Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Vera Bradley Fourth Quarter Fiscal 2016 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 given at that time for you to queue for questions. As a reminder, today's conference is being recorded. I would now like to turn the conference 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: Thank you. Good morning and welcome, everyone. We would like to thank you for joining us today for Vera Bradley's fourth quarter and year-end earnings call. Some of the statements made on today's call during our prepared remarks and in response to your questions may 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 January 31, 2015 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 for you joining us on today's call. With me today are Kevin…

Thank you. And we'll go to Ed Yruma with KeyBanc Capital Markets.

Hi. Good morning. Thanks for taking my question. I guess, first, on the promotional front, you've been successful at ratcheting back promos. And I know you still have a little bit more headway to make through the beginning of the year. But, I guess, in terms of the intensity of the promotional offer, given some of the product success you are seeing, do you think you could take it down perhaps even further than you have been going forward? Robert T. Wallstrom - President, Chief Executive Officer & Director: Ed, thank you for the question. In terms of the promotional activity, we continue to focus on playing out the hyper-promotional activity, which we've been very effective at doing last year. And you're right, we still have some more to do at the beginning of the year. And so we feel really good in terms of how we're beginning to balance it out and we will continue to look for opportunities to return to a strong full-price presence. And you're absolutely right that the new product gives us an opportunity to really focus on that in a unique way and bring customers in.

I think you guys noted in previous quarters that obviously the strength of the new product was kind of being overshadowed by the continued weakness in cotton. I guess, have you hit a kind of equilibrium where the power of the new product can kind of drive growth? Or are you still seeing kind of continued erosion in the cotton? And, I guess, when could we hit that tipping point? Thanks. Robert T. Wallstrom - President, Chief Executive Officer & Director: In terms of cotton, we have seen that the rate of decline in cotton has begun to stabilize, which is good news. So we still are seeing cotton trending down, so there's still a negative trend in cotton, but much stronger than we've seen. So we think we're getting closer to that tipping point. And as we've talked about comps getting positive sometime in the back half of the year, we really feel that the stabilization of cotton, along with our new product, the combination is what will get us there.

Great. Thanks so much. Robert T. Wallstrom - President, Chief Executive Officer & Director: Thank you.

Next, we'll go to Mark Altschwager with Robert W. Baird. Mark R. Altschwager - Robert W. Baird & Co., Inc. (Broker): Hey, good morning. Thanks for taking the question. Congratulations on the continued progress. I wanted to focus on the Direct business for a moment. You have shown nice sequential comp improvement. Could you just dig in a little bit more to the comp trend you are seeing in the full-price stores versus the outlet? And I know MFO has been a big conversion driver, so trying to get a better sense of whether the new fabrications in the full-line store are having a similar effect and how that kind of gap is closing. And then, just still on the Direct, fiscal 2016 was a big reset year on the e-commerce side. Do you expect trends to return to positive territory in e-commerce in 2017? And how are you thinking about the timing? Robert T. Wallstrom - President, Chief Executive Officer & Director: Thank you, Mark. A couple things. One, in terms of Direct, we are definitely seeing sequential improvement in our comps across our Direct business, which is very encouraging to see. We are seeing that our comps are stronger in our factory business than our full-line business, but we are seeing that comps can improve in full-line and we do believe that the new product is definitely attracting in new customers. Our research shows that. But there is more work to do in our full-line stores, and that's really where our focus is. Regarding e-commerce, we still have hyper-promotional activity that will be taken out of the e-commerce business in the first quarter and going into just the beginning of the second quarter. So we feel that the biggest headwinds are at the beginning of the year. And…

Next, we'll go to Oliver Chen with Cowen and Company.

Hi. Great job on the improving fundamentals here. Regarding the opportunity for positive comps in the second half, is the real opportunity here in conversion? And how do you think average unit retail may trend? And then as we dissect that glide path to positive comps, which products would you isolate as kind of being the needle-movers for the newness factor in terms of what may drive these comps? And also, if you had any context about the channels in which you see the most opportunities, whether it be full-price online or outlet, in terms of the delta and the improvement in the comp store sales? Robert T. Wallstrom - President, Chief Executive Officer & Director: Thank you, Oliver. In terms of really what will change our comp sales, and we definitely see the improvement in the e-commerce business and the full-line business, as we anniversary, taking out the hyper-promotional activity. We believe those are the two channels that will see the biggest impact due to the sales trend. So we believe that that will be a core driver. In terms of AUR and conversion, in terms of AUR, we definitely expect to see continued increases there. One thing that is playing a little bit against us, though, is what you see going in the market right now is the consumer is buying smaller pieces in terms of cross-bodies and those type of items that are slightly less. But on the flip side, we do have a lot of newness in terms of our Streeterville and our Sycamore, which is driving a higher AUR. At the same time, we are, though, also doing our brand extensions like Fragrance and some other things, which are balancing that out. But we see a little bit on what we call the ADF (38:15) to total sale, and continuing to see conversion improvement, particularly in our e-commerce site. We've seen significant conversion improvement on our e-commerce site with the new search, and we expect to see more improvement as we go to the new platform during fall. In terms of specific product category, Sue, you want to talk a little bit about some of the key products that you believe will be the drivers? Sue Fuller - Chief Merchandising Officer & Executive VP: Yes. So, from a fabrication perspective, which is what you had first asked, we're really seeing three as the main drivers: the microfiber, which was spoken about before; Lighten Up fabrication; and Sycamore continue to perform for us, and we believe that that will continue into this next year. And then from a product classification perspective, we continue to believe in our bag classification, obviously, the smaller pieces that Rob mentioned with cross-bodies, as well as travel.

Okay. And on micro, Lighten Up and Sycamore, what percentage of total approximately is that? Sue Fuller - Chief Merchandising Officer & Executive VP: Right now, it – approximately other fabrications outside of cotton roughly represents about a quarter of our business.

Okay, thanks. That's really helpful. And Rob, you mentioned – and I know you've been working with Amazon. And in that relationship, what are you most cognizant about regarding trying to ensure that you have as little cannibalization as possible, and you also explore that relationship in a brand-appropriate way? So what are you doing regarding either product or how you think about the channel in terms of evolving that relationship to help really broaden traffic? Robert T. Wallstrom - President, Chief Executive Officer & Director: Great question, Oliver. When we opened up the Amazon relationship, our number one driver to do that was to really clean up our presence in Amazon. Amazon, obviously, has a lot of consumers going to their website all the time. We had a lot of discounting of Vera Bradley products on Amazon. So we've really been trying to work with Amazon to really put forward a strong full-price presence. And that's really kind of the key. We're not – we want to make sure we grow it right and we grow it in the right brand-appropriate way. Amazon is not a huge business for us, and we're not expecting it to become a huge business. But we do believe it's important to control our presence in that distribution point, and that's really what we're focusing on.

Okay. And our last question, Kevin, on the gross margin front, you mentioned that it was slightly below what you – it's a little bit below your previous guidance range. What was the rationale there? And then as we look at the year ahead, at the year-over-year in terms of the merchandise margin, will the merchandise margin and promotionals like decrease and merch margins go up steadily on a quarterly basis? I'm just curious about the glide path and how we should model that and think about that, as we look at markdowns and check the stores. Kevin J. Sierks - Chief Financial Officer & Executive Vice President: Yeah. If you look at Q4, we expected to reduce our promotional days by between kind of 5% and 10%. We ended up being on the low end of that range, given the promotional environment out there. And we found our customer really finding the retirement product on the web more so than we thought. So that's really the small miss from a gross margin perspective. If you look at gross margin, as you look at next year, really the first half of the year, we'll annualize the MFO, so we get to our kind of annualized MFO penetration right after Q2. But even during Q2 is a pretty high percentage. We exited that quarter around 60%. So we'll see improvements as we go throughout the year there. Also, as it relates to closing down our manufacturing facility, we'll annualize that in Q3 and Q4, primarily Q4. So you'll see an improvement in gross margin as you go throughout the year.

Okay. Best regards. Thank you. Kevin J. Sierks - Chief Financial Officer & Executive Vice President: Thanks, Oliver.

And next, we'll go to Eric Beder with Wunderlich.

Good morning. Congratulations on a solid end to the year. What should we be thinking about as the longer-term penetration for cotton? Where does that go? And the same question for home. How are you looking upon home? Is that going to be mostly in the stores? How do you look upon the home category? Because, obviously, there are big pieces of home that are bulky and wouldn't work in your store size. Robert T. Wallstrom - President, Chief Executive Officer & Director: Yes. Thank you, Eric. Good morning. So, a couple things. One, in terms of cotton right now, we anticipate that cotton will probably stabilize around that 50% of the business. Obviously, we'll react to the consumer in how she adjusts in the coming years, but we think about 50% is the right number. And in terms of our home business, I'm going to let Sue talk a little bit in terms of our vision for home and the strength of our current business and why we see this as the opportunity. Sue Fuller - Chief Merchandising Officer & Executive VP: Right. So, as you know, Eric, we already have a presence in home with our beach towels and our blanket classification as well as drinkables. We do continue to see expanding into soft home and eventually hard home and accessories. We will take partners in order to do this both from a distribution perspective as well as from a product perspective. So those would be the major areas that we would go after initially in home.

And what has been the response to the new perfume and some of the other – the new jewelry products? What are you seeing in terms of the consumer response to that product? Sue Fuller - Chief Merchandising Officer & Executive VP: We've been pleased with our launches in Fragrance and Jewelry and Collegiate, both from the perspective of the productivity that we're seeing from a SKU perspective, but also from the response from a new consumer acquisition perspective, and it does give us confidence as we continue to expand into other brand extensions going forward.

Okay. And final question. In terms of – I know department stores like exclusives, I know you've done some exclusives for your distribution channels, how are you fitting that into kind of your expansion plans and your pieces here going forward? Sue Fuller - Chief Merchandising Officer & Executive VP: Yeah. We do believe that continuing to tie channel segmentation to product segmentation is really important. Really what we're aiming to do is, obviously, meet the consumer needs from our own core line first and then also supplement in with those specific exclusives that are meaningful to her. We don't see this representing a large percentage of our business, but where we do think that there is opportunity we will continue to supplement those opportunities in.

Great. And good luck on 2016. Sue Fuller - Chief Merchandising Officer & Executive VP: Thank you. Robert T. Wallstrom - President, Chief Executive Officer & Director: Thank you, Eric.

Next, we'll go to Bill Dezellem with Tieton Capital Management.

Thank you. It's Tieton Capital. And a couple of questions. The first is how does the completing of the brand transformation look like at the end of the year versus what we see today? Can you give us a window into how that might feel different to us? Robert T. Wallstrom - President, Chief Executive Officer & Director: Yes, I'll give you a couple of things. First of all, we really are going out with the brand transformation and the new brand position, from a consumer standpoint, basically September is really kind of the target. How you'll see that is you will see our new platform launch in our global flagship, so that will look very different, the creative, the look and feel, the new logo, the storytelling and how we really put content out there and really connect with our consumer emotionally, as well as just from a commerce standpoint. So, that obviously will be critical in the rebranding since we know that the vast majority of consumers interact with Vera Bradley on our website. Second of all, it will also impact our consumer campaign. So as we go into all the new photography and the new look and feel of how we're communicating to our consumer, that will happen in September and we'll see that carry forward. You'll begin to see the new logo hit our halo product or our top collections this fall, and we'll continue that transition through our summer deliveries of next year. It'll take us about that long to get all the way through the supply chain but then all of the products will be relogo'ed. We are going to go out with our new stores this year with a new logo and new design, which will be built upon the one that we've been rolling out for the last year. But the logo will be different, and we will be rolling that logo out into some of our existing stores this year. We're finalizing those plans as we speak right now, and then we will continue that process as we go through next year.

So the new imaging that you referenced with your campaign that you're doing the photo shoots for here in the next week or two, that is different from what you're going to be bringing out in September, or is it just an incremental step in that direction? Robert T. Wallstrom - President, Chief Executive Officer & Director: No, the photo shoot that we will be doing now is what the fall campaign is. So that's what we're speaking to.

Understood. And then lastly, I believe there was a reference to an Indirect product launch that was going to be benefiting the first quarter. I was hoping you'd discuss that please. Kevin J. Sierks - Chief Financial Officer & Executive Vice President: Yeah, sure. So last year we had a small launch that hit the middle of May, and we actually moved that up to the end of April. So, if you think about when we will be shipping that product, it will be in April. So that's why you can see in the guidance, Bill, that the Indirect segment looks like it's performing a little bit better in Q1 than the remainder of the year.

Understood. Thank you, both. Kevin J. Sierks - Chief Financial Officer & Executive Vice President: Thanks, Bill. Robert T. Wallstrom - President, Chief Executive Officer & Director: Thanks, Bill.

And we'll go back to Oliver Chen with Cowen & Company.

Hey. Thanks. Rob, on one of your earlier comments, just regarding the outlet channel, it sounds like you guys were pretty encouraged there. Would you attribute that to MFO, and what's driving that? Because I know it does remain a somewhat competitive channel overall? Robert T. Wallstrom - President, Chief Executive Officer & Director: Yes. We definitely believe that the MFO assortments have really helped our factory channel and for a couple of reasons. One, the assortments are much stronger since we've been manufacturing to it, so they're more balanced and that's definitely working as well as putting in the exclusive MFO patterns are working as well as just really focusing on key items and key classifications. So, the discipline of controlling our assortments and our outlets is definitely paying off for us. Kevin J. Sierks - Chief Financial Officer & Executive Vice President: Yeah. And, Oliver, the second thing there is the team execution has been very, very good this year compared to the prior year as well. We changed over some of the leadership team on that side of the business, and they've executed extremely well.

Okay. And the logo change sounds new and interesting. Could you just brief us on what's underpinning the strategy in terms of how you did the research around why now? And will it be – do you think this will be a material difference in terms of how the customer analyzes your brand? Robert T. Wallstrom - President, Chief Executive Officer & Director: That's a great question. First of all, when we went through this brand work we made sure that we worked with a great partner in doing it. We did a lot of analytical research, a lot of quantitative research to really look at the consumer segment. As we talk about this daymaker, what we're able to identify is a potential target of 22 million women in the U.S. And as we talked to them, we found a lot of unique things. First of all, that 60% of them were open to Vera Bradley. So we definitely knew that there was a propensity to experience our brand. But we also heard from our consumer that we were a brand that she loved, or knew people who loved but she was not purchasing today that she knew us for a cotton-quilted business but she did not know much more about the brand. So, we felt it was important to tell our story in a fresh new way to attract new customers to the brand. And our research really led us down this path that we are rolling out. We felt that the logo was really important for a couple of reasons. Part of the reason why the logo became so important is that we had used our script logo for so long, and as we went to the block logo that you'd seen a lot of our new product, it was too generic. And it was not a really strong brand identifier and we really wanted to unify around one brand. And so, as we built this new logo, we wanted to make sure that the logo was distinct, it felt very handcrafted. And when you look at the logo, the way the logo is designed is very special and very unique. And we feel that it will really position us different in the market.

Okay. And as we look at the marketing programs the daymaker idea sounds really big and interesting. How would you analyze how your marketing was then versus where it's moving now in terms of – you've touched upon this in different aspects during the call, but where would you focused on as a major delta between the new program ahead versus programs you've had before? Robert T. Wallstrom - President, Chief Executive Officer & Director: I think a couple of things. I think, one, Theresa and the team have been working very hard on the media and just where are we placing our ads and how to do it much more efficiently, reach the right consumer. And what we're seeing definitely as we look at fourth quarter, we're beginning to feel good about our vehicles. And so, a couple of things we're seeing. In the fourth quarter last year; we saw prints impressions go up by 50%, we've seen PR impressions double in fourth quarter; we've seen increases on Instagram; we've seen increases on our Facebook reach. So, we're definitely beginning to feel that we're beginning to lay the pipe, shall you say, in terms of how we communicate out to the consumer. Now, we believe the next piece is really the content and making sure that the content really is focused on her and her lifestyle and connecting with her and really surrounding ourselves. So, we're becoming much more content-oriented, much more story-oriented, and really trying to engage her deeper on an emotional level, which we think is critical to building the brand long term and attracting new customers in.

Okay. And just lastly, I thought it was important to ask you about the new modern store design. As you do engage in the evolution of the portfolio of product, what are the highlights for the best way to present product such that she understands from an editorial perspective and it kind of matches, changes you're making to the assortment and to the brand? Robert T. Wallstrom - President, Chief Executive Officer & Director: That's a great question. I think we're still working through different visual presentations. One of the challenges we definitely have in our stores, we still have a very broad assortment. We have a history of choice. Our customer likes choice. And so finding the balance between a curated assortment and an assortment with choices is what we're still kind of working through. What we have definitely found is we're putting new product in our windows and really kind of curating the windows and making them highly impactful. We definitely are seeing new consumers come in. So that gives us a lot of confidence as we go forward that a cleaner, more focused store design is really important. I think what you will see from us, as we move forward, is just bringing in a little bit more excitement into the environment and adding a little bit more femininity into the environment as we move forward. So, it's just, so you say, putting that female touch on the store design is kind of the next element, but it should be – it'll be just an evolution. It won't be a revolution.

Great. Thanks for answering my questions. Thank you. Robert T. Wallstrom - President, Chief Executive Officer & Director: Thank you, Oliver.

Next, we'll go to Corinna Freedman with BB&T. Corinna Lynn Freedman - BB&T Capital Markets: Hi. Thanks for taking my question. Wondering if you could talk about the differences between the core demographic and the new demographic that you're targeting with the new product and marketing? Thank you. Robert T. Wallstrom - President, Chief Executive Officer & Director: Yeah, absolutely. A couple of things. One, in terms of our current demographic, we've always had a very wide customer reach. As we've said in the past, from 8-year-old to 80-year-old, a very, very broad, multi-generational customer. But what we've found is that as that consumer moves out of college to kind of, we'll say, the 24-year-old to the 40-year-old, we saw that we weren't retaining her as well. We were not penetrated as highly in that part of the demographics. This daymaker is definitely focused on attracting that customer, really building out that 28-year-old kind of age band. And what's been really encouraging over this last half of the year is we are seeing more of our growth coming out of that consumer. So, we're seeing more daymaker-type consumers come in into our business than in the other categories. So, we are getting some traction already with the initiatives. And we feel now that we begin to tell the story and not just the product, but we're really begin to tell the story, we think we'll see even more growth going forward. Corinna Lynn Freedman - BB&T Capital Markets: Great. Thank you.

And that concludes today's question and answer session. I'd like to turn it back over to the speakers for any additional or closing remarks. Robert T. Wallstrom - President, Chief Executive Officer & Director: As I reflect back on the last year, I am so pleased with the second year of our turnaround and all of the progress our talented team has made. At Vera Bradley, three of our core values are ingenuity, tenacity and optimism. And I can't think of better words to illustrate how our team collaborates with creativity and relentless passion for our customer and a positive view towards the future. We expect this year will propel us forward as we complete our brand transformation, drive core growth and to begin to explore new growth opportunities. I remain confident that we are taking the right steps for the future of our business. Thank you for joining us today and for your interest, time and questions, and we look forward to speaking to you on our first quarter call on June 1.

And this concludes today's conference. Thank you for your participation.