Ladies and gentlemen, thank you for standing by. Welcome to the Williams-Sonoma, Inc.'s Fourth Quarter and Fiscal Year 2010 Earnings and Fiscal Year 2011 Guidance Conference Call. [Operator Instructions] I would now like to turn the call over to Steve Nelson, Director of Investor Relations, to discuss the non-GAAP measures and forward-looking statements.

Good morning. This morning's conference call should be considered in conjunction with the press releases that we issued earlier today. Our press release and this call contain non-GAAP financial measures that exclude the impact of unusual business events. These non-GAAP financial measures are provided to facilitate meaningful year-over-year comparisons. A reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measure, and an explanation of why these non-GAAP financial measures are useful are discussed in Exhibit 1 of the press release. The forward-looking statements included in this morning's call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements address the financial condition, results of operations, business initiatives, guidance, growth plans and prospects of the company in 2011 and beyond, and are subject to risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company's current press releases and SEC filings for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. I will now turn the conference call over to Laura Alber, our President and Chief Executive Officer, to discuss our fourth quarter and fiscal year 2010 results and our outlook for 2011.

Good morning, and thank you for joining us. With me today are Sharon Mccollam, our Chief Operating and Chief Financial Officer; and Pat Connolly, our Chief Marketing Officer. Fiscal 2010 was a year of record performance for our company. Each of our brands ended the year stronger than it began and aggressive and proactive initiatives across the organization led to new milestones and profitability. We are particularly pleased with the progress we made in merchandising, marketing, customer acquisition and customer service, as it was these initiatives that allowed us to attract new customers to our brand and gain market share all year. In the fourth quarter, our results once again significantly exceeded expectations as net revenues increased 10% and diluted earnings per share increased 26% to $1.08 per share. We ended the quarter with over $600 million in cash after returning nearly $185 million to our shareholders over the past 12 months and today announced a 13% increase in our quarterly dividend on top of the $125 million share repurchase program that we announced in February. During the fourth quarter, direct-to-customer revenues increased 17% and comparable store sales increased 5.2%. On a one-, two-, and three-year basis, year-over-year growth rates continue to improve as we introduced more authentic, artisanal, and exclusive products to the market and further enhanced our value proposition. We also increased our investment in eCommerce, elevated our in-store experience to a new level, optimized our advertising costs by re-deploying less productive catalog circulation into more productive e-marketing initiatives, and re-engineered our supply chain to generate shipping savings for our customers. In our core brands, the sales trends improved in every concept and we saw significant growth in new customer acquisitions. In total, fourth quarter core brand net revenues increased a better-than-expected 8%. In our emerging brands, net…

Thank you, Laura. Good morning. As Laura said earlier, our results for the fourth quarter substantially exceeded our expectations, as the initiatives we set forth for the year delivered greater benefits than we would have expected. We could not be more pleased with this performance and are encouraged about the opportunity it signals for 2011. The P&L highlights for the fourth quarter were as follows: Net revenues increased 10% to $1.2 billion, with 17% growth in the direct-to-customer channel and 5.2% comparable store sales growth in the retail channel. Catalog circulation increased 2% but based on the benefits of burgeoning, pages mailed decreased 1%. Non-GAAP diluted earnings per share increased $0.22 to $1.08 versus $0.86 last year and was $0.10 over the high-end of our guidance. Versus our guidance, higher sales growth, stronger selling margins, lower advertising costs and lower other general expenses drove these better-than-expected results. Non-GAAP gross margin increased 80 basis points to 42.3%. This improvement was primarily driven by sales leverage of fixed occupancy expenses, a reduction in inventory-related reserves, a decrease in occupancy expense dollars and a channel mix shift rate benefit due to a higher proportion of total company revenues being generated by the DTC channel. This improvement was partially offset by higher inventory shrinkage. Non-GAAP occupancy costs in the fourth quarter were $130 million versus $132 million last year and leveraged 120 basis points. Non-GAAP SG&A decreased 130 basis points to 26.6%. This decrease was primarily driven by lower fourth quarter incentive compensation and other general expenses. This decrease was partially offset by a channel mix shift's rate impact that resulted from a higher proportion of total company revenues being generated by the DTC channel, which incurs higher advertising costs than the retail channel. I would now like to comment on our non-GAAP earnings…

Thank you, Sharon. In the Williams-Sonoma brand, fourth quarter net revenues increased 5% as Direct-to-Customer revenues reached a quarterly all-time high and comparable store sales increased 2%. From a merchandising perspective, we saw strong growth in key categories that offer innovation and great value, including electrics, cook's tools and cookware. Our competitive promotional calendar and the launch of Williams-Sonoma Reserve shipping program, in addition to our great service and innovative and compelling merchandising strategies, drove these better-than-expected results. We are extremely pleased with the reserve program's performance and feel this is significantly enhancing our competitive positioning against other online retailers. As we enter 2011, we will execute against the following initiatives to continue to drive profitable growth and enhance the brand’s authority by introducing new, exclusive, innovative products; driving value across the brands to attract and engage more customers; growing customer acquisition through increased e-marketing, including the rollout of international shipping in the back half of the year; engaging our most loyal customers through in-store events, online community, social media and special programs; and expanding the reach of the brand through collaborations with the cooking community across all channels. We will also integrate Williams-Sonoma Home into the Williams-Sonoma website in the third quarter to better serve our wedding registrants and allow for a simpler shopping experience for our customers. In the Pottery Barn brand, net revenues in the fourth quarter increased a substantially better-than-expected 12%, and the direct-to-customer channel traffic and conversion were a key focus and we achieved very strong results from our highly targeted eCommerce and catalog marketing initiatives. Comparable store sales increased 8.9%. From a merchandising perspective, all key categories, particularly textile, furniture and decorative accessories, delivered impressive growth. Our compelling artisanal product assortment, combined with great value and a highly interactive in-store customer experience, drove these…

[Operator Instructions] We'll take our first question from Matthew Fassler with Goldman Sachs.

My question focuses on the long-term future of the store portfolio. You gave us your detailed plans for 2011, you spoke to west elm as a growth vehicle, how do you envision store portfolio evolving in the years ahead? Do you see further consolidation in your larger brands, Sonoma, Pottery Barn, or do you say that you're at a level that you're comfortable with today?

Well, Matt, in the guidance this morning that we provided, we are closing an additional 20 stores next year. But I think it's important to note that in that base, five of those stores are closing that will be replaced by other brand stores, they are Home stores that are closing and we are moving the other brands into those locations. So while it looks like 20, the number is 15, plus those five stores. And now I'm going to let Laura talk about provision for the retail portfolio.

We are looking at each market individually and the trade area to understand where we want to be positioned for the long term. We've done that, and I've bet on many of these chips with our Real Estate department over the past year and made some very good decisions about closing stores in markets where either, we have too many stores already or where the real estate isn't up to par with where we'd like it to be. And we've found great success in closing those stores and moving a large portion of those sales to surrounding stores. And so this continues to be our approach as going in, walking the malls ourselves and making those decisions in every market for every single brand across the country. So I imagine you're going to continue to see us consolidate in some of these multi-store markets as the opportunity arises, particularly if when we re-up the lease, we don't get a favorable rent deal, you may see us close a store. We also see some markets performing better, and new markets are out there that we believe we can open stores in. We do see more opportunity in Canada, as an example, to open stores in areas where we don't have them today. But we are in no rush and it's going to be based on whether we can achieve the retail profitability benchmarks that we've set for ourselves.

And our next question will come from Matt Nemer with Wells Fargo Securities.

Two questions. First, on the $25 million in incremental SG&A, have you factored any incremental revenue from international shipping into your back half guidance? And then secondly, I realize it's early, but on Williams-Sonoma Reserve, can you talk to what you're seeing in terms of average order values, and I guess margins on those orders?

Matt, as it relates to international shipping in the back half, we have some very conservative assumptions in the back half. And I would say that if the program is as successful as we believe it can be and why we are investing in the program, we certainly could see some upside to those numbers in the back half. On Williams-Sonoma Reserve, we've been in the program now for a quarter and we believe that the information around Williams-Sonoma Reserve is very competitive. So we are going to not be releasing metrics on the program today. We'll think about it, maybe at some point in the future. But right now, we are out there and we're one of the few that are, and we really feel like this is something that we need to keep internally here at Williams-Sonoma.

And next in queue, we have Budd Bugatch with Raymond James.

It's actually TJ McConville filling in for Budd. The question, Sharon, is about some of the guidance. You give us a lot of the detail on the puts and takes, specifically the gross margin guidance. It looks like you're assuming some fixed occupancy leverage. How about some of the other buckets in there? What are the assumptions for things like maybe first costs, or any of the other items you've got in there?

I think we've taken a pretty conservative approach to first cost. Basically, we've talked all year and in the last conference call, about the fact that while we see substantial increases in commodity costs, we can talk about cotton, we can talk about, now fuel, that we are in a position to have some offsets that are unique to Williams-Sonoma. And so in 2011, we believe at this time that we will be able to hold our own in the cost of March. From the other categories, we continue to see the benefits from our supply chain initiatives, but of course, we, like all retailers, have had to clay in an assumption for higher fuel costs and we've done so. So that would be the picture. Clearly, occupancy is going to lever substantially and we'll continue to make progress in that as we close stores and we continue to optimize the real estate portfolio.

And next, we have a question from Colin McGranahan with Sanford Bernstein. Colin McGranahan - Sanford C. Bernstein & Co., Inc.: Question is on DTC margins. Obviously it was a little bit more promotion when you had the cost of shipping in there. Can you give us a little quantification in the quarter of how much shipping pressure DTC margins and whether the promotional cadence was planned or you've found you had to step up given the environment? And then thinking about DTC margins going forward, that clearly some of the investments that you're making in eCommerce will impact those DTC margins. So would you expect those to be up for the year, or would you expect them to be down for the year?

In growth margin for next year -- let's talk about the gross margins for the fourth quarter and the promotional cadence. If you go back to our third quarter conference call transcript, you'll see, Colin, that we talked about the fact that this was a strategy for us to introduce enhanced value to our customers. And we think that, that strategy is attracting new customers to our brand and allowing us to deliver the kind of results that we delivered here today. So it was planned and we will continue to look at programs like Williams-Sonoma Reserve if we believe that they can drive enough incremental revenue to pay for themselves. We're not going to implement programs that don't bring top line revenue. But on the other hand, what we don't want to do, and this is really important to us, is what we don't want to do is to get obsessed with operating margin metrics and then leave sales on the table because we are not doing what we need to do to introduce new customers to the brand.

And next, we'll hear from Neely Tamminga with Piper Jaffray.

How are you feeling about outdoors, some of the discretionary entertainment categories, et cetera?

Neely, you got cut off at the beginning of your question. Would you mind repeating it?

Sure. I'm just wondering how some of the difference spring -- how some of these key discretionary categories like outdoor, entertainment, et cetera, and what that might be telling you about the consumer when you're gaining some share?

Laura, would you like to take that?

It's early. The outdoor season, really starts a little bit later than today, but our initial results are good so far. And we also had strong response to our seasonal holidays, Valentine's Day and Easter, albeit, it’s later this year, it’s off to a good start.

And next, we have Christian Buss [ThinkEquity LLC].

Wondering if you can provide some more color for us on the incremental CapEx and SG&A spend, maybe bucket for us where that spending is going?

Absolutely. As I think we mentioned in the prepared remarks that about 1/3 of it is going into eCommerce and the supply chain that is supporting eCommerce. We continue to see eCommerce as the fastest-growing channel. You can see it in the numbers, and we are investing in both new functionality on the site search. It's all the things, Christian, that you would expect from that standpoint. We are also opening some new stores, as I've said earlier. We closed five of our Williams-Sonoma Home stores but we're also opening additional stores in our brands. We're opening the new west elm stores. We're doing some refreshers and remodels, of course, of our existing store base, which we think is critical and we will continue to have an ongoing base level of capital invested in that. We are also investing in enhanced technology in our stores. And I think there's some -- this goes along with the conversation about comparable brand revenue reporting because in our stores, our associates are interacting with customers, and customers want to interact in multiple mediums, both the personal interaction and then of course there's the technology interaction. So we'll be continuing to invest there as well. Also, we are making investments in our East Coast distribution consolidation. We talked about completing Phase I and of course, we'll have Phase II to complete this year and that will be done by the third quarter.

Next, we have Matt McGinley, ISI Group, McGinley.

Can you please tell me about what you're seeing in regards to promotion trends in the category? And do you see your tight inventories as preventing you from being price competitive in some categories? As a follow-up to the CapEx question, can you talk about the gain you would expect to see on the CapEx in the year?

Laura, would you talk about those promotional environments?

The promotional environment continued across all retailers. You can see everybody, big bucks, including specialty, running, different promotions. Some of them -- we track them. Some of them are the same that they run every year, and then there's additional promotions out there and it's clear that this is going to continue on until the customer is more comfortable. So we are mindful of that and we're bringing better value into our designs to combat that. And an excellent innovative design is always the best defense against promotions and copies at lower prices. But also, we are working very hard to deliver great value to our customers. And as we continue to make supply chain improvements, we are passing along a portion of those improvements to our customer in terms of better pricing, which we think is very important. Our inventory, as we beat our sales, there are areas, pockets of inventory where we're a little tight and where we are replenishing core inventories and seasonal inventories in some cases, and seeing new categories take off faster than expected. And so obviously, when that happens, you don't have to take a markdown, which is a wonderful thing because we love regular price selling. And I don't believe in those cases that it's impacting our competitiveness because, clearly, the demand is very strong in those categories and our promotion wasn't needed. On CapEx, Sharon, do you want to...

The capital spending, I think what your question was, Greg is, is there incremental revenue included in the guidance for the capital? And I need to take the capital in some buckets in order to answer that question. Clearly, the biggest increase in our investment this year is in eCommerce. And eCommerce functionality will be rolled out through the year. So you have a rollout that happens and of course, you're not getting the full benefit of that for the entire year as we implement the different phases of our strategy. First, it's another area that we are very focused, customer engagement. You've heard Laura in each of her prepared remarks about each of the brands. Customer engagement is an important issue. Social media is a key focus of ours right now. Mobile is big. But the issue with those is you need to be there, you need to start interacting in those channels and the revenue is going to follow in future periods. So those are areas where you have to be there. It drives the customer engagement, but the revenue is hard to project and we'll do a better job of that as we learn more about it along with other multi-channel retailers. On the DC side, we will see benefit from Phase II of our distribution consolidation, and you are seeing some expense savings of that but we won't actually be doing that until the third quarter. So again, that capital goes in this year, but you'd get the full year benefit in 2012. So I think that Laura articulated it perfectly in her prepared remarks. We're investing capital this here and these investments will create some de-leverage this year on the bottom line, but we expect to start seeing some benefits for this capital to come into 2012 and beyond.

And our next question will come from David Magee with SunTrust Robinson Humphrey.

My question has to do with the international shipping later this year. How well-known is your brand overseas? Or I guess where's your brand best known overseas? And how do you gauge what the demand might be? And is this something that could be meaningful in the second half of the year to the overall numbers?

I'm going to let Pat Connolly take that question, Dave. It's a great question.

David, we think that over the long term, our brands have great appeal internationally, and the anecdotal evidence is very strong in terms of brand recognition. We have -- although Canada is close to the United States, we’ve had great success in Canada. We've had very good success in the Middle East. And so we think we can continue that around the world. And this first program of international ordering and shipping will give us a strong indication of where and which countries have the greatest promise. Certainly, we know that the ones that are primarily English speaking in the beginning have that but we also see other opportunities.

And next, we have Anthony Chukumba with BB&T Capital Markets. Anthony Chukumba - BB&T Capital Markets: Just had a quick question on west elm in one of the international markets. In terms of west elm, you commented on how it was a record Q4 for sales and profitability, some of them seems to be going very well there. So I guess I was a little surprised that you're not going to have any net store openings, or you're going to open two and close two. I just would have expected you to be a little more aggressive in terms of opening stores. I just want to kind of reconcile those two. And then just in international, you mentioned entering a new international market in 2012. And I was just wondering if that would be through another sort of licensing, sort of franchising agreement that would be like a company-owned store?

On your comments about west elm stores, what we have been doing is setting benchmarks and metrics for west elm and as they achieve them, we are getting more aggressive about retail store openings. Clearly, we have been talking about better-than-expected performance of west elm now for four consecutive quarters. And Anthony, as you do that, then you are starting to look at real estate. You're getting more confident. You're moving forward. So while we have two stores right now, our real estate teams are aggressively looking for additional real estate. I suspect there are scenarios under which we might see additional, maybe a few additional stores this year. A small number, we're not committing to that, but I will say that for 2012, we would expect that number to be greater. The other thing you don't want us to do is to miss these opportunities to close stores where we are in a situation where the recession created co-tenancy failure that is not being resolved, or where we believe that the initial site selection isn't optimal for the west elm brand. So what we -- from an investor point of view and from a company point of view, we want to continue to take advantage of those opportunities and not hang on to real estate for the long-term that is unhelpful, just so that we can show a net increase in the number of stores.

On the international question, we're in the preliminary stages of looking at where to go and how to go. We're building our international team here and we're going to bring great experience into the company and that's going to help us really cement this plan for how we go overseas, but at this point, we don't have specific plans. We are open to all ways of going and each market is very different, depending on the political climate and the ease of entry to the market and how much help we need. The thing that is most critical to us is that wherever we open stores, we want them to have the same standard of excellence as we do for our stores in the United States, and that is our commitment.

And next, we have Scot Ciccarelli with RBC Capital Markets.

This is Austin Pauls in for Scot. My question is on the continued growth you expect to see in eCommerce. Is it possible at all to break out the biggest drivers there, whether it's higher traffic or increased conversion rates? And also, does the growth there assume continued channel shift from your retail locations?

Austin, we would tell you that there is nothing that we are doing in eCommerce that is not driving incremental revenue. Clearly, we have had stated objectives as it relates to driving increased traffic and conversion. We have said consistently that we are redeploying catalog circulation into e-marketing to enhance the revenues, actually of all channels. We continue to see that where we redeploy catalog advertising costs, and this of course has to be measured, we see not only incremental revenues in the eCommerce channel, but we also see incremental revenues go to the retail channel. So this is a very fine -- you have to square root this, it requires a lot of square-rooting. But truly, everything Laura talked about in her prepared remarks about the brands, all of those initiatives are driving increased revenue. The one that we continue to be excited about and we continue to figure out ways to measure and to grow, because we do believe it's so important is going to be the area of social media. And that’s an area where we're making some investments this year and we're going to know a lot more about that as we get more aggressive into that arena.

And the next question will come from Chris Horvers with JPMorgan. Christopher Horvers - JP Morgan Chase & Co: I want to focus on the cash on the balance sheet. Assuming that you return a bit over the $125 million in repurchase and $70 million to $80 million in dividend, it looks like, on my projections, you would end with an excess, I don't know -- you've maintained about $600 million on your balance sheet. Just curious, how you're thinking about that. Is that keeping the powder dry for a potentially store acceleration in '12 internationally? Is that maybe attack on brand acquisition, or is it just a function of getting through the $125 million of repurchase and then authorizing more?

This is Sharon. We believe that in this post recession period, first of all, we have said consistently that we want to keep approximately $300 million on the balance sheet at any point in time in order to ensure that we are not dependent, in any way, on the capital market. So I don't know how long we will want to do that but at this point in the back of our minds, there is still a sense of security that needs to be held on corporate balance sheet. As we look at the return of capital to shareholders next year, when you combine the share repurchase program with the dividend that we are paying, including the 13% increase we announced this morning, that's $200 million that we're returning. And we will continue to assess our cash balances. We as a management team, and the board, do not believe that holding large cash balances earning very small returns because of such low interest rates is good for shareholders. But we do believe that dry powder to do big, to be able to accelerate our growth objectives, is good for the company. So we're just taking a look at that. We've already announced $125 million and we're only one month into the quarter. So give us some time and we'll keep looking at it.

And next, we have Brad Thomas with KeyBanc Capital Markets.

I was hoping that you all could just provide a little bit more color around the trends that you're seeing in your selling margin. I believe you noted that the 4Q results were better than your expectations but at the same time, noted a higher level of promotions that you were seeing in DTC. And to that end, if you could talk a little bit more about the pricing trends. I know that over last year you've had a great deal of success, pulling out lower price point items, is that something that can continue given some of the inflationary pressures?

I'm going to let Laura speak to the rolling out of value in our brands, because it is a key objective for us in several of the brand picture. So Laura, why don't you talk about that? And then I'll talk about the gross margin and the guidance.

The pricing trends are really product by product and we have four brands with very different products in them from anchovies to armoires, we like to say around here, and each one has a different elasticity of demand and changing every day. And we also have different opportunities by product category. So I could say one thing about our textile programs and of course, there's pricing pressure there. And we're working very hard to hold our retailers so we don't increase them. We are seeing our competitors raise their retails. We're tracking that closely and a lot of people are raising their towel prices, their sheet prices everywhere from the big boxes to specialty, we're seeing price increases happen there. So that's a very different situation than exclusively designed furniture in our Sutter Street operation. So it's a hard thing to give a categorical generalized answer to. I guess my best answer is that, across every single brand in every category, we are studying the market and understanding how we can deliver value to our customer and making sure that there's a reason to buy it from us. And that reason may be that we have a very competitive price, it may be that it's exclusive to us and very new, it may be that it goes with the rest of the assortment and therefore, it's the perfect pillow add-on to the rug. And each one of those factors goes into how we price a product. We saw further -- I guess, more acceleration than we expected as we dropped some prices during the holiday season. In some categories, the customer was extremely interested in buying our promotions and that is the reference point we made to more promotional activities and higher demand driven by promotions in the fourth quarter. So I hope that answers your question somewhat. And we will continue to, as I said, watch it, study it, and test new things and find areas where we should potentially raise prices and/or drop prices.

And then when you think about the margin, that is the selling margin that's inherent in the guidance that we provided this morning, as I said earlier, we are going to have -- we see some cost pressure next year, we're working on offsetting that. We have assumed that we will be able to force into some of the value that we offered this year, particularly in brands like west elm. So we will see some expansion of the selling margin coming from that area but I think we need to be conservative and we were in our guidance about potential additional inflationary issues that may come up as we progress through the year. One thing I will point out is that versus our peak selling margins that we delivered in 2005, we talked a lot about this in our fourth quarter call last year, we are still 75 basis points, 75 to 100 basis points off of that peak. So we still have a lot of runway in front of us to recover that if we believe that, that is the best strategy to continue to grow the company. One area that, for instance, one area that we may choose -- there's different ways to deal with pricing. Pricing comes in merchandise price, but it also comes in the value that you offer to a customer through shipping. And this year, as you know from Laura's prepared remarks, we did reduce our shipping -- we increased or enhanced our shipping value to our customers, reduced our shipping to our customers and we offset it with some supply chain efficiencies. So we will not stand on the sidelines and not -- and be more promotional in that area, if we believe that it can drive substantial incremental revenue.

And next, we have Peter Benedict with Robert Baird. Peter Benedict - Robert W. Baird & Co. Incorporated: Just one follow-up on that last question, just Sharon, kind of continue on your thoughts there on the long-term operating margin potential for the business, that was some good insights into the selling margin but I think in the past, you've kind of indicated maybe something 12% or better. Where do you thinking about that right now and how you would get there, if that's the direction you want to go? And then secondly, on that $25 million of incremental SG&A that's coming in, in 2011, should we assume that, that line item goes to zero in 2012? Or does it just remain flattish at around $25 million and that's how you get the leverage?

As it relates to the investment -- this is obviously a significant investment for us. We are very tight with our SG&A dollars. You guys know that, you've followed us for years. But again, if we see opportunity to be able to expand our business, you're always going to have to invest in front of it. So if we decide to make a substantial investment in international, of course, you're going to see some additional dollars come into those numbers. But I feel like this year, this was a significant investment for us, and we believe that a good chunk of that will sustain us for a couple of years to come. As it relates to your operating margin question, I again just want to reiterate that what we don't want to do is obsess over the operating margin and start getting married to those if we can drive increased revenue. However, answering your question, I did mention previously, that we are still about 75 to 100 basis points off of our peak selling margins. We are also still 150 basis points. Our 2005 was our best reported year. We are still 150 basis points on occupancy away from that number. It's 150 to 190, something like that. So in that area, when you just add those two together, if you could just recover those, not there you go with the number that you threw out earlier. But we just want to be -- you guys, what we're focused on right now is growth. We see significant growth in front of this business and we believe that we are gaining market share, and it's profitable. You can see it in the Q4 results, highly profitable market share. So we're just not going to spend as much time obsessing on these little basis points on the operating margins.

And we have time for one more question. That will come from Brian Nagel with Oppenheimer. Brian Nagel - Oppenheimer & Co. Inc.: Just one quick maintenance question. As you look at the gross margin for the fourth quarter, in your release and then your prepared comments, you called out the 40 basis points from the Williams-Sonoma Home issue, was that embedded in the initial guidance you gave a couple of months ago?

Yes. There was -- a big piece of that was embedded in there, and the reason for that is because we could see the liquidation initiative being very successful, particularly coming into the fourth quarter. We're actually struggling – I mean we ran out of inventory in Williams-Sonoma Home, they just did an exceptional job of transitioning out of the retail channel, and then of course, holding only the inventory we need for DTC. So yes, it was. A significant piece of it was already inherent in our guidance. Brian Nagel - Oppenheimer & Co. Inc.: Okay, perfect. And the second question I have, at the risk of being repetitive, I know we've discussed occupancy costs a lot. But given the adjustments you've made with the business model thus far, and then some of the other adjustments you'll make as we push into 2011 with respect to store closings, how should we think about the actual growth decline and that occupancy cost line for the next several quarters?

Well, the good news or the bad news is that landlords are still very proud of their real estate, so we're going to have lease expirations. We're going to have negotiations with landlords on these leases and we are going to stay in the best locations in this country. So I've already guided for you or given you a preview of this year at 2% to 3% increase in occupancy. Now a piece of that, which I'm sure you’ve picked up from Laura's prepared remarks, is coming from the new office space in San Francisco as we add all of these people. Of course, we need additional space to support that. So in the retail side, we're closing -- net-net, you’ve got 20 closings next year. You've got some closings next year. You'll have closings out there. So between those and the negotiation we're doing with the landlords, we feel that you're going to see increases probably in the low-single digits, would be my guess.

And that is all the time we have for questions today. I'd like to turn the call back to Laura Alber for any closing remarks.

Thank you all for joining us today. We appreciate your time and your support, and we'll talk to you next quarter. Have a great day.

And thank you for joining us today. We appreciate your time and support, and we will talk to you next quarter. Have a great day.