Sierks - Chief Financial Officer & Executive Vice President: And then Evren, with regards to – you asked about gross margin, we do expect a pickup in gross margin due to that. So less promotions, better gross margin. Also if you think about the mix on the web, just to remind you, typically we're about 65% to 70% of what we sell on the web is retired products – you can think about that as being a factory store – and then the remainder is full-price, so it's still a larger store from a factory perspective the full-price.

Would that percentage you just gave, I think you said 65% to 70%, where would you like to see that and kind of maybe the timing of that in terms of the mix of full-price versus, I guess, not? Kevin J. Sierks - Chief Financial Officer & Executive Vice President: I think it's a good question. We do expect it to gain a little more. Our focus is to grow the full-price part of the business on the web faster over time anyway than the retired product, but we don't have any goal set out there to express to you externally anyway over the next couple of years. But we do expect to grow the full-price business faster than the retired business.

Okay. Thank you.

It appears there are no further questions at this time. I'd like to turn the conference back to management for any additional or closing remarks. Robert T. Wallstrom - President, Chief Executive Officer & Director: Great. Thank you. I just want to thank everybody for your interest and time and patience. We are very excited about the future. We're excited about the progress we're making against the long-term plan. Thank you, again, for joining us.

This concludes today's conference. Thank you for your participation.