Good day, everyone and welcome to Carter's Second Quarter 2012 Earnings Conference Call. On the call today are Michael Casey, Chief Executive Officer; Richard Westenberger, Executive Vice President and Chief Financial Officer; Jim Petty, President of Retail Stores; and Sean McHugh, Vice President of Investor Relations and Treasury. [Operator Instructions] . Carter's issued its second quarter 2012 earnings press release today before the market opened. A copy of the release as well as additional presentation materials for today's earnings conference call have been posted on the company's website at www.carters.com. Click on the Investor Relations section, then News & Events on the left side of the screen. Before we begin, let me remind you that statements made on this conference call and in the company's press release, other than those concerning historical information, should be considered forward-looking statements and actual results may differ materially. For a detailed discussion of factors that could cause actual results to vary from these contained in the forward-looking statements, please refer to the company's most recent annual report filed with the Securities and Exchange Commission. Also on this call, the company will reference various non-GAAP financial measurements. A reconciliation of these non-GAAP financial measurements to the GAAP financial measurements is provided in the company's earnings release. Also, today's call is being recorded. And now, I would like to turn the call over to Mr. Casey.

Thank you very much. Good morning, everyone. Thanks for joining us on the call. Before we walk you through the presentation on the website, I'd like to share some thoughts on our business with you. Over the past few months, we've made good progress improving the profitability of our business. We believe the margin pressure from the cotton crisis is now largely behind us and we're expecting more meaningful margin improvement in the balance of the year. Since our last update, we continue to see strong demand for our products in all channels of distribution. We significantly improved our inventory position and cash flow, and we acquired one of our sourcing agents in Hong Kong to help us accelerate our direct sourcing initiative. With respect to our business segments, our Carter's business in the United States continues to be the driver of our results. The strength of our Carter's business is the baby product offering, which is the core of the brand. A key component of the baby product line is called Little Layette. This is a high-margin replenishment business, which we refreshed and relaunched in May, and its performance to date has been very good in all channels of distribution. We're on track to open over 60 Carter's stores this year and our new stores have been achieving their plans. Our retail team has made good progress this year, improving the store experience. They've reduced the density of the product on the floor, made the stores easier to shop and improved the brand presentation. We recently completed our fall floor set. We've meaningfully improved the wear now component of our fall product line and third quarter sales are off to a stronger start than last year. Carter's eCommerce sales nearly doubled in the second quarter, and it's profit contribution more than doubled. All key metrics in eCommerce are better than last year. It's an exciting new growth opportunity for us both in sales and margin contribution. To support the growth we expect this year in eCommerce, we invested in a new multichannel distribution center in Georgia earlier this year. We expect to begin supporting eCommerce demand from this new facility by the end of the year. By bringing eCommerce fulfillment capabilities in-house, we expect to improve our service levels and profit margins. In 2013, we plan to begin supporting the growth in our retail and wholesale businesses with this new facility. Sales grew 13% in our Carter's wholesale segment in the second quarter. This is very good performance given the current retail environment. In the first half of the year, we've had over 10% growth with 4 out of our top 5 customers. We met with our largest customers during June market week. A consistent message we heard from our customers in those meetings was that we are doing an excellent job supporting them and driving good performance in their stores with our Carter product offerings. We have a strong cross functional team who focuses on strengthening our brand presentation and performance for the national retailers. Their good work is reflected in these results. The second largest contributor to our growth in the quarter was our new international segment, which represented about 8% of our total sales and 18% of our operating margin. Growth in this high-margin segment was driven largely by our new Canadian operations. We expect to open at least 100 stores in Canada over the next 5 years, and we believe that we have the potential to double our sales and earnings in Canada in that timeframe. We met with some of our largest international business partners in Atlanta, in June. Over 40 countries were represented. We're taking a more active approach to managing these relationships, exploring with our partners the full potential of their business with us. To better support our international partners, we plan to establish distribution capabilities in Hong Kong by the end of this year. Our objective is to leverage our merchandising expertise and stronger supply chain capabilities to help strengthen our brand presence in Asia. With respect to OshKosh, we achieved our third consecutive quarter of comp store growth. The growth is being driven by the Girl's product offering, which is meaningfully better than last year. We've made good progress in improving OshKosh's product offering. We're getting good feedback from our consumers, retail store employees and national retail partners. Our back-to-school offering is now in stores and online, and we've improved the in-store experience and marketing to support our second half growth plans. Similar to Carter's, we've improved the wear now offering in our fall product line and the third quarter sales are off to a stronger start than last year. Our focus with OshKosh continues to be on improving its profitability by strengthening the product offering, editing out unprofitable sales and improving our supply chain capabilities, including direct sourcing and inventory management. Our outlook for OshKosh is consistent with what we shared with you in April. We're forecasting growth in sales and earnings this year. We expect OshKosh to grow to at least $500 million in total sales over the next 4 to 5 years, and we believe it has the potential to earn an operating margin of 10% to 12% in that timeframe. In our supply chain, we've taken steps to accelerate our direct sourcing initiative and acquired one of our sourcing agents, Channel Industries [ph] based in Hong Kong. Channel [ph] has provided good service to Carter's over the past 8 years and has a very experienced workforce who we expect will be very helpful to us. We plan to increase our direct sourcing mix from about 5% today to at least 50% over the next 5 years. It's an important component of efforts to improve the competitiveness of our supply chain and increase our profitability. Given the strong performance in the second quarter, we are affirming our previous outlook for the year. We hope to reinvest some portion of the more favorable earnings in our growth initiatives, which are focused on leading the market in product value and brand presentation, extending the reach of our brands and improving profitability. As you know, our business is heavily weighted to the second half of the year, with over 60% of our annual profits forecasted in the balance of the year. I think you'd agree this is a less-than-robust retail market given the sluggish economy, which weighs on consumer confidence and demand. That said, we believe we're well positioned to continue weathering the storm. We have a highly engaged, talented team of employees focused on achieving our growth plans this year. Richard will now review our second quarter results and our outlook for the balance of the year.

Thank you, Mike. Good morning, everyone. My comments this morning will follow along with the presentation materials, which are available on the Investor Relations portion of our website. I'll begin on Page 2 with some highlights of the second quarter. Second quarter was very solid for us with significant growth in both our top line and in earnings. We posted strong revenue growth of roughly 20%. This was on top of 21% growth in the second quarter of last year. Our Carter's domestic businesses and our international operations drove the revenue growth we experienced in the quarter. Adjusted operating income and adjusted EPS, as noted here, grew significantly over the prior year. These results were better than we had planned, principally due to strong year-over-year gross margin expansion and the contribution from our growth initiatives. On Page 3, just to orient everyone as for the composition of our business in the second quarter, the chart at the left shows the components of our roughly $470 million in second quarter revenue. As you can see, our Carter's business, domestic businesses represented about 80% of our revenue base, OshKosh approximately 15% and international is roughly 8% of the mix. In the waterfall chart at the right, you can pretty readily discern the headlines for the change in profitability for the quarter. And that is that the Carter's domestic businesses, primarily wholesale, drove the increase in year-over-year operating income. International contributed $4 million of the increase. And lower earnings from OshKosh, which were principally due to higher product costs, as well as some higher corporate expenses, reduced earnings in total by about $7 million. We're very pleased with the overall increase in adjusted operating income of over 55%. On Page 4, we provided a more detailed look at our second quarter sales performance. In the U.S., total Carter's sales grew over 15%, driven by strong growth in all channels: wholesale, retail stores and eCommerce. In our retail stores, comparable store sales increased 1%. Carter's wholesale delivered solid growth of 13% in the second quarter, with growth in all brands. Unlike the first quarter, off-price channel sales were fairly comparable to a year ago, and therefore did not distort the segment's top line performance. Consistent with first quarter results, we expect a meaningful reduction in off-price channel sales for the second half and for the full year. U.S. OshKosh sales declined modestly, mostly reflecting the effects of retail store closures and lower sales to the off-price channel and wholesale, partially offset by growth in eCommerce sales. We've been managing the OshKosh store portfolio more aggressively over the past year, focusing on eliminating underperforming locations that may contribute to sales but which don't contribute to profitability or in some cases, are actually unprofitable. OshKosh retail store comps grew 1% in the second quarter, our third consecutive quarter of positive comps. Our international business contributed approximately $30 million to our net sales growth in the quarter, driven by the addition of our Canadian retail and wholesale business. In total, our Canadian operations contributed about 8 percentage points of net sales growth in the second quarter. Recall that we acquired this business at the end of the second quarter last year, so beginning in this year's third quarter, our results will be on a comparable basis. I'll provide some more detail on our business segment results in a moment. Our second quarter P&L is on Page 5. We've already covered the specifics of net sales. So turning to gross margin, second quarter gross margin increased 460 basis points over last year. Contributing to this increase was our business in Canada and the continued growth in our other higher-margin, direct-to-consumer businesses, namely retail and eCommerce. Our Carter's business drove this major expansion in gross margin due to strong product performance, improved pricing and promotional strategies, and in the wholesale side of the business, the benefit of lower fall product costs, which we begin to ship towards the end of the second quarter. OshKosh gross margins remain under pressure but we're forecasting good improvement in this metric in the back half of the year when we expect to see the benefit of meaningfully lower product costs. Gross margin also benefited from our dramatically improved inventory position year-over-year. Adjusted SG&A increased approximately $34 million over last year, which I'll go through in a moment. Royalty income was down versus last year, principally reflecting the acquisition of our former licensee in Canada. So on a bottom line basis, adjusted earnings per share for the quarter grew over 60% to $0.37. Page 6 summarizes the key drivers of adjusted SG&A for the second quarter. Our SG&A increases over last year continue to be driven by our growth initiatives, namely Canada, retail and eCommerce. As a reminder, these direct-to-consumer businesses are more SG&A intensive than the rest of our portfolio and contributed significantly to our SG&A rate increase. In retail, we're operating 46 more stores on a net basis in the U.S. than we did a year ago, and eCommerce volume and associated costs are up meaningfully over the same period. We're also providing for higher levels of performance-based compensation versus a year ago, given our expectations for improved profitability for the full year. Distribution and freight expenses increased over last year driven by the higher sales volume. Finally, the all other bucket contains a number of smaller items, including notably, spending on brand marketing, information technology and other corporate administrative expenses. The next 2 pages summarize our first-half performance. I'll touch on just a couple of items on Page 7. We delivered very strong first half sales growth of 19%. This reflects nearly 14% growth in our Carter's domestic businesses and our OshKosh domestic businesses grew about 2%. Our international business increased nearly 4x driven by our Canadian acquisition. Sales detail by business can be found on Page 8. The success of our growth strategies and pricing, promotional and supply chain initiatives helped us to overcome meaningful product cost increases of approximately 10%. First half adjusted earnings per share increased 19% to $0.94 per share compared to $0.79 per share in the first half of last year. Pages 9 and 10 provide a detailed reconciliation of our GAAP results to our adjusted earnings, both for the second quarter and the first half of 2012 and 2011. I encourage you to review these pages to assist in your analysis of our results. Turning ahead to Page 11, we've recapped a few key balance sheet and cash flow metrics. Our liquidity and balance sheet remained very strong. Cash on hand at the end of the second quarter was approximately $240 million. A real highlight on this page is that inventories at the end of the quarter declined 18% compared to a year ago, with units down 8%. This decline is a result of our inventory management and supply chain initiatives and lower fall product costs. The quality of our inventory at the end of the second quarter was excellent. Looking ahead, we're forecasting year-end inventories up mid-single digits in dollars and up low double digits in units versus the end of fiscal 2011 in anticipation of good demand in early 2013. Given our strong cash balance in the quarter and favorable outlook for the year, we took the opportunity to pay down $50 million on our revolving credit facility. Cash flow from operations in the first half was $90 million, a first half record for the company. This nearly $180 million improvement from the prior 6-month period reflects our higher level of earnings this year, the decline in inventory and other favorable movements in working capital. CapEx for the first half of the year was $38 million compared to $16 million last year. Most of our current year investments relate to domestic and international retail store growth and our new multichannel distribution center here in Georgia. Page 13 summarizes our business segment performance for the second quarter. Some of these results are presented on an as adjusted basis, excluding the impact of the previously described acquisition and facility closure costs. Carter's wholesale segment margins improved nicely compared to a year ago for the reasons I've already mentioned. OshKosh wholesale operating margin performance reflects improved gross margins year-over-year as the level of off-price channel activity has declined. OshKosh retail profitability has declined due to higher product costs and incremental expenses related to new store openings and investments in the OshKosh organization and in marketing. As we've talked about in previous calls, the product cost inflation we experienced in play clothes has been severe, the highest of all of our product categories. So despite some very good results in areas like driving higher AURs and improved in-store productivity, we've continued to experience lower overall profitability in this part of our business. Our forecasts reflect our expectations that we'll begin to see a reversal of this trend and post earnings growth in OshKosh retail in the second half. Our international segment margin delivered an adjusted operating margin of nearly 20% compared to approximately 51% last year. Consistent with recent quarters, this decline reflects a greater contribution of our Canadian retail stores in the current year compared to a higher mix of royalty income in the prior year. Overall, adjusted operating income grew approximately 56% in the second quarter, with adjusted operating margin growing by 180 basis points to 7.7%. Now I'll cover second quarter business segment results in some more detail. Turning to Carter's wholesale on Page 14. We continue to see good demand for our brands in the wholesale channel. Net sales grew 13% with growth in all Carter's brands: Carter's, Child of Mine, Just One You and Precious Firsts. This net sales growth reflects both unit growth and higher average selling prices. Overall, our spring assortments posted positive over-the-counter sales despite a somewhat choppy retail environment. Our recent top to top meetings with our wholesale customers have been very positive and they continue to reinforce with us the importance of our brands to their businesses. Seasonal spring 2013 bookings for Carter's wholesale are planned up about 5%, with growth in all brands. On Page 15, we have some key metrics for our Carter's retail segment. We delivered a comp sales increase in the quarter of 1%, which compared to a strong performance and 8.1% increase last year. We're pleased with our sales results given that we believe some meaningful amount of spring demand, perhaps as much as 2 percentage points of comp growth, was pulled forward into the first quarter this year given the earlier Easter holiday and warm weather at the time. The strong appeal of our products, coupled with our successful pricing, promotional and inventory management strategies, drove a solid increase in AUR for the quarter. During the second quarter, we opened 16 Carter's stores and closed 3. We ended the second quarter with 385 stores, an increase of 57 stores compared to the second quarter of last year, and we're on track to open 63 Carter's stores for the full year. Rounding out the Carter's retail segment, our eCommerce business continues to perform extremely well. Second quarter sales were approximately $20 million, up $10 million from the second quarter of last year. Our growth outlook for eCommerce continues to look strong, and we're progressing with our plans to in-source the distribution center and fulfillment functions of this business later this year. Now turning to the OshKosh businesses, beginning with OshKosh retail on Page 16. Second quarter sales increased about 2% in the quarter, reflecting growth in eCommerce sales and a slight decrease in retail store sales, due primarily to fewer stores in the base. As mentioned previously, our OshKosh retail store sales have been affected by the closure of 13 underperforming or low potential stores a year ago, and another 5 stores in the first half of this year. Comparable store sales increased 1% for the quarter. As with Carter's retail, we believe there was a similar effect of demand pull forward into the first quarter. We continue to be pleased with the improvements and the performance of our retail store assortments. The Girl's portion of the business continues to show a lot of momentum in particular. Our work on the mall store retail concept continues as an important step in bringing the OshKosh brand closer to the consumer. The 3 mall stores we've opened have been delivering higher average unit retails and better gross margins than the rest of the chain. We're planning on opening 2 more mall stores over the balance of 2012, including 1 here in the Metro Atlanta area. And as I said earlier, we're expecting improved profitability in OshKosh retail in the second half of this year. On Page 17, in OshKosh wholesale, in this smaller part of the OshKosh business, sales were down 13% in the second quarter, mostly due to lower sales to the off-price channel. Regular priced OshKosh wholesales sales, which exclude sales to the off-price channel declined 4%. We continue to receive good feedback on the improvements in the OshKosh product assortments. From what visibility we have into our customer's performance, we believe they've been able to successfully raise their AURs based on the product improvements which have been made. Spring 2013 seasonal bookings are planned down about 7% compared to last year, which in part reflects lower upfront selling to off-price channel customers. On a full year basis, we're forecasting OshKosh wholesale net sales to decline in the mid-single digits, with a significant decline in off-price channel sales. On Page 18, we've summarized the components of our international segment in the second quarter. Our Canadian retail stores contributed nearly $27 million to our top line in the quarter. Overall, same-store sales in Canada for the second quarter declined 6.5%. We believe the pull forward of demand into the first quarter was more pronounced in Canada than it was in our U.S. stores. Recall that first quarter comps in Canada were up almost 14%. In terms of store format performance, the business posted a negative comp in the legacy Bonnie Togs nameplate stores, but a solid positive comp in the cobranded format. The cobranded Carter's and OshKosh stores are the model we are following for future store expansion in Canada. During the second quarter, we opened 4 new Carter's and OshKosh stores, bringing our quarter end total Canadian store count to 73 locations. We plan to open an additional 10 locations in the second half, which would bring us to a total of 18 new stores for the year. International wholesale sales grew 45% in the second quarter, also principally due to the addition of our Canadian business. In the second quarter, we launched our international eCommerce shipping capabilities. By partnering with an experienced third-party service provider, we now have capabilities to serve customers in more than 80 countries. While we are planning this to be a material part of our business, we do think it's interesting where the demand is coming from. To date, the strongest demand has originated from consumers in Canada, Brazil, Russia and Japan. International royalty income, which is included in the international segment's operating income, declined by approximately $1 million versus last year, driven by the acquisition of our former licensee in Canada. Turning now to our outlook on Page 20. For the third quarter, we're projecting net sales to grow in the mid-single-digits over Q3 last year, driven primarily by planned growth in Carter's retail stores, eCommerce and international. We expect third quarter adjusted earnings per share to increase 25% to 30% compared to an adjusted $0.67 last year. For the full year, we are reaffirming today our previous full year guidance, which calls for net sales growth in the range of 9% to 11% and growth in adjusted earnings per share of 20% to 25%. The year is off to a solid start for us and our current second half year reflects summary investment of our first half upside in the form of some higher spending on a few key initiatives, which we think will position the business well for 2013 and beyond. Notably, we're projecting some higher spending in the areas of international, information technology and distribution infrastructure and marketing. I think it's also helpful to remember there's a lot of the year left to play out. As I mentioned on our last call, we continue to monitor risks related to the level of pricing and promotional activity in the marketplace and we're currently executing a very complex project to transition the fulfillment activities for our eCommerce business to in-house management. We're also cautious regarding the potential for softening demand, given the continued weak economy and the uncertain impact of the upcoming presidential election. Importantly we're continuing to invest in the business in support of our growth initiatives. We're projecting CapEx in the range of $90 million to $100 million, which reflects the ongoing growth in our store base both here and in Canada and the initial buildout costs related to the new multichannel distributor center. We expect a solid year of operating cash flow in the range of $180 million to $200 million. And with that, we're ready to take your questions.

[Operator Instructions] And for our first question, we go to Robby Ohmes with Bank of America Merrill Lynch.

This is Helena Tse in for Robby. A couple of quick questions. One, can you discuss the comp trend for the Carter's retail segment through the quarter and also sort of trends in July?

Sure, sure. For each of the brands, Helena, it rolled out as follows. Again, on the quarter, we were up 1% in each of the brands. We started out in April with the expected shift due to the Easter shift this year. April came in down 3.4%. May rebounded to a positive 2.2% and June was up 3.9% for the Carter's brand. Similar results in OshKosh, April down 1.9%, May up 6.5% and June roughly flat. And again, coming in at 1%. So the way we look at the quarter, as Richard spoke about in his opening comments, we believe there's about a roughly 2% shift into Q1 that would've been realized in Q2, primarily due to the Easter shift and also the unseasonably warm temperatures that we had earlier in this year. So our current comp trends, as Mike alluded to, pretty much bared that out. And we feel as though we're very much on track with our plans.

Great. And then on the AUR trends, I know that in the past, you've sort of given out pretty detailed sort of segment AUR trends as well as UPTs. Would you be able to provide that for the Carter's retail brand and also your wholesale segment?

Yes, Helena, I'd say in general, we had good results in all of the key metrics in retail, particularly AUR. We've decided to pull back a bit on some of that disclosure. We don't think from a competitive perspective it's probably that advantageous for us to continue to report that. But we've continued to make very good progress on pricing.

Got it. And is your wholesale -- well, can you let us know if whether the wholesale and the retail segment AUR trends are relatively similar like in the past quarter?

I'd say that we've continued to make progress across all of our channels on pricing.

Got it. And then last question would be in terms of your Carter's wholesale segment. Can you mention, are there any shifts in the quarter, any pull forwards from 3Q to 2Q, and maybe elaborate also on any sort of growth initiatives you might have in that segment, whether it's rolled out of any planned distribution and the timing of any of that?

Helena, I'd say the wholesale business has had very strong performance. We have at least a couple of our customers working through some issues within their business. But to date, it has not had any meaningful impact on our business. As I shared with you in the opening remarks, 4 of our top 5 customers had growth in excess of 10% in the first half of the year. So the business is rock solid. The feedback we continue to get from our wholesale customers is that we're doing a good job for them. I don't think -- I'm not aware of any meaningful pull forward or shifts in demand. I think the performance has generally been good. We're going through a transition now. Everybody's getting rid of the spring product and summer product getting ready for back-to-school. The timing of the fall floor set varies by retailers. We're probably on the early side of it. We usually get set early on the fall because people, just based on the nature of the age segment that we're focused in on, people buy ahead of needs. So if you'd walk in our stores right now, you'd probably see a lot of good offering of Halloween product and probably within a month, you might even see Christmas, which we've moved up because people are buying beautiful things for their children way ahead of actual need. But I'd say that the wholesale business has been a very solid performance so far this year. And the outlook is good. Outlook for that business is good for us.

Just add to that, Helena, we didn't really see much of a trend towards demand pull forward. We have, as you know in previous quarters, had a bit of a phenomenon where customers have come to us and asked for product earlier than we had originally planned. That was not a significant factor in the second quarter.

And for our next question, we go to Susan Anderson with Citi.

I was wondering if you could maybe give a little bit more color on your guidance. You had a good great quarter this quarter. So just wondering why you didn't raise the year. It sounds like you're being very cautious on the back half. Is that something that you're seeing now in the results or you just wanted to kind of like take more of a cautious approach?

I don't know if it's so much a cautious approach. We've got a good plan for the year. We've got good growth plan in both sales and earnings. And when you think about what we were up against, at least in the first quarter, we had no growth in earnings. And for the year now, we're forecasting 20% to 25% growth in earnings. So I'd read less that we're more cautious than we were 3 months ago. I just don't feel any compelling desire to every 3 months be elevating the forecast. We're, as a company, we are focused on executing a very good growth plan for the year. We don't really manage this businesses from quarter-to-quarter. You've got a lot of moving pieces in our business, multiple channels, multiple brands. So I think if you look at this business from quarter-to-quarter as opposed to year-over-year on an annual basis, I would encourage you to do the latter because that's the way we manage the business. But we have a robust growth plan for this year. We think we have good growth plans for many years to come. So we have had a rock solid first half, far better than what we envisioned. We've got good growth plans for the balance of the year. It's just I wouldn't read anything into that we're not elevating the forecast. I just don't think that's a good practice after just 3 months. Second quarter is probably the least significant quarter of the year. We have 2/3 of our profitability still ahead of us. But I would encourage you to think about the kind of growth this company is positioned to deliver for its shareholders for the year. 10% growth in sales, 20% to 25% growth in earnings, that's a terrific plan. And of course, as you know, our track record has been we're focused on executing that plan and perhaps, doing a bit better than it.

Great. That sounds good. And then maybe if you could talk about maybe a little bit more color on just taking your eCommerce in-house in terms of the timing and then transitioning to the new DC and I think you kind of mentioned that there should be some margin benefits. If you can maybe -- I don't know if there's any numbers you can put around it or just maybe a little bit more color?

Sure. So the big deal is the eCommerce's business, we're well ahead of what we originally laid out a couple of years ago, it's our 5-year plan. We're probably in year -- at least 3 if not year 4 of where we -- in our second full year of doing business online. The consumers clearly love the presentation of both brands online. So we didn't envision we'd have to make this investment this year. We thought we'd have to probably make it in years 4 or 5. So we -- so anyways, we scrambled earlier this year. We looked throughout the entire country. We engaged some good outside experts to guide us on where is the best place to have an eCommerce fulfillment center. Thankfully, one of the final choices happened to be just north of Atlanta. We've got a beautiful 1 million square foot distribution center about 45 minutes north of Atlanta. We were up there earlier this week. They're making good progress. Product's flowing in, not flowing out yet. We don't think we'll be shipping out of that facility until later this year. And the margin benefit I would characterize as significant. You pay a very healthy premium to a third-party provider, and they've done a good job for us. There's no doubt the third party fulfillment providers have done a nice job for us. But it's time to bring it in-house. And for Carter's, the operating margin, I'm told, I think our forecast we'd probably be somewhere around 10% operating margin for Carter's eCommerce this year, which I think is terrific. And it's first -- pardon me, second full year of doing business. So demand has been good. The profitability's getting better. We think by making this investment it gives us an opportunity to even further improve the operating margin when that new facility gets up and running. In this new facility, we described it as a multichannel distribution center. And because Phase 1, probably the smartest thing -- things worked out well for us. Phase 1 of this new facility is to bring eCommerce in. And it's the smallest component of our business relative to retail and wholesale. But we were briefed earlier this week in terms of some of the technology that will ultimately go into this facility, beginning sometime next year, to better support our retail stores and the national retail partners. So I think our service levels in our stores and for our wholesale business I'd say is good. I think we're going to move from good to great over time. And so we're pretty excited about eCommerce, but particularly there's good initiative underway with respect to the new distribution center.

Great. That sounds exciting. And then one last question on the direct store thing. It seems like maybe you've accelerated that a bit also maybe with the acquisition. I was expecting maybe 5% next year but it sounds like you're already doing that. Maybe you could, yes, talk about the timeframe to reach the 50, I think 5 years, but is it more back-end loaded or front end? And then also with a 5% you're doing now, what have been the challenges and what have been the benefits, so far?

Well, again, the high view is substantially everything we've done over the past 10 years has been through sourcing agents. And most of that's been done through Li & Fung. The service level from Li & Fung and the others has been, I would say, excellent. They helped us achieve a 14% operating margin back in 2010. In terms of the quality of the product, the execution, rarely do we have any issues in terms of deliveries. Every once in a while, if you're sourcing 400 million units, you'll hit a bump in the road. I'd say -- I'd give Li & Fung and the other sourcing agents a solid A. But it was clear that we needed to evolve. It's unusual for the kind of volume we're doing to have substantially everything going through sourcing agents. So over the past year, we have developed plans to evolve the business away from agent-sourced to more direct sourcing. And the timeframe we've set on it is take the time you need, do it over a 5-year period, looks at a goal that at least have a 50-50 mix over the next 5 years. So just the overall objective is create a more competitive supply chain, become a lot more knowledgeable about where good factories are to do some components of our business. The thing that we're more excited about after we bought Canada, Canada was doing all their business direct sourcing. Their margins were far better than ours. And their experience in terms of some of the plants that they were doing business with we were not, so they've introduced us to some good suppliers. But you really can't appreciate, at least based on this conversation, the good work that's been put into finding 2 first-class sourcing offices in Hong Kong, the recruiting effort that we've had in place over the past year to hire a very talented team that's now in place, the leadership team is in place in Hong Kong. We have some of our new associates from Channel [ph] . Now our employees here in our office earlier this week. So we've been -- we've contemplated this for some time. We're announcing it today that we've acquired Channel [ph]. We've been working with them for 8 years. They're going to give us a jumpstart on this effort. We've also been fortunate to have some people here in the United States who've decided to do a tour of duty in Hong Kong, nice opportunity for them, so that we're not starting with all kind of new people and so we can kind of accelerate the effort to get to that 50-50. And again, we say 5 years but we just started. And so as the years go by, on every quarter, we'll give you an update on our progress. I'd like to think we can accelerate that. But for the time being, just assume -- just know that this we view as an important component of our efforts to get back to that 14% operating margin we just earned a couple of years ago. And again even now we say that might take us 4 or 5 years. But this is a big step forward for us.

For our next question, we go to Margaret Whitfield with Sterne Agee.

I was wondering, Mike, if you could comment on the product cost outlook for this fall and next spring and if there is a difference between the Playwear as you described, more pressure there than in Baby or Sleepwear?

Okay, okay, sure. So the outlook is good and continues -- I think at the end of fall costs for both brands, the mother brand so to speak, Carter's and OshKosh, are down about 10% for fall after going up over 20% last fall. So I think it's important -- even though this cost outlook is good, we're still not back to where we were 2 years ago on the cost scenario. We're starting to get some visibility into spring '13. We're encouraged by that directionally. We think those costs might be down some portion of 10%. But again, it's important to understand the history. In spring '11, costs went up about 12%. In spring '12, they went up about another 15% or so depending on what brand. And now they're going down 10%. So we're kind of digging out a hole. So we're thrilled with this performance that we're reporting today. Our performance relative to 2010 in first half to first half, we're kind of -- we're still a little bit below what we were earning just 2 years ago. So -- but the outlook is good. And I think it says not so much getting -- the cotton's improved but some other things that we've done over the past year I think are going to be important margin drivers. We just talked about one in terms of direct sourcing, but the progress we've made in terms of inventory management over the past year, I would say, has been significant. This initiative that we referred to on earlier calls what we call quick backup, where we ship into our stores a fraction of what we would have otherwise shipped in -- so for purposes of this conversation, just assume we'd ship in about 80% of what we'd normally ship in, see what sells, and then quickly replenish what sells. So that the stores isn't sitting on a lot of stuff they didn't need. And if they have some stuff they don't need, they have to mark it down. So our level of clearance sales in our Carter's stores is down meaningfully to last year. So markdowns or excess inventory is lower just as a company needs to get to the total consolidated view for a moment. Our off-price sales this year, we're forecasting might be half of what they were last year. In round numbers, whatever was $80 million of off-price sales last year will be about $40 million. And the profits, there are probably the losses attached to that, will probably be half of what they were last year. So we're excited about what's going on with product cost. It's important to note they're still higher than they were a couple of years ago. But we've got some other things where we've made progress on that we're seeing a meaningful benefit in margin improvement, which I think, you'll see more of in the second half of this year.

Well, offsetting the benefits of the product costs and the initiatives you mentioned, I know you're reinvesting in the business. Would you say SG&A, as a percent of sales, would grow at a similar rate in the back half to what you reported today for Q2?

I think just directionally, you will see SG&A rise as a percentage of sales. Our business is changing. So if you look at the percentage of our business that is now direct to the consumer, with the acquisition of Canada, with the success of eCommerce, with the success we're seeing in terms of site selection for the Carter's stores, directionally, I think in this -- our direct-to-consumer sales a year ago was a little over 50%. I think this year it's closer to 54%. So that -- those businesses have a different cost structure. But it also has a different gross profit structure, gross profit margin structure. So if you looked at our business relative to our defined peer group, I would say we probably rank in probably -- at least the median if not the top quartile in terms of operating margin. But we rank low in gross profit margin and rank low in SG&A. So as our businesses is evolving, as our business evolves, the gross profit margin will improve and SG&A relative to sales will increase. But it's -- when you get underneath those numbers, and Richard will be happy to provide a little bit more color if you like it, but it's largely driven by the new Canadian operations, the expansion of our retail stores, the success of eCommerce. As Richard mentioned, we're funding because we can, some good work on the marketing side of the business. We'll tell you more about that in October. But yes, directionally, you will see SG&A increase relative to sales.

Final question. I wondered what the acquisition of Channel [ph] and your efforts in Hong Kong means for exploiting the Asian market. I know that was cited earlier as a key focus point apart from Canada and perhaps Brazil down the road.

I think it's an important part of it. So we're establishing a management team in Hong Kong to source product and more importantly to support our international partners. I think we've referenced that we're opening a third-party logistics center in Hong Kong. So instead of product going from Asia to Georgia and then back to Asia, the product will go from the factories in Asia to Hong Kong, then directly to our Asian-based partners. So the offices are dual-purpose, certainly to support our direct sourcing initiatives but also to be our hub in Asia to do a much better job supporting our international partners in developing a bigger base of business in Asia.

And we go next to Howard Tubin with RBC Capital Markets.

This is Courtney in for Howard. I just had a question, this might apply more to OshKosh but where are your -- do you have any specific marketing plans for back-to-school, something new or different? And then I know you mentioned that the product had been improving. Can you talk about what's been working d what you'd highlight for back-to-school product-wise?

So what's been working is Girl's. Girl's has been -- in OshKosh. The Girl's product offering I would say, in recent years, had been the weaker component of the offering, and Girl's product by its nature, it's more a bit more fashion-forward, it's got to have a little bit more bells and whistles on it, a little bit more shine is the word that I hear in Atlanta. It's got to have a lot more beauty to it. The more beauty in it, the better it sells. The more basic it is, doesn't sell as well. So we've addressed that. We've had good feedback on the spring line. I think you'll start to see this holiday season -- yes, spring was good, back-to-school is good, even the holiday product offering I think you'll start to see the improvements we've made in the Girl's designs. We've beefed up the talent in that component of the business, and I would say what's driving the performance right now has been Girl's. Boy's has always been good. And interestingly for OshKosh B'Gosh, about 1/2 is Boy's, about 1/2 is Girl's. I think right now Girl's is a little higher percentage of the mix. But Boy's has always been good, Girl's is right now is outperforming Boy's. In terms of our overall marketing effort, and this is just for all the efforts at both Carter's and OshKosh, the focus is improve the brand presentation, acquire new customers and increase the loyalty of existing customers. And we've made good technology investments in recent years in CRM to help with that effort. But I've seen the back-to-school. It's focused on the everyday essentials. It's focused on easy dressing. I think probably the most significant change year-over-year, and this is Carter's and OshKosh, is a more wear now offering. And so that's what the consumer is asking for. If you look at the news where they would say we've got a heatwave from coast-to-coast right now. It was miserably hot up in New England in recent weeks. It's pretty toasty here in Atlanta right now. But that should come as no surprise. It's the summer. So in years past, we'd have corduroys on the floor right now. That doesn't make a whole lot of sense. So both brands consciously, I think, we set the fall floor set at least a week later than we did last year. And if you go in, there's plenty of choices for children shorts. A year ago I'd say it's probably tough to find a pair of shorts in our stores. Today, you've got a lot of wear now product. It's fresh, it's new. It's bright colors. It's clearly different from the spring and summer offerings which have been discounted and being cleared out. As Jim referenced, our third quarter so far, both brands, Carter's and OshKosh, in our stores and eCommerce are off to a much stronger start than a year ago. One thing for me to describe our back-to-school marketing, but one thing I'd encourage you to do, get on the mailing list. Give us the information, so you can get these things directly and you can form your own opinion. But I've seen both Carter's and OshKosh back-to-school marketing. I think it's terrific. I thought last year's was good, this year's is far better.

For our next question, we go to Anna Andreeva with FBR Capital Markets.

I had a couple of questions. I was hoping to follow up on the gross margin line. You guys obviously, saw a nice upside on gross margins and in the first quarter, you talked about the higher margin DTC, eCommerce and the lower off-price sales contributing the most to that upside. Can you maybe give us similar type of comments for the second quarter and again, how should we think about the gross margin line into the back half? I was hoping to follow up on Canadian comps. Did you guys say that Bonnie Togs was comping negatively in 2Q? Just a question on is it pull forward or is there something else going on there? And then Mike, you always talk about just what are you guys seeing in the pricing environment out there. I know you said department stores, your business continued to be very solid in the second quarter. Just what are you seeing from the pricing perspective into the back half?

Anna, I'll take the Canadian question first. We had a positive comp in the co-branded stores for the second quarter of about 5%. The comp in the Bonnie Togs nameplate stores was down about 12%. What we experienced in Canada was a more significant pull forward of demand into the first quarter. You had the earlier Easter holiday. I think the real factor though was just how extraordinarily warm it was for Canada at that time of year. So more pronounced shift forward of that business. On balance, if you look at the first half comps, very solid performance. The Bonnie Togs stores were only down about 1.5%, that's about $400,000 of revenue. Most of that actually was outerwear. So in our minds tracks pretty well to the performance that we saw and the climate at the time. Very solid performance in the co-branded stores of about 10%. So a bit of a shift there. The focus clearly of the business is to continue to build out the co-branded format and that's what we're going to be pursuing going forward. And your question on gross margin, the majority of the upside year-over-year was driven by the Carter's businesses, and recall that, that includes the core Carter's wholesale business, it includes the Child of Mine business, it includes Just One Year. We've had Just One Year, rather, we've have very good margin performance from a variety of different sources. We've started the shift fall product, those costs to Mike's point are down about 10%. So we get a very nice benefit from that. Our inventory position year-over-year is dramatically better than it was a year ago. So the provisions you have to make for excess inventory for troubled inventory are far lower than they were a year ago. And then rounding it out I would say would be the very strong contribution of our pricing and promotional efforts in our retail stores, where despite still facing the higher product costs in the spring assortment, we are -- we're making more on those sales each day as we've been just smarter on our promotions and yielding more. So on balance, I think the outlook for gross margin looks good. To your point, we will have a continued mix benefit, mix shift benefit as we move into the second half. The Direct-To-Consumer businesses are a bigger proportion of the total in the second half and of course we'll have the full benefit of the fall assortments being at lower product costs in the second half as well. So we're bullish on the outlook for gross margin.

In terms of what we're seeing at wholesale, generally speaking, the pricing is higher year-over-year. It has to be. Everyone's costs went up. So everybody has figured a way to elevate their pricing. It's just -- it's more than just raising the price. So the best price is going to be on the product that's selling well. So I think everybody's focused on strengthening the product offering, strengthening the brand presentation in the stores, making the stores easier to shop. Price clarity, I think, with our wholesale customers and certainly with us has been a big initiative, so consumers understand the value in the product offering. And the other thing we've talked on previous calls is just run leaner on inventory. So that you're not stuck with a lot of excess goods. And that's always been good for pricing, good for margin. And I'd see those are some good practices in place with most of our wholesale customers.

Mike, are you planning to keep pricing flattish then in the back half?

We are.

And department stores flattish as well or...

Yes. This whole strategy with the benefit of the cost reduction in the second half, our strategy was to maintain the level of pricing that we had in the second half of 2011. That's correct.

We go next to Susan Sansbury with Miller Tabak.

Everybody's asked most of the questions, but Mike, kudos for getting all of this momentum going and because the upside just seems to be enormous. In that regard, talking about this return to the 14% plus pretax margin, is it too soon to shorten the timeframe in which you might accomplish that objective?

Yes, first, thank you. And in second, yes, too soon. Again, a lot of these things are still evolving. And if you look at over, say, over the next 4 to 5 years and just knowing that we're -- everybody here -- if there's one number that most people that are in this company, particularly people who support me know, is that 14%. That's what we're working hard to get back to that. If you look at our business in 2010 versus where we are today, it's a much different business. We have Canada, we have this wonderful eCommerce business, we have a bigger presence with our stores, we're making some good investments in the supply chain, we're making good progress with inventory management disciplines. I think it's a far better company today than it was in 2010. In 2010, we achieved our record level of performance. So we're determined to get back to that. But things take time. As Richard said before, we're going to continue to invest. We're not going to wring every nickel of opportunity out of this business this year. We are performing well, we're going to use some of that upside to reinvest into some of these good growth initiatives. We're starting to focus more on 2013 and '14 now, and making sure that we position ourselves well as we roll into next year. So yes, I'd say too early to accelerate that timeframe. But even if it does take us 4 or 5 years to get there, we will deliver good performance for our shareholders.

That's exciting. Any feedback that you can provide from the gathering of all your licensee partners in Atlanta? Is there any update in terms of your franchising initiatives or bringing anybody in-house?

Yes, for me, it was something -- and this has been an area of focus over the past couple of few years. Yes, we always had an established business in our international markets. It just didn't get a whole lot of attention. And it's got a tremendous amount of attention right now. So we brought these folks in. We had a big sales meeting over the weekend here back in June. And as these folks stood up and introduced themselves, I was struck by one, the number of countries represented. We had over 40 countries represented at this meeting. And as they stood and introduced themselves, I asked them, "How long have you been doing business with us?" And a number of people said 5, 7, 10 years. Some people were 15, 20, -- one fellow, 25 years that represents our brands in the Middle East. And what a wonderful opportunity now to work with these folks to say, "What's the full potential of your business with us?" With our wonderful resources and their local market expertise, what can we do together? So our vision here for our company is to be the world's favorite brands in young children's apparel. We are the market leader in the United States. We own 17% share in a $22 billion market. Nobody is even close. We own 3x the share of the nearest competitor. If you look at the earliest ages, newborn to 24 months, we own 5x the share of the nearest competitor. If you look outside the United States, and you take the top 5 markets, it's at least equal to the size of the market in the United States, and we own probably less than 1% share of the collective market outside the United States. So our near-term focus is on China and Japan because that's where the market is. The other markets, South Korea, Mexico, Australia, those market sizes pale in comparison to China and Japan. So we're devoting some attention to that. And as those things take shape, we'll share it with you. But we're trying to replicate this wonderful model that's been built over many years in the United States, which has got a retail component, wholesale component, licensing and eCommerce. And all of those things exist today outside the United States. It's just what's the full potential of each of those business components. And we have a search underway. Probably the only gap I'd say we have of any significance in our organization is a full-time executive over international. So we've been interviewing for that position over the past few months. And we're seeing some very talented people and hope that we have more to share with you next time we have our update.

We'll go next to Scott Krasik with BB&T Capital Markets.

Question on the sales guidance. It sounds like all your direct businesses are off to a really good start in the third quarter, and you said you were going to get probably flat pricing in your wholesale business. So how are you thinking about your wholesale businesses for the back half of the year? It would imply to me that maybe you're thinking about those being flat to down in the previous...

A significant factor, Scott, it continues to be the decline in off-price activities. That will affect our reported wholesale numbers in the second half. Absent that, we're forecasting good continued growth in what we call the regular-priced portion of the business.

Okay. So you wouldn't label it conservative because the off-price is coming out, is that...

I think we can even have nice momentum in the core part of the wholesale business. The decrease in off-price inventory tracks directly to our improved inventory position. So I wouldn't look at our reported number as the exact barometer on the health of the business. I think we're in better shape today than we were a year ago because we're not liquidating inventory.

Okay. And then Jim, historically, you guys had a bit of a traffic problem. When the weather would get very hot, people would stay away from the outlets. You said that your comps quarter-to-date are positive. So are you not seeing that phenomenon at this point?

It's earlier in the year with the shift, traffic kind of came in, in the first quarter, a little bit of a decline in the second quarter as a result of that. We're very happy right now with our overall performance, especially in the brand stores. We've got 209 brand stores right now, Scott, that are close to where mom lives and are convenient. We'd like to think we've positioned these stores in their shopping destination of choice. So as a result, that is helping us to offset what in the past may have been a little bit more of a concern from a traffic perspective. And the hot weather declined, the people going out to our -- of course the people not go out to our outlets. So overall, we feel as though we're able to meet the customers' needs with the incremental locations. We also have a couple of initiatives underway that are assisting with this. We don't talk much about it but we've begun remodeling some of our stores. And interestingly enough, the remodels, which we've got about 33 done to date, are also seeing incremental upside in sales, in large part due to traffic. So we've been able to go into some of our stores, you've been in them. We've moved our cash wrap out of the center of the store to more effectively utilize the overall square footage and picked up capacity and those stores have actually seen an uptick in our traffic. So there -- it ebbs and flows a little bit with the peaks and valleys of the hot weather. But the beauty of this business is that these children basically grow out of their wardrobe every 3 months and they've got to go back out and get more. And with our brand store strategy meets mom's needs. So we're in good shape.

Okay. And then Mike, you mentioned you're holding pricing flat at wholesale right now. Does that assume pricing flat for spring of '13 in your discussions as well? [indiscernible]

That's correct, yes, it will be -- the pricing for spring '13 will be comparable to spring '12.

Okay. Great. And then if I just look at your sort of key core quarter gross margin performance, if you look at the second half of 2009 to the first half of 2010, you did about 39.5%. But to your point, you've got mix in your favor, costs are going to keep coming down even more. Is there any reason to think that you can't be above that or significantly above that?

Well, I think long term we certainly have the potential to get back to that territory, Scott. I don't see any barriers. We have a lot of wind in our sails from a gross margin perspective.

Well to get there, I think you're going to be there in the next couple of quarters. But I mean in terms of exceeding that for 2013, would that be the goal to exceed past peak margins or...

Yes, the goal is to work our way back to that 14%. I think less about gross profit margins. You've got to look at that operating margin because the business is changing. So the thing that it is important to us is how do we work our way back to that 14% operating margin. And I think that's the key metric that we will work hard to show progress with.

Okay. And then let just lastly, sorry, Richard, I know you're investing in the business but the cash flow profile still looks really strong. Any reason why you're not buying stock back here if you think the margins are going to keep going up?

Well, we've considered a range of alternatives for our cash, Scott. I'd say right now we're in a more aggressive period of evaluation of how we put that cash back to work in our business. I'd rather see if we can't accelerate our growth and use it for that purpose. But if we really find ourselves in a position of true excess cash and that's really where the debate is, how do you define excess, then that's not our intention to hold onto it forever.

Okay. So you don't view yourselves as having the excess cash to do that right now?

Well, I think we're still in a period of evaluating it, and there's a number of opportunities that could be potentially attractive for our business. I think international is a good case study where I don't think we've fully scoped how we can take these great brands and take them overseas in a more meaningful way, and we'd like to accelerate that and that likely have some cash implications.

We'll go next to Jim Chartier with Monness, Crespi, Hardt.

Two quick questions. First, what do OshKosh bookings look like for spring next year, excluding the off-price?

I'd say down slightly, Jim.

Okay. And then is there any impact on second half earnings from the acquisition of the sourcing agent?

There is not. It's actually a Q3 transaction for us, and it's very immaterial to the consolidated results of the company. So we've not disclosed terms of that transaction.

And we go next to Gerrick Johnson with BMO Capital Markets.

You mentioned you're keeping your pricing flat in the back half. Is that based on anticipation that competitors will do the same?

Well, I don't know what the competitors are going to do. I know what's right. We've studied the market, we've seen what our competitors are doing, it's based on our best judgment. We're the leader in the market, so I'd like to think what we do, others follow. But it's based on what our pricing strategy has been determined to be, based on what we think will move our brands forward. The reality of it is we don't know what our competitors are going to do in the second half but we have enough history of setting prices that we think we're going to be well-positioned in the market. Our overall focus, make sure we're providing great value to the consumer.

Okay. And given that you're not providing us with the numbers of transactions or the units per transaction at retail, can you at least tell us if the number of transactions were up or down in the quarter?

Number of transactions on the quarter, on a comparable store basis, we're down slightly. But the quality of transaction was much more significant. The stores, in large part due to the quality of product, have done a really nice job in conversion. Conversion is up and our conversion numbers, to begin with, which is obviously, transactions to traffic, our conversion rate is record high in the industry to begin with. On a quarter and year-to-date basis, we've seen nice improvement in that conversion rate overall. So that tells me that the customers are voting very positively around the assortment. We've also -- I think that Mike alluded to it earlier, but I don't think we can underestimate the importance of what improving the overall shopping environment has done. We deliberately exited from our store a number of fixtures, approximately 10 on a large percentage of our stores and created a much more, I think shop-able experience and positive response from the customers has been significant. So all of this has allowed us to focus on more profitable product, more desirable product and the overall quality the transaction has seen upside as a result of it. So while traffic or transaction's down slightly, overall quality of transaction has been meaningfully improved. So that's, I think, the best way to run one of these businesses. It's also helped us to realize a less significant clearance side of the business, which has helped overall averaging at retail. So the initiatives that we put in place have been really, in large part, about an incremental gross margin quality per unit. And they have not only begun paying us back this year, but they've got long-term, sustainable benefits to them.

Lastly, just one strategic kind of question. I know the mall-based store initiative is relatively young. But do these malls you're going into have anchors like JCPenney or Macy's, et cetera, that might already have your product or you're trying to avoid malls with those kind of anchors?

No, we're going to pursue where the best real estate is. So keep in mind, the wholesale component of OshKosh is very small. And so -- that we're not avoiding any locations. The overall objective with this component of our OshKosh initiative is simply to bring the brand closer to the consumer. We've got the brand, got very high marks last year when there was a survey done with consumers of what brands they ranked highest in the outlet centers. OshKosh and Carter's scored very high in quality, value, selection, service. What we're trying to do is just add another dimension to this convenience. And so, no. Some of these centers, some of these malls may have some of our very good wholesale customers. But it's -- I don't think it's going to be an issue whatsoever with respect to OshKosh, given it's becoming one of the smaller components. Still important, but one of the smaller components of the business. I think near term, the focus for OshKosh should still continue to be on the outlet stores. That's where the lion's share of the revenue is. And even as we look out over the next 4 or 5 years, the lion's share of the profitability is going to be coming out of the existing business we have today. The first real mall store we will have will be in the Mall of Georgia, sometime here in September. I would encourage you to come see it. We'll have another one in the Houston Galleria later this year. But it's, relative to the total OshKosh franchise, it is the smallest component of the business near term. I would view it as R&D. We're trying to create a -- make the brand more convenient, elevate the experience, have it be a more special product offering for the consumer and create another growth vehicle for the brand.

And with that, ladies and gentlemen, we have no further questions on our roster. Therefore, Mr. Casey, I will turn the conference back over to you for any closing remarks.

Okay. Thank you, all, for joining us this morning. Your questions are very helpful to us. We hope this briefing has been helpful to you. We look forward to updating you on our progress in October. Goodbye.

And again, ladies and gentlemen, this does conclude today's conference. Thank you for your participation.