Dennis D'Andrea - Vice President of Investor Relations Fabrizio Freda - Chief Executive Officer, President and Director Ivan Fernandez - President of Europe, Middle East & Africa Tracey Thomas Travis - Chief Financial Officer, Executive Vice President, Member of Corporate Risk Management Committee, Member of Fiduciary Investment Committee and Member of Investment Development Committee

Timothy A. Conder - Wells Fargo Securities, LLC, Research Division Javier Escalante - Consumer Edge Research, LLC Linda Bolton-Weiser - B. Riley Caris, Research Division David Wu - Telsey Advisory Group LLC Wendy Nicholson - Citigroup Inc, Research Division William Schmitz - Deutsche Bank AG, Research Division Alice Beebe Longley - The Buckingham Research Group Incorporated Mark S. Astrachan - Stifel, Nicolaus & Co., Inc., Research Division Christopher Ferrara - BofA Merrill Lynch, Research Division Caroline S. Levy - Credit Agricole Securities (USA) Inc., Research Division Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division Lauren R. Lieberman - Barclays Capital, Research Division

Good day, everyone, and welcome to The Estée Lauder Companies Fiscal 2013 Third Quarter Conference Call. Today's call is being recorded and webcast. For opening remarks and introductions, I would like to turn the call over to the Vice President of Investor Relations, Mr. Dennis D'Andrea. Please go ahead, sir. Dennis D'Andrea: Thank you. Good morning, everyone. On today's call are Fabrizio Freda, President and Chief Executive Officer; Tracey Travis, Executive Vice President and Chief Financial Officer; and Ivan Fernandez, President, Europe, Middle East and Africa. Ivan will give a strategic overview of his region. Since many of our remarks today contain forward-looking statements, let me refer you to our press release and our reports filed with the SEC, where you'll find factors that could cause actual results to differ materially from these forward-looking statements. Our discussion of our financial results and our expectations are before restructuring and other charges. Tracey's discussion will also exclude the impact of sale shifts related to our SMI implementation. You can find a reconciliation between GAAP and non-GAAP figures in our press release and on the Investor Relations section of our website. And I'll turn the call over to Fabrizio.

Thank you, Dennis, and good morning, everyone. During the third quarter of fiscal 2013, consumer demand for our prestige brands and innovative products remained solid around the world. Our sales grew 3% in local currency, more than 5% excluding the advanced shipments related to our Strategic Modernization Initiative discussed with you previously and reflected in this morning's press release. And we gained share in strong markets like China, as well as in soft ones, such as Spain and Italy. The key forces driving our sales were emerging markets, e-commerce, travel retail and certain of our luxury brands. We made focused choices as we increased our media spending on our most promising opportunity, yet we also deferred some planned investment to the fourth quarter. Combined with strong improvement in cost of sales and our ongoing cost savings, we delivered 20% EPS growth before charges, which exceeded our expectations. With most of fiscal 2013 now behind us, we are confident we can achieve double-digit earnings per share growth for the fourth year in a row. In fact, this morning, we announced we are raising our fiscal 2013 EPS guidance to a range of $2.56, $2.61. Our sales growth in the quarter was tempered by continued weak economies in Southern Europe and Korea. Additionally, in the latest rollout of SMI, some short-term customer service challenges emerged, which negatively impacted our ability to ship all our orders in the quarter. We expect to have the issue resolved by the end of our fiscal year. Tracey will provide more details later in the call. Despite these difficulties, we achieved higher sales in all 3 of our regions. In the Americas, across our diverse portfolio, the strongest advances came from our top-tier luxury brand as affluent consumers continue to demonstrate their purchasing power. Additionally, the Estée Lauder brand benefited from several recent skin care launches and our makeup artist brands enjoyed healthy retail sales. Aveda hair care business rose nicely, due largely to the successful advertising behind Invati, its hair product, which helps build awareness for the entire brand. And in Latin America, Venezuela and Brazil lead our double-digit growth. In the U.S., our company and the prestige beauty industry continue to outperform mass in the recent quarters, thanks to many of our brands' recent product and service innovation. As a company, we grew broadly in line with the prestige beauty and a number of our brands gained share, led by M-A-C and La Mer. Our sales grew in Europe, the Middle East & Africa, even though consumer spending remains sluggish across Southern Europe. Many of our brands outperformed prestige beauty on the strengths of their appealing products, targeted marketing in the High-Touch services they provide to consumer in all our channels. Our business was robust in the region's emerging markets, including the Middle East and South Africa. Ivan will go into more details about the region. In travel retail, our net sales have improved as the year has progressed. Our double-digit net sales this quarter were closer to retail trends and nearly twice the growth of passenger traffic. Our sales at retail grew fastest in Asia/Pacific and rose sharply in China during the Chinese New Year. Other countries also benefited and saw stronger sales as Chinese consumer travels during the holiday. Our U.K. business had a healthy retail performance, with positive results across most brands. For instance, Bobbi Brown enjoyed excellent sales at retail after launching a new campaign featuring the actress Katie Holmes, a trend we expect to continue. Asia/Pacific remained very positive and continues to hold terrific opportunity. Our growth at retail was robust in Greater China as we gain new consumers and broaden our presence. In China, our sales at retail climbed 25%. We recently opened in Sephora new flagship stores in Shanghai, its largest in the country, which features a collection of our brands. Japan continue to grow faster than prestige beauty although modestly, and we expect sales growth there to be positive for the full year. Several of our brands took additional steps to elevate their profile in the challenging Korean market. Clinique, for example, created the innovative profile store in Seoul, featuring its Chubby Stick products to reach new and younger consumers. The popular concept received widespread media coverage, raising Clinique profile in the country. Aveda launched e-commerce, La Mer reached out to fans on Facebook and have then expanded into 16 more doors. Turning now to our product categories. In skin care, we continue to launch well-received innovative products. Skin care remains an important strategic priority, but the category had a tough comparison to the double-digit growth over the past 2 years when we had several major launches. The makeup category was driven by strong global sales at M-A-C, reflecting outstanding product innovation and broad international expansion. Archie's Girls, its limited edition makeup collection, was a huge success selling out worldwide. The brand also opened its third global flagship stores on the Champs-Élysées in Paris, which was backed by an extensive media relations company. Consumers are responding enthusiastically to our growing network of freestanding stores and the creative service they provide. Our improved fragrance sales were largely due to our luxury brands, namely Jo Malone and Tom Ford. The recent launch of our Marni brand was well received in Europe, meeting our expectations. In hair care, Aveda had healthy growth, reflecting strong product launches, particularly North American and Asia/Pacific, including Korea, where it also opened in 8 department stores' doors. Our online business continued its robust growth, posting strong double-digit sales increases across all our categories and regions. Globally, we had terrific sales from our brand sites, as well as retailers' sites. We launched 5 e-commerce sites, including our first ones in Thailand and Turkey, which are for Clinique. As we are wrapping our fiscal year '13, we see a continuation of the macro trends that have framed our direction this year. China and other emerging markets are expected to remain vibrant. The U.S. should see continued solid growth. In Southern Europe and Korea, we likely stay at current levels and provide ongoing challenges. Our investments will continue to support the most compelling areas driving our strategy, such as developing, tracking innovation and blockbuster launches and channel diversification through a combination of online and mobile e-commerce sites, freestanding stores and a greater presence in specialty multi-retail. We also will continue to focus on the important emerging market consumer, wherever she lives and along travel corridors. Reflecting these priorities, here is a sampling of upcoming initiatives. Clinique and Smashbox are introducing CC creams, with innovative technology. CC creams, which stands for color correcting, are among the most popular new products on the worldwide beauty scene. Zegna Uomo scent for men is beginning a global rollout in our fiscal fourth quarter and expect it to be a boost to our Fragrance category. Our brands continue to expand their retail presence, focusing on the best opportunities. M-A-C expects to open 9 freestanding stores, mostly in international markets, and La Mer plans to expand in Sephora flagship locations in China and France. Looking ahead, we expect our sales will accelerate in the fourth quarter despite some economic headwinds. For the full year, we again expect to post record sales and outpace global prestige beauty. With a winning team, strong innovation, substantial media investment, world-class brands and a sound long-term strategy, we plan to continue our journey of sustained sales growth and improved profitability. Now I will turn the call over to Ivan, who will discuss our business in Europe, the Middle East & Africa.

Thank you, Fabrizio. I'm happy to be here. I have been with Estée Lauder Companies for 23 years. I have led the part of the EMEA region that covers Continental Europe, the Middle East, India and Africa for the past 5 years. My area of responsibility does not include the U.K. or travel retail, which are managed separately. This part of EMEA is a diverse region of 60 countries, managed through 17 affiliates. It represents approximately 30% of the global prestige beauty and personal care category. Within our region, France represent over 50% of the prestige category mix, followed by skin care, makeup and health care. Distribution formats vary across markets but perfumeries are the most important channel for us, with over 50% of our net sales mix, followed by department stores, freestanding stores, online and other channels. We closed fiscal 2012 in EMEA with net sales of $1.8 billion and achieved compound annual growth of nearly 7% over the last 3 fiscal years versus prestige beauty growing at 2%. In the region overall, we gained 2 points of share in prestige beauty in the 3 past years, ending calendar '12 with an estimated 13.6% share. In Western Europe, which is the largest market for prestige beauty, we have added substantial share. By creating a successful strategy and investing during a downturn, our sales have grown by nearly 6%, way ahead of prestige, which has been flat. In the emerging markets, our sales growth of 14% during the last 3 years was far above the 8% for prestige. In fiscal '13, we estimate our growth in the EMEA region to be a solid 5%, 8x faster than the prestige cosmetics industry, which has slowed even further to essentially flat, allowing us to aggressively gain share in this important market at this critical time. As you are aware and Fabrizio discussed, Southern European countries have been impacted by tough economies and weak consumer spending. Despite the difficult economic environment in Southern Europe, we continue to outperform prestige beauty by adhering to our strategy, which I will describe later on. Some example, we are growing 7% in Italy as compared to the 4% decline in prestige in calendar '12. And in Spain and Greece, we are substantially outperforming prestige as well. You are aware of our challenges in Russia, but our outlook for the business remains positive. We see our growth coming from developing the Ukraine and CIS and regions outside Moscow and St. Petersburg, accelerating the growth of our brands with lower penetration, particularly with freestanding stores and developing e-commerce. In EMEA, we have an estimated share of over 25% in prestige skin care and makeup combined. And we're already #1 in prestige skin care and makeup combined in more than half of our affiliates, representing 2/3 of our sales. The success we have experienced in the past few years has been a result of a change in our strategy. This new direction started with establishment of a regional office in Paris, with the vision to unlock Europe's potential, drive skill and efficiency, ensure our local relevance, develop new capabilities and offer best-in-class support to local affiliates. Our successful business transformation has been based on 5 key strategic pillars: One, strengthening of pool advertising, especially TV and digital; two, providing High-Touch experiences and service through near navigation on point-of-sale systems; three, focusing on key categories and developing fewer but stronger locally relevant products; four, acceleration of distribution expansion for our developing brands; and five, acceleration of growth in emerging markets. I will say a few words on each one of these 5 strategic pillars. The first one has been the strengthening of pool advertising, especially TV and digital. This is a critical business driver in a market dominated by generic or self-assisted service. In the past 3 years, we have increased our advertising by over 50%, including a 74 [ph] rise in TV advertising and an increase of 2.5x in digital. Additionally, we have focused our investments behind a select number of franchises in the skin care and makeup, creating breakthrough [ph] programs that stand out against the competition. As a result, for the first time, Estée Lauder Companies reached the #1 share of voice ranking in prestige skin care and makeup combined in EMEA, with Clinique and Estée Lauder ranking #1 and #2. We currently are one of the leading prestige skin care and makeup companies online, in terms of marketing, e-commerce and mobile commerce, and we continuously leverage our social media expertise to connect with our diverse consumer base. Our brands have more than 100 Facebook pages throughout the region and continue to launch e-commerce where they see opportunity. For instance, in the recent quarter, Smashbox began selling through its own e-commerce sites in Germany and Italy. Our second strategic pillar has been to provide a High-Touch experience on service through new navigational systems. We have worked together with our key retailers to reinvent the consumers' shopping experience. As a result, during the past 3 years, we have introduced new skin care and makeup navigation units, have strength and service through more robust education programs and adequate monitoring via mystery shopper protocols. Our third strategic pillar has been to focus our resources and efforts behind key categories and develop fewer but stronger locally relevant products. Some examples of these focused efforts have been Estée Lauder Revitalizing Supreme, developed specifically for European women, which today is the #1 prestige moisturizer in 12 EMEA markets. And Advanced Night Repair, the iconic Estée Lauder product, which is the #1 anti-aging serum across Europe. Clinique gained substantial share in prestige anti-aging, with the launch of Even Better, which currently is the leading prestige hyperpigmentation franchise in EMEA. And Clinique Chubby Stick franchise has made a significant impact, leading to a greater share in the lips category and makeup overall. Other examples of local relevance have been pioneering the introduction of fragrance for the Middle East, with Cologne Intense from Jo Malone, Wood Mystique from Estée Lauder and Calligraphy from ADF, all important successes. And most recently, Sahara Noir from Tom Ford. We have also developed relevant shade assortments in makeup for diverse geographies and ethnicities and promote them through local campaigns, such as shades of Africa and shades of Arabia from Clinique. Our fourth strategic pillar has been the acceleration of distribution expansion of M-A-C, Bobbi Brown, Tom Ford and Jo Malone in markets with low penetration. M-A-C has increased its EMEA distribution by over 50% in 3 years to 445 doors in fiscal '12. Today, M-A-C is the #1 prestige makeup brand in over 1/3 of our markets. The distribution expansion of these brands has been done in great part from freestanding stores. EMEA currently has the largest number of freestanding stores in the corporation outside of North America. Last month, for example, we opened a M-A-C flagship store on the busy Champs Élysées in Paris, which is expected to become one of the brand's largest stores in the world in terms of sales volume. The fifth strategic pillar has been an acceleration of growth in the emerging markets. These markets, which represents about 1/3 of our business and nearly half of the growth in our region, are at varying stage of demographic and distribution development. Our share of prestige in emerging markets is 17%, higher than the overall region, due to channel mix, lower service cost and young population. We continue to see a lot of white space and a great potential coming from these countries, especially the Middle East, North Africa, sub-Saharan Africa and the CIS markets, where the prestige segment is still very small. There is a growing middle-class consumer, a young population and we have the opportunity to recruit from this. The transformation of our strategy require a reallocation of resources and a major focus on driving out non-added value costs. We have been proactive in finding savings through various initiatives, such as indirect procurement, productivity improvements and distribution center optimization. These initiatives have delivered substantial savings, contributing to the outstanding margin improvement in the past few years. Our well-executed strategy has enabled us to outperform prestige beauty and gain share in both Western Europe and emerging markets. Looking forward, we remain cautiously optimistic for prestige beauty in EMEA. In Western Europe, we still see a relatively sluggish market for the remainder of calendar '13, and we expect that the emerging markets will maintain the high single-digit growth. Looking at the prestige beauty landscape, we forecast the strengthening of the leading brands, as well as a proliferation of new brands entering the market, especially in makeup. We believe that the aging of the population will drive growth in the skin care category, where we have a leading position. We project makeup to grow at a faster rate than overall beauty, with continued innovation and new brand interest. These trends will benefit our makeup artist brands and our newest makeup brand, Smashbox. Within fragrance, we expect an acceleration of ultra-prestige brands, where we have a stronger position. This subcategory represents approximately 11% of the prestige fragrance mix in Europe, but already 18% in France and is growing at double digit. And we see high-end hair care developing nicely, particularly in retail, albeit from a small base. We will continue to improve on our strategy. Our primary focus will remain on the skin care and expanding our makeup business, while strengthening our local relevance initiatives and innovation. We also plan to accelerate the rollout of our brands with low penetration. We will take a more active role in fragrance, where we plan to increase our growth rate through an acceleration of our ultra-prestige portfolio of brands, such as Tom Ford, Jo Malone, Marni and Essenza di Zegna collection. In the mainstream selected fragrance area, we are evolving our strategy, with the ambition of achieving a top 10 prestige ranking in selected programs in key markets, in both sales and investments. The first example of such an approach is the current launch of Zegna Uomo. We believe we are very well positioned to capture a greater share of future growth. We are focused on our biggest opportunities with clear priorities. I have the most talented and passionate team in the industry. We are confident that our strategy will allow us to be a winning company in all categories, to continue growing at a faster pace than prestige beauty and deliver sustainable, profitable long-term growth. Thank you. And now I will turn the call over to Tracey.

Thank you, Ivan, and good morning, everyone. Reported net sales in the third quarter were $2.29 billion, a 2% increase over the prior year period. Excluding the impact of currency translation, our net sales rose 3%. Net earnings before restructuring and other charges increased 19% to $177.8 million compared with $149.2 million in the prior year quarter and diluted EPS was $0.45. EPS was higher than our previous guidance range, primarily due to the timing of some marketing and other activities, as well as a lower tax rate in the quarter. As you are aware, our third quarter sales growth was affected by the pull forward of orders into the second quarter in advance of the January rollout of the third wave of our Strategic Modernization Initiative. This acceleration reduced our third quarter results by $94 million in sales and $78 million in operating income, equal to approximately $0.13 per share. The third quarters -- the prior year third quarter also included a shift from our second wave of SMI of $30 million in sales and $23 million in operating income, equal to $0.04 per share. Excluding the shifts in both years, local currency sales would have grown by more than 5% for this year's third quarter. Please refer to the table and text included in today's press release for more details of these shifts by both region and product category. As Fabrizio mentioned, some challenges emerged later in the quarter with the latest wave of SMI. We rolled out to 7 additional countries in January, and that went well. Global supply planning also went live, integrating our overall supply planning processes with locations where we have implemented SMI. We experienced some difficulties with the additional complexity contained in this launch. And in the short term, it has led to some customer service delays and certain products being briefly out of stock. We rapidly began fixing the situation when it emerged and have made good progress thus far. In fact, the initial issues are addressed and we expect full resolution of them by the end of the fiscal year. These challenges contributed to the third quarter sales growth coming in at the low end of our guidance range. To ensure the best possible outcome of the next wave 4, which had been scheduled to occur in January of 2014, we have decided to defer the next rollout by 6 months. Separately, in last year's third quarter, we established $16 million provision for reserves -- returns related to changes in U.S. sunscreen regulations. This charge aided sales growth this quarter by less than 1 percentage point. The provision was reversed in our fourth quarter last year when the regulations were deferred. To get a true picture of our underlying business performance, all of my commentary on the third quarter financial results excludes the impact of the SMI shifts I just reviewed, as well as restructuring and other charges. Geographically, in the quarter, sales in our Americas region increased 4% in local currency. Latin America saw strong double-digit growth and North America rose approximately 4%. The prior year sunscreen reserve -- returns provision that I just mentioned added more than 1 percentage point to the Americas growth in the quarter. From a channel perspective, our North America sales at retail were strong, led by multi-brand specialty stores, online, department stores and our own freestanding stores. In the Europe, Middle East and Africa region, sales increased 5% in local currency. We achieved double-digit increases in the Middle East and South Africa. Our travel retail sales rose 11%, slightly below the retail sell-through and driven by both increased passenger traffic and increased conversion. This growth was partially offset by continued economic difficulties, primarily in Spain and Greece. Of the other major markets in the region, France and Switzerland declined slightly, while Italy grew approximately 2%. In the U.K., net sales growth was flat to last year but grew 10% at retail, as certain U.K. retailers reduced their trade stock levels, given the continued uncertain economic environment. Sales in the Asia/Pacific Region rose 8% in local currency. China and Hong Kong each grew approximately 27%. Thailand and Taiwan rose high single digits, while Japan was up 1 percentage point. As mentioned previously, Korea has been challenged as continued soft economic conditions, combined with additional competitive pressures, have impacted sales across many of our brands. Our gross margin increased a healthy 170 basis points to 80.8%. This increase came primarily from 70 basis points related to favorable cost of goods, 50 basis points from improved obsolescence expense and 30 basis points related to positive pricing and mix. Operating expenses as a percent of sales improved 20 basis points to 67.3%, primarily reflecting favorable selling cost of 50 basis points and advertising, merchandising and sampling of 20 basis points. These favorable variances were partially offset by a combination of higher stock-based compensation and general and administrative cost of 50 basis points. Operating income rose 22% to $321.5 million and operating margin increased 190 basis points to 13.5%. We've realized total savings of $29 million in the quarter from our cost savings programs and expect to save approximately $75 million to $80 million for the full year. Our effective tax rate fell to 25.2% this quarter, primarily due to some discrete tax benefits in the quarter. We reported favorable adjustments of $1.7 million to our restructuring charges in the third quarter. For the full fiscal year, we still expect to record charges of approximately $25 million. Year-to-date, net cash flows generated by operating activities increased 7% to $934 million compared to $870 million last year. We have invested $306 million in capital expenditures, $363 million to repurchase approximately 6.3 million shares of our stock and paid our stockholders $349 million in dividends, which reflects the increase announced last fall and the transition to quarterly dividend payments beginning this past quarter. Days sales outstanding increased by 1 day to 53 days. Inventory days to sell rose to 165 days compared with 150 days last year, primarily due to the SMI inventory build. Let me now talk about our outlook for the balance of this year, excluding restructuring. Our forecast reflects broad-based growth from product launches, marketing and service activities and retail expansion. However, we do expect continued softness in Southern European countries and in Korea. For the year, we are now forecasting local currency sales growth of approximately 6%. We estimate a negative currency translation impact of approximately 1% on our full year sales growth. Our estimate assumes weighted average exchange rates for the full year of 1.28 for the euro, 1.56 for the pound and 86 for the yen. The combined benefits of pricing, cost savings and operating leverage are expected to drive operating margin improvement of approximately 70 to 90 basis points for the full year. As Fabrizio noted, we are raising our full year EPS forecast to a range of $2.56 to $2.61, which is equal to solid growth of 13% to 15% versus last year. Our EPS range excludes the charge of $0.03 related to the repurchase of debt earlier in the fiscal year, as well as $0.04 for restructuring charges. For the full year, we continue to expect to generate approximately $1.2 billion of cash flow from operations, and expect to invest approximately $500 million in capital expenditures. We now estimate our effective tax rate will be between 30% and 32%. With 3 quarters behind us, our full year guidance does imply an acceleration in our fourth quarter sales growth from our fiscal year-to-date growth of 5%. There are a number of factors giving us confidence in this result: Greater benefits from our innovation pipeline, including strong shipments of fourth quarter launches, such as Zegna's Uomo and Clinique's CC cream, as well as incremental sales of products launched in the past 9 months, such as Estée Lauder's Advanced Night Repair Eye serum; sequential improvement in travel retail; and more comparable year-over-year results in Korea. In the fourth quarter, we expect our advertising spending will now be consistent with the prior year's quarters, as we properly support our innovation and business trends to drive higher sales. And that concludes my prepared remarks on the quarter and the guidance for the balance of the year. We'll be happy to take your questions at this time.

[Operator Instructions] Your first question today comes from Tim Conder with Wells Fargo Securities. Timothy A. Conder - Wells Fargo Securities, LLC, Research Division: Tracey, could you give us a little bit more color on the impact in the quarter from the supply-chain disruptions, whether that -- the total top line, if you can quantify that and then any EBIT impact?

Sure. So it's a bit difficult to quantify because we certainly had product substitution that happened in the trade and certainly with consumers. But we believe it was worth a couple of basis points, Tim, from a sales standpoint.

Your next question comes from Javier Escalante with Consumer Edge Research. Javier Escalante - Consumer Edge Research, LLC: I just would like to understand how you see fiscal '14 shaping in terms of your operating margin expansion target of 70 to 90 basis points as you have less savings going forward and there has been a modest lift from the A&P spending, as I understand it. So how -- give you -- what gives you confidence that this new earnings growth target that you floated back in August are achievable, given the difficulties that you had, had in fiscal '13 to deliver your numbers?

First of all, we didn't get any difficulties in fiscal '13 in deliver our margin growth numbers. Actually we are over-delivering our margin growth results. And in the last 3 years, we have been growing margin in a very strong way. So we plan to continue our margin growth. As announced, our target is 15.5% to 16%. Actually, we are -- the way we are trending, we are more likely to hit the top of our guideline. Because as we said, we have the capability to grow about 0.5 margin point per year, driven by a mix of cost savings, mix of products at geography and categories and the initial impact of our SMI value creation model.

Your next question comes from Linda Bolton-Weiser with B. Riley. Linda Bolton-Weiser - B. Riley Caris, Research Division: I was wondering if you could explain why you think the travel retail growth for you will accelerate in the fourth fiscal quarter. Is that a function of things you see in the marketplace? Or is that specific initiatives that you have planned for the fourth quarter?

It's a combination of factors. The most important factor is that in travel retail after initial destocking during the beginning of our fiscal year, the retail sales and the net sales are now aligned. Our retail sales in travel retail has been strong and double-digit all along. And now that net sales are aligned to retail sales, this imply an acceleration of our travel retail sales. On top of that, travel retail is continuing to be very successful with expanded distribution, where appropriate, and also travel retail sales are also depending from the quality of the initiatives we have in the various countries. And as we discussed, the quality of our innovation is going to accelerate. And in this way, it's going to drive also our travel retail sales.

Your next question comes from David Wu with Telsey Advisory Group. David Wu - Telsey Advisory Group LLC: Can you update us on new distribution opportunities, including how the testing of Lauder at Sephora and Aveda at Nordstrom are performing? Are you planning to expand it to more doors this year? And you also mentioned introducing La Mer at select Sephora flagships in France and China. But what other brands could you introduce into new channels? And then just secondly, you mentioned that travel retail sell-ins and sell-throughs are both up double digits. But could you perhaps quantify the increase there and just update us on your distribution strategy and long-term door potential, especially just given that we are seeing more retailers open up stores in this channel?

So our distribution strategy includes a continuous increase in distribution of our key brands in specialty multi around the world. Referring to your specific question on Sephora U.S., where it's below the -- the test has basically started only few -- 6 months ago, so the test will continue. And when we will read the test, we'll decide the opportunity for the expansion. And the same for Aveda in Nordstrom. We started there recently, so we are still in the middle of the test. But there are other activities going on many of our brands, particularly our new brands. Ivan commented in his prepared remarks that the part of the strategy of expanding our brands internationally in gaining new distribution is a big part also of the forecast in Western Europe. We also are improving distribution via freestanding stores around the world. And the other big driver of distribution is China, where we are increasing distribution in tier-2 and 3 cities, and this increased distribution in tier-2 and 3 cities is actually now getting applied to more and more emerging markets in general, for example, in Brazil with the brand market. And we are opening new geographies. We recently opened some new geographies in Africa, particularly with the M-A-C brand. And we continue expanding distribution in the geographies that we opened more recently, like Vietnam and others. So -- but the -- I want also to clarify that the majority of our growth is still coming from same doors, and we are growing very well, same doors. So distribution is really a net extra versus the main strategy, the remain same-door strategy in general, as a total company. Last, your travel retail question. Yes, there are newer reports and particularly, the travel corridors, meaning where consumer travels and which nationality travel where has been studied in depth. And so we are adjusting our distribution to be completely relevant to the traveling corridors, to which consumer travels where and which are the airports, which are getting the maximum success in these years.

Your next question comes from Wendy Nicholson with Citi Research. Wendy Nicholson - Citigroup Inc, Research Division: My question has to do just with the full year sales growth outlook. I know at the beginning of the year, you offered 6% to 8% in local currency terms, and that's kind of your long-term target. And now it's looking like it's going to be closer to 6%. And I assume that your initial guidance was actually pretty conservative because that's what it usually is. So I'm trying to understand kind of what the change is, how much of that is a reduction in category growth, how much of it is maybe less market share expansion than you had expected. And as you look towards 2014, do you think you need to step up again your investment in advertising in proportion to reaccelerate from that 6% level? Or how do you think about that?

Wendy, the -- first of all, as we explained already in the first 6 months that the big driver of our -- at the end forecast in this fiscal year, at the bottom of our initial range, so 6% to 8% -- you're right, we are projecting 6%, is mainly the change in the market assumption. The 6% to 8% was accompanied by an estimate for the market around 9% -- sorry, 5%. And today, we believe that the market is trending more 3%. So there is a, first of all, a difference in the market. And then we -- so what we see -- how we see the future is that we are going to accelerate our top line already in the fourth quarter. And the main driver of it is the acceleration of our quality of innovation by brand, as explained by Tracey in her remarks. Also for us, it's very important the alignment of retail sales and net sales for travel retail. And it's also clear that some of our difficult markets like Korea, Russia or Southern Europe, will start having, in our numbers, probably -- we hope -- we at least count on having hit the bottom or close to the bottom. Which means that in terms of comparable sales, this will be helping the growth in the next quarter and in the future in general. So that's the way we see it. So we are pretty comfortable with our 6% to 8% long-term range to continue to be our focus.

Your next question comes from Bill Schmitz with Deutsche Bank. William Schmitz - Deutsche Bank AG, Research Division: Can you talk about the difference between what looks like your sell-in or shipments and consumption and how long you think it's going to last? Because it seems like in pretty much every region and every brand, there's a big disconnect between the actual retail sales and kind of what you guys are shipping in. So maybe how long you think the retail destocking last. And then the second part of the question is, the margins in Europe or EMEA were great this quarter. And I'm curious if you think that level of sort of new margin is sustainable. Is there something one-off in the quarter that drove that?

So in terms of retail -- sell-in and retail, frankly, this assumption on many things is a function of innovation pipeline build. It's a function of, obviously, our going to SMI that when we announced that we'll go to SAP, the trade react, as you know, stocking gap -- and then during the SAP, like this time where have some problem, this was a good idea because the problem is being contained also because we had some stocks. So these are all managed very carefully and has a certain influence on the relation between retail and not, But the biggest influence, frankly, is the expectation on the market. There are some markets where the retailers are concerned with the trend of consumption, and they become more prudent to stock. And then when the consumer goes away, they stock back again. And this is very different in different parts of the world. You have seen this happening in the beginning of the fiscal year in travel retail, then happening in the Southern European markets in Europe, in general, during this period. And so that's the way it goes. But we managed the global portfolio in a way that we try to be as aligned as possible over the long term. Now as far as Europe is concerned, I'd like Ivan to answer this question.

Well, first of all, today, we are running our sell-out 2 points ahead of our sell-in. And so there is deciding on stocking that Fabrizio was mentioning. But our stocks are extremely healthy across Europe, so we don't expect that they will arise in the coming months. Also I think it's important to mention a little bit on outlook. On Europe where we definitely don't see a lot of change in current trends, we will still see some markets in Western Europe and positive development on emerging ones. However, we believe that we will continue outpacing the market substantially, both in Southwestern Europe and in emerging markets. And we will do that by continue focusing and strengthening our winning strategy in the skin care and makeup by accelerating, as Fabrizio mentioned, development of brands with still relatively low penetration in our portfolio. And in addition, we will play fragrance with a greater ambition. And therefore, we believe we will continue delivering growth in Europe in all categories.

Bill, it's Tracey. Lastly, I will mention, regarding your commentary on specifically the third quarter and EMEA performance. As Ivan mentioned, he does not have the responsibility for travel retail or the U.K. Travel retail was a big driver in the profit growth in the third quarter, given their sales performance. I also mentioned that we had shifted some advertising that had previously been focused on the third quarter into the fourth quarter. And that did impact travel retail as well. So not only did they have a great sales quarter, they had terrific cost performance that was driven by cost-savings initiatives, but also we did shift some timing of advertising spending.

Your next question comes from Alice Longley with Buckingham Research. Alice Beebe Longley - The Buckingham Research Group Incorporated: My housekeeping question is will the delay in shipments take a couple of points off of sales in the fourth quarter as well? And then my more substantive question is about the nature of your innovation. You've got these color correcting creams that you're highlighting as your major new invention in Clinique and I guess to a lesser extent, Smashbox. There are a lot of brands that have CC creams, and you're not the first with one. Can you sort of tell us why yours, particularly the Clinique one, is different and will stand out and continues your image as a hero developer?

Okay, Alice. I'll take -- this is Tracey. I'll take the first part of that question. As it relates to the SMI shifts, and I know we have a lot of different shifts to talk about with respect to our performance. But as it relates specifically to the SMI shifts, there is no impact in the fourth quarter. So that shift was between the second and the third quarter. As it relates to some of the challenges that we had with our latest SMI implementation, I mentioned that we think that, that was worth a couple of basis points in the third quarter, possibly a couple of basis points in the fourth quarter. We largely have those issues behind us. We had planned for the third quarter to be our hyper-care quarter to really resolve any issues related to the start-up. We've extended that a bit into the fourth quarter but certainly are well on our way to resolving those issues and being able to move forward with our next release of SMI.

Yes. In terms of the innovation, Clinique CC, for example, is a great formula, which also as an important advantage is the concept is very attracting. Clinique is the biggest brand in the U.S. in prestige and in total. And so when a new innovation is brought, with great product, new concept by the biggest brands has a big impact on a market, and that's what we are counting on. And by the way, we are seeing and also seeing in our tests. And then there are many other innovations. For example, Estée Lauder Advanced Night Repair eye serum is not the first eye product on the market but is a roaring success and it will definitely continue into the fourth quarter. Zegna Uomo launch is a new fragrance that is the first Estée Lauder big launch of a Zegna fragrance, and the initial results are exciting. And we have innovation, obviously, on every other brands, particularly on M-A-C, that are very exciting. There are also some innovation that we cannot yet discuss for competitive reason, that we are very excited for that will impact the near future. So we are really proud of our innovation pipeline, as we discussed in CAGNY.

Your next question comes from Mark Astrachan with Stifel, Nicolaus. Mark S. Astrachan - Stifel, Nicolaus & Co., Inc., Research Division: Tracey, just one qualification. So you're talking about a couple basis points for the supply chain. Are you talking, I assume, a couple of percentage points, so 200 basis points of the impact in the quarter?

No. No, more like 20 to 30 basis points. Mark S. Astrachan - Stifel, Nicolaus & Co., Inc., Research Division: Got it. And then if you could maybe give us some sort of updates on monthly sales trends. It looked like the data got a little bit better in the U.S. in the most recent months. You're talking about this acceleration in the June quarter. So maybe if you could talk about sort of how the last quarter played out, what you see in maybe April to date? And then if you could just specifically quantify the growth rates for travel retail China and Brazil in the March quarter, that would be helpful.

So we cannot speak about April. But what we see, as we said -- yes, you're right. In U.S. in March there was an acceleration, and it was a good one. And as I said, we are very comfortable and confident of continuous acceleration based on innovation program and our strong advertising investment in the fourth quarter, and not only in the United States. In terms of the travel retail question, we are looking for...

The travel retail growth in the third quarter was 11%. I think you asked about China as well, and shift adjusted for SMI is about 27%.

Your next question comes from Chris Ferrara with Bank of America Merrill Lynch. Christopher Ferrara - BofA Merrill Lynch, Research Division: I think it sounds like you said that advertising, merchandising sampling were up about 20 basis points in Q3. And there was some shift to Q4. And I think you also said Q4 is more of a normalized quarter. So I guess the question is, where is advertising going to come in relative to what you thought 3 or 6 months ago? And for Q4, when you say normalized, it's because you had a heavy up investment in Q4 a year ago and we're just going to be kind of in line with that, as a percentage of sales?

So in -- no, we didn't say a couple of basis points. Advertising was up roughly 4% in the third quarter. And what Fabrizio said is we expect that it will be flat to last year in terms of the fourth quarter -- relatively flat to last year in terms of the fourth quarter. So overall, we expect that our advertising spend will be up mid-single digits for a full year. And that's comparable to what we had expected coming into the year.

And also I would like to clarify one thing on advertising spending. The absolute amount of total advertising, merchandising sampling is also what has an important impact. And the absolute amount, the biggest absolute amount is in the fourth quarter. So the third quarter increased 4% in a 5% adjusted sales environment. So to be clear, as a percentage of sales, this was down, not up. And in the fourth quarter, we are going to be about flat in terms of total advertising but with the biggest amount in any quarter to support our innovation, which means a gain in terms of percentage of sales is going to be slightly down. So we are -- we have a very solid advertising team. And then I want to clarify on advertising, the concept that our advertising makes in a quarter is influenced enormously by which brand has innovation in that quarter, which category and which region. Because our advertising spending level is very different by brand, by category, by region. Example, if the new innovation is on M-A-C, there will be less advertising and more in-store investment than if the initiative is on Clinique, which would be more advertising investment and less in-store. If the launch is in China or is in, I don't know, in a European market, there will be a different level of advertising because China is more advertising intensive than some European markets. And the same by category, Fragrances or skin care tend to be more advertising investment than makeup. So it's very difficult for us to read the year by quarter-by-quarter progress of advertising. Just as with a normal consumer company, we depend a lot by mix of innovation and our focus is to be really delivering the maximum effectiveness and efficacy of our innovation launches, and that's the way we made the decision on advertising, not absolute level by quarter.

Your next question comes from the line of Caroline Levy with CLSA. Caroline S. Levy - Credit Agricole Securities (USA) Inc., Research Division: Not to beat a dead horse, but in terms of looking at the acceleration of sales, according to my numbers for year ago, your comps are actually tougher in travel retail and in China than they were this quarter. So I just want to be clear that you really expect those key markets will be strong despite that. And then just, again, on the 15 days of inventory that's ahead of where you were a year ago, doesn't that make your challenge even greater to grow that top line the required 7% to 8% of the fourth quarter, to make the full year?

I'll take the first part of your question. Yes, we had a great last quarter also last year. But as I said, we are very comfortable with our innovation program and our plans. However, within last year, the days of last year of the countries where we had the toughest challenge this year, meaning Korea and Russia, were lower in the last quarter. So in this sense, we have an easier comp where we had challenges and we have a challenging comp where our business is anyway very strong and will be accelerated by innovation. Tracey?

And the extra 15 days of inventory, assuming that it's the right inventory, actually helps us from a sales standpoint. As we see an acceleration of sales, we expect to draw down on that inventory.

Your next question comes from Ali Dibadj with Sanford Bernstein. Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: So it seems like you've been very careful about the language you're using around market share, whether it be in the prepared remarks or in the press release. And given that skin care grew about 3% adjusted, given that Americas was only about 4%, can you give us a sense of a few things, one is what was your market share globally, so what was the change? And two, to come back to this question of are you spending enough -- you choose your words Fabrizio, you over-delivered on margins. I think you'll probably continue to do that. But I think at least to some expectations, top line is a little bit tougher. So can you just give us a little more confidence about that? And the last thing is, I think part of your answer will probably be about the category growth rates slowing. Do you have any insight on what was driving that growth between price, volume and mix? Because when we look at your peers, you don't see as much of a slowdown.

So internal growth, again, we have a plan over the long term of 6% to 8% growth every year. And as I said, there could be years where we are 6% or 7% and years it will be 8%. So 6% to 8% is our ability to grow. We have a strong innovation program for the future. We believe we'll be in the 6% to 8% growth. The big change was the market estimate this year. The market was supposed to grow by about 5%. We estimate the market will be growing about 3%. And that's why in this fiscal year, we are forecasting to end up at the lower part of our range. But we believe that this quarter, the quarter 4 will accelerate this. And we are confident in this acceleration. Sorry, the second part of your question?

Can you repeat the second part?

Could you repeat the second part, sorry, on advertising spending which I... Ali Dibadj - Sanford C. Bernstein & Co., LLC., Research Division: So yes, so the second part was around just the over-delivering that you're clearly doing and will probably continue to do on margins. But a little bit less than expected on top line, particularly versus your peers. So again, kind of are you spending enough question. And then to your point about the category growth, being what's slowing a little bit, if you could give us more insight on whether that's pricing or volume or mix?

Yes. So in terms of pricing, our -- there's about 2 points to pricing in our sales, and that's been also consistent in the last years. And we do not expect this to change in a very significant way. In terms of growth versus competition, we are growing 2 points at least above market. So we are growing global market share. We are growing global market share in some markets more than others. In the U.S., we have, for example, we are stable in market share this year in makeup and skin care, and we are losing market share in fragrances. And in fact, we are going to work now in acceleration innovation in skincare and makeup to accelerate growth and we are going to be more active in fragrance to start growing also in the Fragrance category. I'd also want to point out for example, in the U.S., that the overall market grew 12% versus mass growing 1%. So we have about 40% market share in the U.S. So the double-digit growth of the prestige market in the U.S. that we are generating with our activity is benefiting, first of all, us. So even in the context of a stable market share for some months, this is still very beneficial and is still the right strategy to continue to source and -- from mass and grow the category as a whole, where we have a big market share. In markets where we have smaller market share like Europe, you just heard Ivan's comments where market share gain has been spectacular, in market like Italy, where the market is minus 5%, we've been growing 7%. Again, this is by choice. Because since the euro, we have a 13.7% market share, we are aiming at growing market share, taking advantage of the recession period, so to enjoy bigger market share later. And then in emerging market, we are growing market share very aggressively everywhere in China. In the last quarter, we counted we have grown 1 full market share point, as an example. So we keep growing market share overall and in the selected market, with very specific strategy by market, which depend by the level of market share in that market, and that's going to drive our strategy. In terms of advertising, are we investing enough? I think we have basically doubled the level of media investment over 3 years. I believe that's been one of the major element of our restructuring. We have taken, as you all know, a lot of cost out of the system and we have reinvested part of this in creating the right level of media investment for the company. The company needs to expand globally. I think I feel very comfortable with the level of advertising power that we have reached at this point in time. And from now on, we believe we can continue driving media updates on sales growth, while internal percentage of sales, we are in the range of our ultimate goals.

We have time for one more question. Your last question comes from Lauren Lieberman with Barclays. Lauren R. Lieberman - Barclays Capital, Research Division: So I just wanted to clarify, Fabrizio, I apologize because I'm not that bent out of shape about market share. But I think you just said that U.S. prestige was growing 12%. And I know this quarter, North America was up 4% underlying. So that doesn't suggest shares are stable. I don't know if a lot of that is from Fragrance or what the dynamic is. So that's just a clarification point. My real question was more forward-looking just about innovation. So -- and hopefully this isn't the one you didn't want to talk about. But the relaunched Dramatically Different Moisturizer, because I've read about it in the media, and I thought that it was slated for June and it looks like it's now coming in August. So is that correct in kind of assuming that gets pushed into next year as a potential meaningful launch activity? Then also on La Mer, the Sun Care launch, I think that's really interesting, and you didn't mention it. Is that sort of a softer initiative and kind of build through the summer? Or is it a lay the groundwork now and it's more of a push for next year's sun season? And then finally on the CC cream for Clinique, I've seen a lot of advertising, so I just didn't know if it had the real push kind of started and it's really been kind of late March into April, so that's why it impacted Q4 more than Q3?

So on the U.S. NPD sales 12% in the last -- in March. And so is the -- I will just indicate in this as how much prestige is growing more than mass. And we have been growing also at retail very, very well in the March month, as you probably know, from NPD data. In terms of our big initiative on Clinique that you mentioned, yes, this is a big initiative. And we are doing it in the moment we believe is the right moment from a competitive standpoint in every market. So if we are continuing to adjust the launch dates and activities is based on our decision by market and our competitive position more than anything else. But, yes, this is going to be a very important initiative for us, and we believe will be a successful one. And then in terms of La Mer, yes, this has been recently launched and obviously, this is an important initiative for La Mer summer. And for the La Mer brand, this is going to be an important initiative. The specific SKUs are not going to be significant in the context of the total company but very important for the La Mer brand.

That concludes today's question-and-answer session. If you were unable to join the entire call, a playback will be available at 1 p.m. Eastern Time today through May 16. To hear a recording of the call, please dial (855) 859-2056, passcode 52045999. That concludes today's Estée Lauder conference call. I would like to thank you all for your participation, and wish you all a good day.