Michael D. Casey - Chairman and Chief Executive Officer Richard F. Westenberger - Chief Financial Officer, Principal Accounting Officer, Executive Vice President and Treasurer Brian J. Lynch - President

Taposh Bari - Goldman Sachs Group Inc., Research Division Susan K. Anderson - FBR Capital Markets & Co., Research Division Daniel O'Hare - BofA Merrill Lynch, Research Division Stephanie Schiller Wissink - Piper Jaffray Companies, Research Division Rick B. Patel - Stephens Inc., Research Division Steven Louis Marotta - CL King & Associates, Inc., Research Division Howard Tubin - RBC Capital Markets, LLC, Research Division Anna A. Andreeva - Oppenheimer & Co. Inc., Research Division Evren Dogan Kopelman - Wells Fargo Securities, LLC, Research Division

Good day, everyone, and welcome to Carter's Third Quarter 2014 Earnings Conference Call. On the call today are Michael Casey, Chairman and Chief Executive Officer; Richard Westenberger, Executive Vice President and Chief Financial Officer; Brian Lynch, President; and Sean McHugh, Vice President and Treasurer. [Operator Instructions] Carter's issued its third quarter 2014 earnings press release earlier this morning. A copy of the release and presentation materials for today’s call have been posted on the Investor Relations section of the company's website at www.carters.com. Before we begin, let me remind you that statements made on this conference call and in the company's presentation materials about the company's outlook, plans and future performance are forward-looking statements. Actual results may differ materially from those projected. For a discussion of factors that could cause actual results to vary from those contained in the forward-looking statements, please refer to the company's most recent quarterly 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 and presentation materials. Also, today's call is being recorded. And now I would like to turn the call over to Mr. Casey. Michael D. Casey: Thanks very much. Good morning, everyone. Thanks for joining us on the call. Before we walk you through the presentation on our website, I'd like to share some thoughts on our business with you. Earlier today, we announced a record level of sales earnings for the third quarter. As expected, our gross profit margin was a bit lower than last year due to higher product costs, but we controlled the growth in SG&A, improved our operating margin and continued to return excess capital to our shareholders. Given our progress this year with our growth strategies, we are reaffirming our growth objectives for the year. As a reminder, we're focused on 3 key strategic priorities for our business. The first is to provide the best value and experience in young children's apparel. The second is to extend the reach of our brands. And the third is to improve profitability. We believe we've strengthened our market position this year by focusing on the things that matter most to consumers. In a recent survey, millennial moms said good value is the most important characteristic when shopping for brands. There are a lot of lower-price alternatives for our brands. We believe we continue to outperform our competitors and gain share because our brands have a strong reputation for quality and value. We are competing in a highly promotional environment. Despite the heavy discounting, we improved price realization in the third quarter. As you know, we raised prices this year to help absorb higher product costs. Consumers supported most of our price increases. Even with these price adjustments, our brands continue to provide great value, with average unit prices under $10. In terms of brand experience, we've done a good job this year strengthening our brand presentation with our top wholesale customers in our stores and online. For those of you in New York City, I encourage you to visit our new Carter's shop in Macy's at Herald square. The grand opening was last week. It's been beautifully executed, and we're very pleased with its performance. We've made similar investments this year with Kohl's, Target and Babies"R"Us. Our objective is to stand out on the floor wherever moms are shopping for young children's apparel. This would be a good time to visit our stores, too. We've strengthened our holiday product offerings with fresh new colors and creative details, beautiful head-to-toe outfits, the classic key items our brands are known for and great promotions. As you may know, the children's apparel market in the United States has not grown in recent years. Yet we continue to grow and gain share by extending the reach of our brands. We have the broadest distribution of young children's apparel in North America. Our brands are sold in over 18,000 doors in the United States and over 900 doors in Canada. We're on track to open over 100 stores in North America this year. Collectively, our new stores are performing in line with our plans. Our new side-by-side stores provide a complementary product offering, serving the needs of a newborn to a 10-year old child in one convenient location. On a combined basis, these stores are expected to produce about $2 million a year in sales, on average, with good operating margins. We plan to open 200 or more of these stores by 2018. We're also seeing a good response to new stores located in densely populated cities. We currently have 12 stores in New York City, which we expect will average over $2 million in annual sales, which is 50% greater than our typical single-branded new store location. We plan to explore opportunities in other major cities in hopes of replicating the success we're seeing in New York. To drive traffic to our brands, we increased our spending on digital marketing by about 25% this year. We've seen a significant return on this investment, including a nearly 10% increase in active customers. We continue to see strong demand online for our brands, with eCommerce sales up 29% year-to-date, driven by growth in traffic and conversion rates. This has been our fastest-growing, highest-margin business. On a combined basis, our stores and online sales grew about 12% for each brand in the third quarter. We're also seeing good demand for our brands outside the United States. Sales in Canada are up 17% year-to-date, with good growth both in our wholesale and retail businesses. We launched eCommerce capabilities in Canada this summer and expect sales to grow from about $4 million this year to about $30 million or 10% of store sales by 2019. 45% of the demand on our U.S. websites is coming from international markets. The sources of this demand have given us good insight into new market opportunities. We're currently pursuing eCommerce opportunities in China. Year-to-date, we had nearly $11 million in sales to Chinese consumers shopping on our U.S. website, which is more than double the sales last year. It's the fastest-growing international market for us online, followed by Brazil and Russia. We expect to have more to share with you on our efforts to establish eCommerce capabilities in China next year. We plan to make good progress improving our operating margin this year, which we expect will be driven by a higher mix of retail and eCommerce sales, a higher mix of direct sourcing, improved performance of our OshKosh brand and control over discretionary spending. As you may know, we completed the transition to new systems in our multichannel distribution center in Braselton, Georgia this summer. In the third quarter, we experienced a learning curve with the new systems and new employees which was steeper than we had planned. As a result, we did not realize the expected leverage of distribution expenses in the third quarter. We saw a deleverage worth about $1.5 million. As we continue to work our way through this startup phase, we believe we'll see improved productivity and leverage of our distribution expenses over time. Our supply chain performance this year has been meaningfully better than last year in terms of on-time shipments and product quality from our suppliers in Asia. The outlook for product costs continues to be good. Cotton prices and fuel costs have trended lower. The U.S. dollar has strengthened. Global demand for apparel is generally weaker. And manufacturing capacity at our cost objectives has improved. Collectively, these factors may help mitigate the impact of rising labor costs in Asia. We saw modest cost increases for spring 2015 and are expecting better product costs for fall. We'll have a better view on fall costs and bookings to share with you on our next update. In summary, we believe we've made good progress this year by providing the best value and experience in young children's apparel by extending the reach of our brands and improving our profitability. Our outlook for the balance of the year is consistent with what we shared with you in August. The fourth quarter is off to a slower start than we planned, but we believe we're on track to achieve a record level of sales and profitability this year, which would be our 26th consecutive year of sales growth. I'm grateful for the support provided by all of our employees this year. Their passion for our brands and commitment to strengthen our business are reflected in the strong performance we're reporting this morning. With their help, we've built a multi-channel business model that has enabled us to weather a challenging consumer market. Within the next few months, we'll refresh our growth plans based on our progress this year. Based on our preliminary estimates, we're expecting good growth in sales and earnings next year. Richard will now walk you through the presentation on our website. Richard F. Westenberger: Thanks, Mike. Good morning, everyone. Today, I'll cover our third quarter and year-to-date results, followed by our expectations for the fourth quarter. My remarks will track with the presentation materials which are posted on our website. I'll remind you that our materials present our business results on an as-adjusted basis, which we think provides a meaningful comparison of the company's results. A reconciliation of this adjusted basis to our GAAP results is provided in the Appendix of today's presentation. I'll begin on Page 2 with some third quarter highlights. As Mike noted, we achieved our sales and earnings objectives in the third quarter with top line growth of 5% and solid earnings growth. Our growth continues to be led by our U.S. Carter's and OshKosh direct-to-consumer businesses, which each delivered double-digit sales growth in the quarter. Our international segment was also a strong contributor to revenue growth. One of the key themes of the third quarter was expense management. Despite spending more than we had anticipated on our DC transition, overall spending was very well controlled. This focus on spending has been an important element of managing what continues to be a very challenging retail and consumer environment. We saw solid expansion of earnings in the third quarter with an adjusted EPS result of $1.27. Moving to Page 3 and details of net sales in the third quarter. Total Carter's brand sales in the U.S. grew 4%, driven by our retail store and eCommerce businesses. Our Carter's direct-to-consumer comp increased 3%, reflecting a down comp in our stores and continued solid growth in eCommerce. Net sales in the Carter's wholesale segment were down about 3%. As we told you on the last call, we planned this part of the business down in the third quarter due to lower fall seasonal product bookings with a specific individual customer. Our U.S. OshKosh businesses delivered another solid quarter overall. Total OshKosh sales in the U.S. grew 9%, driven by our retail store and eCommerce businesses. Our OshKosh direct-to-consumer comp increased nearly 5%. International segment sales grew 8% in the third quarter, driven by wholesale demand in Canada and other overseas markets and our Canadian eCommerce and retail store businesses. The weaker Canadian dollar versus the U.S. dollar adversely affected segment net sales by approximately $3 million in the quarter. As noted on the previous chart, on a constant currency basis, international segment sales increased 12% over last year. I'll cover our business segment results in more detail in a moment. Now to Page 4 and our third quarter P&L. Consolidated gross margin in the third quarter was 40.2%, in line with our forecast. The 50-basis-point reduction versus last year was principally due to product cost increases in excess of our offsetting pricing actions and unfavorable foreign exchange movements in Canada. Adjusted SG&A grew only 1% over last year, and we levered our rate by 100 basis points to 27.4%. These results were better than we had forecasted. Adjusted operating income grew 9% in the third quarter, and adjusted operating margin improved by 50 basis points to 14.2%. The weighted average share count was approximately 8% lower than a year ago, driven by our share repurchase activity over the past year. So all this nets down to an adjusted EPS of $1.27, which represents growth of 14% over last year. Moving to Page 5 for a recap of third quarter spending. Overall, we're very pleased with our management of SG&A. Offsetting higher expenses from the growth of our retail store portfolio and the growth of eCommerce were lower expenses in marketing, as we did not repeat the Carter's brand television advertising from a year ago. The exit of operations in Japan provided another roughly $5 million of favorability. We've estimated that approximately $4 million of expenses that we had planned to incur in the third quarter will shift out to the fourth quarter. Additionally, as Mike said, we've been spending a bit more on ramping up the Braselton distribution center than we had originally anticipated. Over time, the Braselton facility is expected to drive meaningful efficiencies in our distribution function, and it's intended to support the strong multichannel growth we have planned for our business, but it's taking longer and requiring additional resources near-term to stabilize and grow the volume in this facility. Managing the growth in expenses overall remains a top priority for us. Despite some higher spending on distribution-related costs, we continue to forecast expense rate leverage in the fourth quarter and for the full year. Pages 6 and 7 summarize our year-to-date performance through the third quarter. Year-to-date net sales have increased 8%, and adjusted EPS has grown 10%. We believe we've had a solid first 9 months given the environment, particularly the first several months of the year, which proved so challenging across the industry. We feel good about having grown earnings by double digits, particularly given the headwinds of unfavorable foreign currency movements in Canada and higher product costs, which have been factors in addition to the general macro conditions. Now turning to Page 8 for some balance sheet and cash flow highlights. Our balance sheet and liquidity remain strong. We ended the third quarter with $134 million of cash and have an additional $183 million of availability on our revolver. Quarter-end inventories increased 18% in dollars versus a year ago, with units up 9%, both consistent with our prior forecast. Product cost increases and business growth drove the overall increase in inventory compared to a year ago. We believe inventories are in good shape, and we're forecasting year-end inventories to be up in the low double-digit range compared to last year. We've continued to make good progress on our open market share repurchase program. In the third quarter, we bought back approximately 370,000 shares for $27 million. Year-to-date, our open market repurchases have totaled approximately $68 million or about 900,000 shares. We have approximately $200 million remaining under our current board repurchase authorizations. We've also returned $30 million to shareholders this year in dividends. Our year-to-date operating cash flow was $25 million compared to $64 million last year, reflecting increased working capital needs due to business growth, higher product costs and differences in the timing of inventory payments. Typically, we generate the vast majority of our annual free cash flow in the fourth quarter. We expect that will be the case again this year as well. Our estimate for full year operating cash flow is in the range of $200 million to $225 million, with full year CapEx between $100 million and $110 million. On Page 10, we've summarized our business segment results for the third quarter. I'll cover some of the noteworthy variances in our segment results, beginning with Carter's wholesale on Page 11. Net sales in the Carter's wholesale segment declined 3% in the third quarter for the reason mentioned earlier. Apart from the significant customer cited with lower sales, we saw good growth in total sales with other Carter's wholesale customers. Segment operating margin improved by 20 basis points, in part due to lower bad debt and lower marketing expenses. We're forecasting Carter's wholesale segment net sales to grow in the high single digits in the fourth quarter, which would result in low single-digit sales growth for the full year, in line with our plan expectations. Our spring 2015 seasonal bookings have improved slightly since our last update in July, with bookings now up modestly versus our prior view of comparable performance. On the next several pages, we have photos of the new Carter's branded shop in the flagship Macy's store at Herald Square. We think this is a great representation of the breadth and beauty of the brand as presented in an important wholesale location. We've continued to partner with our other wholesale customers in order to strengthen the presentation of the Carter's brand. On Page 15, we have included a photo of a Carter's shop in a Kohl's store here in suburban Atlanta. This particular shop is shown set for a baby sale, which was a very successful event for Kohl's, supported by a strong product offering and a well-executed brand presentation. Turning to Page 16 and the Carter's retail segment. Total U.S. retail segment sales in the third quarter increased 12% versus last year, driven by the addition of 70 net new stores and an increase in direct-to-consumer comparable sales of 3%. Retail store comp sales declined 2%, reflecting, as Mike said, lower consumer traffic than a year ago. In general, business was weaker in August and September than we would have hoped. We have continued to have very good execution in-store, with conversion up nicely over last year. Geographically, our Central and Southeast regions comped positively. We saw the most comp pressure in our Northeast and Mid-Atlantic regions. From a product perspective, our baby assortment had strong performance, with a positive comp in the quarter. Accessories has been a strongly-performing category for us this year. Due to the bankruptcy of a key vendor, we did see a negative comp impact in the third quarter due to product unavailability. We opened 17 new stores in the third quarter and closed 1. New stores continue to perform in line with our sales and investment return expectations. For the full year, we expect to open approximately 60 new Carter's stores in the U.S. eCommerce sales grew 28% over last year, and the operating margin of this business improved also. eCommerce represented 19% of total Carter's retail segment sales. Carter's retail segment profits grew 15%, and segment operating margin improved by 50 basis points, reflecting an increased eCommerce contribution and distribution and marketing expense leverage. We believe we're in a great position for the holidays in terms of our promotional and marketing offers. On Pages 19 through -- excuse me, 17 through 19, we have included a few pages from the Carter's holiday catazine. This marketing is intended to highlight our strong value proposition and the beauty of our products. Moving to Page 20 and OshKosh retail. OshKosh delivered solid overall growth again in the third quarter. Segment sales increased 12% versus last year, reflecting the addition of 25 net new stores and strong eCommerce sales growth. Our total direct-to-consumer comparable sales increased 4.6%, driven by eCommerce sales of 32%. Brick-and-mortar same-store sales were comparable to last year, as improved average transaction values and conversion were offset by lower traffic. Baby outerwear and accessories were the best-performing categories in the quarter. And during the third quarter, we opened 10 new stores and closed 2. All new stores were in the side-by-side format. Consumers tell us that they like the side-by-side format a great deal, and the financial performance of these stores continues to track to our expectations. By year end, we expect to have opened 27 new side-by-side stores, bringing the total number of stores in this format to approximately 50. OshKosh retail segment operating profit was comparable to last year. Segment margins declined 70 basis points, reflecting higher product costs. They were only partially offset by improved pricing and expense leverage. Pages 21 through 23 feature a few pages from our OshKosh holiday catazine. Like the Carter's version, these OshKosh catazine pages are intended to convey to consumers what we think are the many compelling reasons to shop OshKosh this holiday season. The next 2 pages include photos of 2 new side-by-side stores, 1 in North Carolina and 1 in Indiana. The Charlotte, North Carolina store is a premium outlet center which opened in late July and is off to a great start. The Indiana store is a suburban strip center location near Chicago which is also performing well. Turning to OshKosh wholesale on Page 26. Net sales in this business segment were comparable to a year ago. Segment operating income decreased by approximately $2 million. The margin decline reflects higher product costs, additional inventory provisions and higher distribution-related costs. For the full year in 2014, we expect net sales to be comparable to last year at approximately $75 million. Spring 2015 seasonal bookings are planned roughly comparable to 2014. This does represent an improvement over our prior view of a high single-digit decline. Now turning to our international segment on Page 27. International segment net sales increased 8% and 12% on a constant currency basis over last year, driven by growth across all channels in Canada. International segment retail store sales in the third quarter grew 1%, reflecting growth in our Canadian retail business that was mostly offset by the exit of our Japanese retail business earlier this year. Canadian retail store revenues increased 11% in U.S. dollars, driven by the addition of 19 new stores versus a year ago. Canadian retail stores comped down 2%. Similar to our experience here in the U.S., store traffic has been down in Canada, particularly in Ontario, where most of our stores are based. Our Carter's and OshKosh branded products posted positive comps in the quarter, but these increases were more than offset by lower sales due to the exit of legacy private-label brands. It's worth noting that a year ago, we were aggressively clearing Bonnie Togs' private-label product in Canada, so the comparison was challenging this year. We expect that we'll fully anniversary the exit of private-label product by the end of the first quarter of 2015. In the third quarter, we opened 5 new stores in Canada, bringing our quarter-end Canadian store count to 115. We plan to open 23 new stores in Canada this year in total. Our international wholesale business achieved good sales growth of 15% in the third quarter, principally driven by growth with U.S. multinational retailers in Canada and partners in other parts of the world. International eCommerce sales increased by $1 million in the third quarter, driven by our recently launched eCommerce business in Canada. We're seeing good traffic to the new site, and we believe, over time, that it can become a more meaningful contributor to our growth in Canada. Third quarter international segment adjusted operating margin declined 30 basis points to 18%. This decline reflects higher product costs in Canada, in part due to unfavorable exchange rate movements, partially offset by the absence of a $2 million operating loss in Japan in the prior year. The next 2 pages, beginning on Page 28, give you a glimpse of some of our licensee stores around the world. Today, we have over 20 partners, with a presence in nearly 60 countries. We've been working to deepen our relationships with our international partners and to leverage our capabilities to help these businesses accelerate their growth and the growth of the Carter's and OshKosh brands in international markets. Page 28 includes a picture of a new Carter's store in Dubai which opened in September. This store is expected to deliver good productivity and margins. This partner currently operates 18 Carter's stores in the United Arab Emirates. Page 29 includes a photo of a new store in Turkey, where we recently signed a new agreement with a strong local partner. This partner has great capabilities in Turkey across the retail wholesale and eCommerce channels and currently operates 11 stores in this country. Now turning to our outlook for the balance of the year on Page 30. Overall, we're maintaining our previous guidance, and we expect we'll end the year with very good sales and earnings growth. We expect fourth quarter net sales will grow in the range of 10% to 12%, with growth forecasted in all business segments. We expect fourth quarter adjusted earnings per share to increase approximately 20% to 25% compared to last year's adjusted $1.02 per share. The principal risks we see right now relate to the overall macro environment, the inconsistency of consumer traffic and demand, the level of promotional activity in the marketplace and our operational execution, including in our new DC. Business so far in the fourth quarter, particularly in our direct-to-consumer channels, has been softer than we'd like. So achieving our forecast assumes we'll see an improvement in trend. Currently, I said we are trending towards the lower end of our earnings guidance range. We will continue to maintain a strong focus on managing expenses as a way of offsetting lower demand. If we're successful in achieving our fourth quarter forecast, we'll cap a very good year with sales growth of approximately 8% to 10% and EPS growth of 14% to 16% over last year's adjusted $3.37. Those are our prepared remarks this morning. And we're now ready to take your questions.

[Operator Instructions] And for our first question, we go to Taposh Bari with Goldman Sachs. Taposh Bari - Goldman Sachs Group Inc., Research Division: Mike, I was hoping you could just talk more about the retail environment. You're one of the first big retailers to report, so I know you have pretty direct relationships with some of the big retailers out there. So I was hoping you could just speak more to what's happening out there in retail, your own stores. Is it a [indiscernible] issue? Is it online migration? Is it competition? Is it macro? Michael D. Casey: I think I'd say -- if I had to say, I think consumers are waiting a little longer to shop for their fall apparel. I'll speak to only our retail business. Our wholesale business has been good. I have more insight in terms of what our stores are doing. We had good, I'd say, consistent comps, July, August, September. And on average around 3.5%, thereabout. And we've seen a decline in comps in October. And October is not the biggest of our months in the fourth quarter, but it's a change in traffic that we did not see in the third quarter. And it's -- I've been in the stores. The product has never looked more beautiful. The marketing is terrific. The level of engagement of our store associates has never been higher. So it's a mystery to us. Usually, when you see the cold weather arrive, you start to see a significant increase in business. We simply just haven't seen that yet. And so we're hopeful that, as we approach the holidays as we move into November, we'll start to see better trends. And the insight we have on wholesale, generally, I would say, is mixed. It's mixed. But our retail business, we've seen a decline in comps in the month of October, which is -- it's unclear to us actually why. Only -- we believe that consumers are waiting a bit longer for their fall outfits. Taposh Bari - Goldman Sachs Group Inc., Research Division: Is that a store comp comment or a total comp comment? Michael D. Casey: Total. Taposh Bari - Goldman Sachs Group Inc., Research Division: Total, okay. And do you have any insights into what's happening kind of over-the-counter at wholesale in October in your business? Michael D. Casey: I'd say generally good, generally good. Taposh Bari - Goldman Sachs Group Inc., Research Division: Generally good. Okay. And then quickly on gross margin. Can you give us some context around how the quarter shook out versus your plan for 3Q? If you can give us context around how much product cost and price increased and how that will look in 4Q? Richard F. Westenberger: First, I'd say, in general, our gross margin results came in for the third quarter right on top of our internal forecast. Product costs were up on an average basis per unit about 7%. Our pricing was up about 5%. So that gap continues to be a bit of an issue, and that's versus the overall gross margin that we're seeing year-over-year. I'd expect that to continue in the fourth quarter. The gross margin rates will be still under some pressure year-over-year for the same reason. But on balance, our gross margin results in the quarter were in line with our forecast. Taposh Bari - Goldman Sachs Group Inc., Research Division: And does the gap narrow at all in 4Q? And how does that gap look in -- I don't know if it's too early to talk about this, but I think your product costs are locked into place for spring. How does that gap look like in the first half of next year? Richard F. Westenberger: I'd say that the product cost increases, again on an average unit basis, that we're expecting in the fourth quarter moderates a bit. It's something more like 5% or so in the fourth quarter. I won't comment specifically on our pricing. We're certainly hoping to have pricing realization be higher in the fourth quarter, but I'll tell you, we do start to ship spring 2015 product in the fourth quarter, and those product costs should be lower than what we experienced here in the fall.

And we go next to Susan Anderson with FBR Capital Markets. Susan K. Anderson - FBR Capital Markets & Co., Research Division: I was wondering if you could give a little bit more color on wholesale now for spring. It sounds like it's a bit better than you expected. Is it the one customer that's improving further? Or are you seeing other benefits from the other customers? And then in Canada, on the Bonnie Togs products, when do we start to cycle, I guess, clearing out that product? Michael D. Casey: Brian, why don't you take the wholesale? Brian J. Lynch: Susan, it's Brian. On wholesale, spring has improved. I think we have a broad assortment in our stores, and our wholesale customers take a subset of that. And as we've worked toward more Wear Now product and continue to flow fresh goods in, I would say that we've got a more strategic approach to that late spring, early summer deliveries. So our original bookings, we felt good about. We did talk to our customers about some of the rich offerings we had for late spring, early summer, kind of a transitional, and picked up additional bookings both in Carter's and OshKosh, which raised the bookings in Carter's to, I think it was, plus low single digits and then OshKosh up to comparable to last year. So we feel better about that improvement. As far as the one customer, we've talked about it incessantly. We have a really good relationship with that customer. They planned us down for fall. That was manifested primarily in Q3 shipments. And now we'll be growing off a lower base. But the sales of our products at that customer's account are very good thus far this fall. Michael D. Casey: The other question, on Bonnie Togs, we'll -- we had sales through the first quarter of this year. So once we get into the second quarter of next year, it'll be behind us. Susan K. Anderson - FBR Capital Markets & Co., Research Division: Got it. And one last question on the retail stores. I guess the comps have been kind of spotty, one quarter up, one quarter down. I mean, are you guys sitting there thinking, yes, that maybe you should slow the store growth just given the migration to online or anything? Michael D. Casey: No. We're seeing very good returns from these new stores. As we bring the brands closer to the consumer with these brand stores, I think it's understandable to us that consumers may be making fewer trips out to the outlet centers. Instead of driving 30 or 40 minutes out to an outlet center, you can go right up the street. So we're keeping an eye on it. It's a level of cannibalization that's understandable. And we're seeing some level of 4% to 5% cannibalization, but the returns -- as long as the returns on these new stores continue to be as good as they are, we'll continue to open up stores.

And we go next to Robbie Ohmes with Bank of America Merrill Lynch. Daniel O'Hare - BofA Merrill Lynch, Research Division: This is actually Dan O'Hare on behalf of Robbie Ohmes. I just had a quick question. I know you've touched on it. But for the customer who dropped in the quarter, is that just a temporary drop, if you could just remind me? Or is that something that's going to be ongoing for the foreseeable future? Richard F. Westenberger: Yes, Dan, it was primarily a fall '14 reduction in bookings. They made a decision to reallocate some of their businesses, and we -- from time-to-time, with a broad portfolio of customers, that can happen. The vast majority of our customers, their business continues to be up and continues to be strong. And this was more of a, I would say, a fall '14 issue and primarily a Q3 issue in terms of shipments. So our business is good with that account. It continues to stabilize, and we feel good about the growth prospects with them going forward. Daniel O'Hare - BofA Merrill Lynch, Research Division: Great. And just lastly, can you talk about the competitive environment inside wholesale? Have you seen an uptick in promotions or any new entrants from either private label or other competitors who are entering that space? Richard F. Westenberger: Yes, Dan, I wouldn't say there's any new competitors. The environment continues to be very promotional. You've got everyday low-price retailers offering couponing. The specialty retailers in the malls are certainly more aggressive with percent-off entire store sales. It was really aggressive at back-to-school for a few weeks, and we would anticipate a competitive environment holiday when you look forward. So we were a bit more promotional. We had to pull some free shipping from time to time, and our coupon penetration was up slightly. Primarily, it was playerwear-based. Playwear is certainly the most competitive category that we play in, but we're proud that our brands were up. Our AURs were up in the quarter, even inclusive of all the promotional activity, and our inventories are in real good shape going into the holiday season. So it's going to continue to be promotional. That's the way retail is right now, and I think the strongest brands with the best strategies and solid execution are the ones that are going to continue to perform at a high level.

We go next to Stephanie Wissink with Piper Jaffray. Stephanie Schiller Wissink - Piper Jaffray Companies, Research Division: We have a couple of questions as well. Richard, I just want to follow up on one of the comments you made. I think you indicated that August and September maybe had come in a bit below what you would have liked to see. But -- and then I'm thinking of the conversation around the lag in October. Just curious around your perspective on any pent-up demand that you might expect to come through late in the fourth quarter. And then how should we think about the margin comparisons in more of a promotional holiday versus what would have typically been kind of a seasonal conversion period? So that's question one. And then I also wanted just some clarification. I think you indicated a shift of expenses into Q4. Is that just the Braselton facility? Or are you also shipping some of your seasonal marketing into the fourth quarter as well? Richard F. Westenberger: Sure. Well, as it relates to comp performance, comps were -- store comps were negative in August and September, but to Mike's point, our total direct-to-consumer comps were a much more favorable result, and -- so we've increasingly started to look at that on more of a combined basis because we think that's how the consumer's interacting with us. To Mike's earlier point, we think the consumer is shopping later. I think that probably also applies to the holiday shopping cycle as well. We've seen that over the last number of years, that volume seems to be coming later and later each year into the holiday season, so we're certainly hoping that there's pent-up demand and we'll start to see that in November and December. Those are the 2 most significant months in the fourth quarter for us. With regard to SG&A, there was about $4 million I think I mentioned that moved into Q4. That was across a range of spending categories. There may have been a small marketing component of that, where we delayed or deferred some activities into the fourth quarter, but that was not the biggest driver. It was a lot of different spending in discretionary categories, that we just pushed that spending out later in the year. So on balance, that's how we're thinking about it. We have layered in some additional spending for Braselton, as is reflected in our forecast.

And we go next to Rick Patel with Stephens. Rick B. Patel - Stephens Inc., Research Division: Can you provide a little bit more color on the challenges you're facing with the new DC? Are you investing in people, systems? How do we think about that? And any way to quantify the pressure the DC will have on SG&A in the fourth quarter and your level of confidence that things will be on track once we enter spring? Michael D. Casey: We believe things are improving. So just as a reminder, we completed the last phases of the new material handling systems this summer. And as the unit volume ramped up in the third quarter, we saw some disruption in the flow of goods. Most of the time, the systems are working as they're designed to work. And at times they didn't. And that caused some unproductive downtime and higher labor cost to process the units. So we have 2 issues. We have to improve the new systems performance, and we have to improve labor productivity. More of the issue is on labor productivity. So we have hundreds of new employees at that facility working hard to understand how to make the most out of the new systems. We've got good internal and external resources helping us work through it, and we were expecting some portion of about 30 basis points of deleverage -- pardon me, 30 basis points of leverage in the third quarter, and we had deleverage of about 20 basis points year-over-year. So 20 basis points on the $800 million business cost us about $1.5 million in the third quarter. We're expecting the fourth quarter to be better. To Richard's point, we even included some additional spending to make sure that the workforce has the proper training, and -- but we're expecting, as we move into next year, with time and experience, we'll see better performance, better productivity. And we're hopeful that the leverage that we expected in the second half of this year, we'll begin to see next year. Rick B. Patel - Stephens Inc., Research Division: And then a question on eCommerce. Very strong growth there. Can you just provide some color on what's driving that? I'm curious how many of your -- how many of those customers are new to Carter's versus existing ones. And then secondly, in terms of where the geographical distribution is of sales, how much of the sales are being generated from locations where you already have stores versus those that are white space, where you have no physical presence? Richard F. Westenberger: A couple of things. Our eCommerce, we're really happy about the performance in the quarter, up almost 30%. We had strong gains in traffic and conversion. The international demand on the sites, the sales are about 45% of the sales coming from outside the United States. So we don't get into the specifics of how the demand's relating to where we do and don't have stores. I do think that when you put together -- when you look at our business from a direct-to-consumer basis, it only helps strengthen our brand experience when we have consumers that have the ability to shop online and in our stores. We've had good growth in mobile traffic, about 50% increase in mobile also on the site, so that's something that we're really focused on. And our experience -- and our strategy is to continue to further link the store experience and the online experience for her. We're finding about 40% of the customers do research our products online before they head to the store. And if we can convert folks to buy in both channels, that's about 2.5x more revenue that we generate from those customers than if they were just a single-channel customer.

For our next question, we go to Steve Marotta with CLK & Associates. Steven Louis Marotta - CL King & Associates, Inc., Research Division: What's total marketing spend in 2014 versus 2013? Richard F. Westenberger: I don't think we share that. I don't think we typically share that. Michael D. Casey: The marketing spend is higher but for the TV advertising we ran last year. Richard F. Westenberger: Steve, I would say that we're moving more toward digital, so digital's about 50% of our spend now. We have migrated the plans more toward digital marketing. Michael D. Casey: Yes, and that's up about 25% this year. Steven Louis Marotta - CL King & Associates, Inc., Research Division: Okay, that's helpful. And can you quantify raw cotton costs within Togs? It's probably another question that you don't normally discuss. And -- or even just try to quantify a little bit more the pricing cost relationship in the first half, which I believe you said that the costing's expected to moderate off of the 7% realized in the fall. Can you get a little more specific on that? Richard F. Westenberger: Well, raw cotton, to the best of our analysis, is something like 15% or so of the cost of a finished good. Fabric costs in total are about 40% of the cost of the good. So we're certainly pleased to see the reduction in market prices for cotton, although Chinese cotton has continued to be relatively expensive. That certainly should help our margins over time, but it's not the most significant component of our costing. For the first half, from memory, costs were up about 5% and pricing was up about 3%. So that's where we came out for the first half.

We go next to Howard Tubin with RBC Capital Markets. Howard Tubin - RBC Capital Markets, LLC, Research Division: Can you just remind us where you stand on your ramp-up of direct sourcing, what percentage of the business it will be this year and where you expect it to be next year? Michael D. Casey: Yes, we expect it to grow to over 30% this year from 25%. Last year, we're planning to grow the mix to about 50% by 2017.

And we go next to Anna Andreeva with Oppenheimer. Anna A. Andreeva - Oppenheimer & Co. Inc., Research Division: A follow-up on the price realization. I think you mentioned the customer accepted most of AUR increase. Any callouts where you may have seen some pushback, whether by category or by division? And just a follow-up on the slower start to the fourth quarter. Are you guys seeing that at Carter's or OshKosh? Any regional differences in the business so far? Michael D. Casey: On the pricing, it's -- Anna, if you recall, we took steps where we thought there was strong value to offset some of the cost increases, primarily in multipiece sets and those things. We planned about 6.5%. We realized the vast majority of that. I think we're up about 5% in AUR. So we came up a bit short of our goal, but we were successful with a majority of the actions. I would say, in terms of item base, there was very few things that we had concerns on, just a few that didn't work quite as well as we had planned. The biggest causal factor to the variance we had was really the intense promotional activity and what we thought we needed to do to compete from a total store or an overall promotion, not necessarily on item level. So overall, we felt good about that for spring '15. We've got selective increases planned to cover the low single-digit cost increase, some carryover for fall, but overall, we felt good that we were able to achieve the vast majority of the AUR plan. Anna A. Andreeva - Oppenheimer & Co. Inc., Research Division: Okay, that's helpful. And just on the quarter-to-date trend, Carter's versus OshKosh, if there are any regional differences in the business? Michael D. Casey: I would say we're probably better in the West, tougher in the Northeast and Mid-Atlantic in terms of regions.

We go next to Evren Kopelman with Wells Fargo. Evren Dogan Kopelman - Wells Fargo Securities, LLC, Research Division: Can you talk about, historically, what kind of correlation you've seen with your business and lower gas prices? And kind of maybe what's your expectation for Q4? Michael D. Casey: It's a good question. It's a good question. Gas prices are trending lower. When they -- in years past, when they went up, we saw a temporary decline in traffic to our outlet stores, and so we're not planning any improvement in traffic in the balance of the year, but that's a possibility. But typically, when they go up, traffic temporarily slows. When the prices have come down, traffic improves. Evren Dogan Kopelman - Wells Fargo Securities, LLC, Research Division: Okay. And then secondly, can you talk about in your -- within your guidance range for the fourth quarter, what's embedded at maybe the low versus the high end regarding both comps in your stores and pricing? Or what do you expect to realize for pricing? Richard F. Westenberger: Well, I think we're not going to be precise on our expectations for price realization for the fourth quarter. I would say that the range is created by differing levels of consumer demand. Pricing would be a component of that. And if we are at the higher end of the range, that means that consumers are coming more aggressively and comps are higher generally.

And we go next to Susan Anderson with FBR Capital Markets. Susan K. Anderson - FBR Capital Markets & Co., Research Division: Just a couple of follow-ups. Not to continue to beat on pricing, but in the first quarter, I guess, since you have some incremental price increases, it seems like that relationship would be where pricing, if you realize what you want, would be higher than cost. And then also, in terms of the comps in October, just wondering if it fell off more towards the midmonth. Wondering if, as you compare it against the government snapback from last year from the shutdown, is that is kind of what made things difficult? And then last one on the Stockbridge. Do you see any thoughts there on potentially closing and consolidating? Michael D. Casey: No, there are no -- let me take the Stockbridge question. That facility is a critical part of our growth strategy, and so that, that's going to continue to be an important component of our total distribution capabilities. Your other questions with respect to price in the first quarter, Richard? Richard F. Westenberger: Yes, first quarter seems like a million years ago. Susan, I think, if you recall, we indicated that we did not take as aggressive a pricing action in the first half, really, first quarter included, as we're taking in the second half. As we saw the cost increases were going to be a bit more permanent in the second half of the year and they were going to continue throughout all of 2014, we became more aggressive with pricing. To Brian's earlier points, we did it in places where we thought we had the most license from the consumer in terms of the product and the features and benefits and such. That said, while the gap has narrowed, there is still a gap between the price increases that we're achieving and the costs that are coming through. We do have, I think, a favorable outlook as it relates to product costs for 2015. The increases for spring, which is really what we have line of sight to, are much more modest than we've seen in 2014. So we're hopeful that, that trend continues then in the second half. And as we cost the assortments for the fall, we'll share that information with you on the next call. Michael D. Casey: Just on the comps. The government shutdown -- the bounce-back that we realized last year from the government shutdown was we are against -- up against some tougher comes here, a big month in April -- or in October, I'm sorry.

And we go next with Taposh Bari with Goldman Sachs. Taposh Bari - Goldman Sachs Group Inc., Research Division: Just a quick follow-up, Richard, for you on capital allocation or the capital return framework. I think, earlier this year, you set out a 50% of free cash flow target. It looks like you're running ahead of that through the first 9 months of the year. So are you -- is that still kind of the long-term target? Are you going to be in a position to update that potentially at some point? Richard F. Westenberger: I think the framework is still the framework that we laid out last year. I'm comfortable that the 50% of free cash flow is, on a go-forward basis, what we're targeting. We have some accumulated cash on the balance sheet. We felt it was a good use of that capital to deploy that more aggressively, above what the framework would have indicated to share repurchases. So if our framework changes, we'll update you. Taposh Bari - Goldman Sachs Group Inc., Research Division: Okay. And then just quickly on eComm margins. I know you made some efficiency tweaks in the DC at some point in the later part of this year. So can you tell us where eComm margins are today and if there's still an opportunity for them to further expand? Richard F. Westenberger: I'd say north of 20% today, and certainly, we see improvements over time to improve them.

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. Michael D. Casey: Great. Thank you. Thank you all very much for joining us this morning. We appreciate your interest in our business. We look forward to updating you again on our progress in February. Goodbye.

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