Katrina O'Connell Glenn K. Murphy - Chairman and Chief Executive Officer Sabrina L. Simmons - Chief Financial Officer, Principal Accounting Officer and Executive Vice President of Finance

Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division Oliver Chen - Citigroup Inc, Research Division Betty Y. Chen - Mizuho Securities USA Inc., Research Division Adrienne Tennant - Janney Montgomery Scott LLC, Research Division Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division John D. Morris - BMO Capital Markets U.S. Matthew McClintock - Barclays Capital, Research Division Lindsay Drucker Mann - Goldman Sachs Group Inc., Research Division Barbara Wyckoff - CLSA Limited, Research Division Paul Lejuez - Wells Fargo Securities, LLC, Research Division Brian J. Tunick - JP Morgan Chase & Co, Research Division Dorothy S. Lakner - Topeka Capital Markets Inc., Research Division Irwin Bernard Boruchow - Sterne Agee & Leach Inc., Research Division Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division

Good afternoon, ladies and gentlemen. My name is Rebecca, and I will be your conference operator today. At this time, I would like to welcome everyone to the Gap Inc. Third Quarter 2013 Conference Call. [Operator Instructions] Today's call is being recorded. I would now like to introduce your host, Katrina O'Connell, Vice President of Investor Relations. Please go ahead, ma'am. Katrina O'Connell: Good afternoon, everyone. Welcome to Gap Inc.'s Third Quarter 2013 Earnings Conference Call. For those of you participating in the webcast, please turn to Slide 2. I'd like to remind you that the information made available on this webcast and conference call contains forward-looking statements. For information on factors that could cause our actual results to differ materially from the forward-looking statements, as well as reconciliations or descriptions of measures we're required to reconcile to GAAP financial measures, please refer to today's press release, as well as our most recent annual report on Form 10-K and our most recent quarterly report on Form 10-Q, all of which are available on gapinc.com. These forward-looking statements are based on information as of November 21, 2013, and we assume no obligation to publicly update or revise our forward-looking statements. Joining us on the call today are Chairman and CEO, Glenn Murphy; and Executive Vice President and CFO, Sabrina Simmons. Now I'd like to turn the call over to Glenn. Glenn K. Murphy: Thank you, Katrina, and good afternoon, everybody. Before I hand the call over to Sabrina, who will take you through the key metrics in our third quarter, I just want to give you a couple of opening comments. This was our seventh quarter of positive comps, and we feel good about that. A very important part of what we've been talking about, mostly internally, is the momentum in our business, gaining market share, and that's been important for us. And this was a 2-year comp of 7. I think it was a good performance for Gap Inc. And the difference between good and great in this quarter was that in Q3 of 2012, we had a very strong quarter in colored denim at Old Navy and Gap. It's kind of the peak of color. It started in February 2012 and kind of peaked in August, September and October. I think the team did a very good job last year. And so it was a good quarter. But I expect great every single quarter, and I have to look at it now and go, in hindsight, could we have built a better assortment commercially that could have allowed us to gain share and growth in other categories besides denim that, when you put it all together, could have produced a performance of better than a plus 1? My answer to that is yes, and the merchant teams and design teams and marketing teams know that our expectations always are, when you're up against that kind of very strong performance in denim last year, then what are we doing strategically on our assortment and how are we building an assortment to be as commercially strong as possible to achieve better growth and better market share than the year before? Now I've been here 25 quarters, and every quarter has its own unique circumstances. I've been here for 2 quarters, where we we're announcing an acquisition. Whether that was Athleta or Intermix. I've been here in some quarters where we talked about, we're going to go into a new country. An example of that was when we announced that we're going into China for the first time. I've been here where we've talked about the fact that we had to make adjustments to the company's operating model in order to be successful. But in order to get a 14% increase in earnings per share, we did manage the SG&A line without doing, I want to make -- this is very important to me, without doing any long-term or midterm damage to the business, to our prospects, to our brands. This is the model we have. And when we can sense that maybe you see a little bit of a consumer slowdown or, in this case, a combination of the consumer not reacting the same way they did in the first half of the year and us not building the kind of assortment that I hope we could build, we were able to make the adjustments in our economic model to still produce the earnings we produced. And I think that speaks to the experience of the management team, the commitment of us at Gap Inc. to be successful and to win and produce results that we expect of ourselves, that we'll make those adjustments. But I do want to be clear on one point, this is very important to me, we will never make any reductions in an SG&A plan that damages the business short term, midterm or long term. We still had strong investments in the third quarter to deliver our growth plan, to introduce omni-channel, to get the company ready next year for responsive supply chain and just the beginning of what seamless inventory will be for us in 2015. Those don't get touched. That's all part of the company's long-term plan. So this was just one of those quarters. Now looking forward, we're just in the beginning of this very important quarter. It's not only important because it's Q4 and involves a big holiday season. It's important because it's the last quarter of the year. And in order to maintain the momentum I talked about earlier on the comp side of the business, we like to finish every year strong, and this is what this fourth quarter is about. I think the teams have done a great job getting ready for this holiday season. We're as ready as we've ever been to compete in the marketplace and that's in Europe, in Japan, in China, in our franchise businesses, Athleta, Intermix, our 3 iconic brands. Now it's interesting, there's been a lot of conversation about late Thanksgiving and all the holiday shifts. Our view is there's always been this many holidays within the larger context of the quarter. You've got this run-up before Thanksgiving, which is -- again, this is true of the U.S. marketplace. You have the actual event of Black Friday and the 2 days that follow it. You have these 2 or 3 weeks after Thanksgiving. Then you have the week of Christmas, and then what's become really important is the week after Christmas. So we, more than any year, have really planned and said, "Well, look, there's really 5 holidays inside the holiday." Let me just leave you with this one thought. Every year, all companies come into the holiday season with a pretty good list of what we're going to do differently to make sure that our business is better than the year before. That's a long list, and none of us have enough time to go through it chapter and verse today, but I just want to mention a couple of them to you. One is on Tuesday this week, we launched Reserve in Store, which we were piloting in Chicago and San Francisco, into every single one of our Banana Republic stores and close to half of the Gap brand fleet. Secondly, we've made gift cards a much bigger part of our business, and there's been some great work done by all of our teams to make that really a driver of success for us from now till the end of the year. And lastly, we are very coordinated between our online and store business. The reason behind that is the structural change we announced last year of them looking at the brand across all channels, you'll notice they're much more coordinated. And I think that's going to be good for us to make sure that we can come together with the marketing power and the promotional and event power behind those 2 channels to win the season. Thank you for your time, and let me now pass over to Sabrina. Sabrina L. Simmons: Thank you, Glenn. Good afternoon, everyone. We're pleased that we continued to meet our goals of growing sales and increasing earnings per share in the third quarter. Our earnings per share were $0.72 versus $0.63 last year. This represents an increase of 14% on top of last year's 66% growth. Here are some additional highlights for the quarter: Net sales were up 3%, with comparable sales up 1% on last year's 6% comp increase. We leveraged operating expenses by 230 basis points. Operating margin expanded by 100 basis points to 14.5%, and we distributed nearly $900 million of cash in the quarter, including the repurchase of 20 million shares at an average price of $38.77. Turning to sales performance. Third quarter total sales were $3.98 billion. For the quarter, the translation of foreign revenues into dollars negatively impacted our reported sales by $61 million, primarily due to the weakening of the yen. On a constant currency basis, our revenues were up 5%. Total sales and comps by division are listed in our press release. Now turning to Slide 6. Gross margins declined 120 basis points to 40%. Merchandise margins were down 140 basis points, driven by our promotional activity in the quarter. This was partially offset by rent and occupancy leverage of 20 basis points. And gross profit for the quarter was about flat to last year at $1.59 billion. Regarding inventory, we're pleased that we finished Q3 with inventory dollars per store up 4%, in line with the guidance we provided at the beginning of the quarter. Moving to expenses. We managed our expenses in a disciplined manner and leveraged operating expenses by 230 basis points. Total operating expenses declined by $60 million versus last year to about $1 billion. Marketing expenses were down $16 million to last year at $162 million, primarily due to lower spending at Gap and Old Navy. Delivering on our goals of sales growth and expense leverage resulted in net earnings of $337 million, up 9.4% to last year. Moving on to cash distribution. True to our commitment to distribute excess cash to shareholders, we repurchased 20 million shares in the quarter. Our ending share count was 449 million. Year-to-date, we've distributed over $1.1 billion, and we're pleased to have announced today a new $1 billion share repurchase authorization. Year-to-date capital expenditures were $487 million, focused on our growth in China, Old Navy Japan, global outlets and Athleta. We ended the quarter with 3,160 company-operated stores. Square footage was up about 1% versus the third quarter of 2012. Store count and square footage by division are listed in our press release. And now I'd like to share our outlook for the remainder of the year. We are reaffirming our full year earnings per share guidance of $2.57 to $2.65. The range encompasses a reasonable set of outcomes for a holiday season that we anticipate will remain promotional. As a reminder, at its midpoint, this guidance implies a growth rate of 12% for the full year on top of last year's 49% increase, and this is even after absorbing the impacts of both foreign exchange and the loss of the 53rd week. The following full year guidance metrics remain unchanged. Operating margin, about 13%; square footage, up about 1%. Regarding company-operated stores, net of repositions, we plan to open about 160 and close about 80. Store openings are weighted toward Asia, while store closures are weighted towards Gap North America. We expect capital expenditures to be about $675 million and depreciation and amortization to be about $475 million. Full year effective tax rate guidance remains at about 39%. For the fourth quarter specifically, there are a few important call outs. First, it's important to note that Chinese New Year shifts from February 10 last year to January 31 this year. This shift in timing will likely increase our in-transit inventory at the end of the fourth quarter. Therefore, we expect our inventories at the end of the quarter to be somewhat higher than the Q3 increase, though certainly still in the single digits. Second, regarding foreign exchange. Keep in mind that our year-to-date sales have been negatively impacted by $162 million, or an average of $54 million per quarter. We expect this translation impact to continue into the fourth quarter. Naturally, this currency depreciation also negatively impacts our earnings in addition to our sales. And finally, the 53rd week. As we've noted since the end of the first quarter, just as the first quarter benefited from the calendar shift, the fourth quarter is expected to be negatively impacted by more than the $0.08 that benefited Q1. This is because the volume of sales for holiday is larger than the volume during spring. As a result of having one less week and the calendar shift, it is unlikely that we will leverage expenses in the fourth quarter, especially rent and occupancy. Additionally, driven by the loss of the 53rd week, we expect the spread between comp and total sales in the fourth quarter to be negative. Having explained the unique considerations around the fourth quarter, let me close by saying that we're pleased with our solid year-to-date performance. We've achieved top line growth of 6%, with comps up 3%, and we've delivered year-to-date earnings per share growth of 29% on top of last year's 43%. As we look forward, we're focused on delivering solid performance in the fourth quarter across our brands while pursuing our long-term strategies. Thank you, and now I'll turn it back over to Katrina. Katrina O'Connell: That concludes our prepared remarks. We'll now open up the call to questions. [Operator Instructions]

And your first question will come from Edward Yruma with KeyBanc Capital Markets. Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division: It seemed like you pulled back a little bit on marketing in 3Q, and I know that you were doing television or were going to. How do we think about marketing expense in the fourth quarter? And I guess, how much flexibility do you have based on kind of how the holiday shapes up? Sabrina L. Simmons: Sure. Most of the marketing was just as planned, Ed. I mean, you're right. In the third quarter, once we decided not to do television in the fourth quarter, the production costs that would have gotten into the third quarter didn't occur. But for the most part, that reduction was as planned. What I'll tell you to be helpful, we expect marketing spend overall for the full year to be probably flat-ish, so implies it might pick up a little bit in the fourth quarter. But overall, no dramatic change. And as a reminder, because marketing is so important, we are holding sort of flat-ish, as I said, on a full year, on top of 2012, very large investment in marketing of over $100 million.

From Citi, we'll go to Oliver Chen. Oliver Chen - Citigroup Inc, Research Division: Our question is about the assortment and the opportunity for betterment there. Could you just clarify where you may see the most opportunities in? The merchandise margin in the marketplace has been tough on everyone given the promotional nature. Are we to expect a continuation of the down merchandise margin? If you could comment on how you see that proceeding, that'd be great. Glenn K. Murphy: Let me take the first part of that. What I was trying to say on the assortment in my opening comments was a little bit that there's uniqueness to every quarter. And one of the unique attributes about Q3 for us was it was anniversary-ing some very strong positive performance by us on denim in -- especially in August and September, and the denim was really driven by the color trend that was going on in 2012. So the criticism of myself and of our teams is that we knew that trend was coming. I think we tried to match indigo with treatments on indigo denim up against the colored denim trend when in hindsight, every now and then, you're going to get a trend, especially in a category that's as strong as denim for Old Navy and for Gap, where trying to match that dollar for dollar in our assortment, it's just not possible. I think I've told people before on the phone that over 12 months, indigo denim with any kind of treatments and whatever the trend is on indigo will beat, over 12 months, will beat a color trend. But any given month or any given quarter, when the trend is that strong on color, it's tough to really match that. And in hindsight -- and this is what we get paid to do and I get paid to do, is to make sure that the assortment opportunities outside of dominant categories like that, we make the right investments, put in the right product, market them accordingly so we can gain share across our total business and maybe take a slight pass for one given quarter on such a big category as denim. Sabrina L. Simmons: And then with regard to the merch margins, we don't guide specifically to that. But to be helpful, as I said in my remarks, we are assuming a continuation of the promotional environment. And then with regard to growth margin, combine that with the fact that it's unlikely that we're going to leverage rent and occupancy due to that lack of the sales in the 53rd week. Oliver Chen - Citigroup Inc, Research Division: And, Sabrina, just as a follow-up, when we think about next year and inventory as a major theme, how should we think about the model -- the modeling in terms of all the opportunities you guys have with untrapping and other more efficient inventory management? Sabrina L. Simmons: Yes. I mean, we'll have more to say about that when we get into next year. And really, most of that starts to take hold not until the back half of next year and into 2015. But more commentary on that next year, Oliver.

[Operator Instructions] Your next question comes from the line of Betty Chen with Mizuho Securities. Betty Y. Chen - Mizuho Securities USA Inc., Research Division: I was wondering, Glenn or Sabrina, certainly, I think we all know that it's been very promotional out there. How do you think it's impacted each of the brand differently, if any? And do you feel like, given the learnings we've seen so far, that they have sort of the right tactics going to holiday? Related to that, I was wondering if you can comment on sort of the Gap Cash event and sort of any early learnings you can share with us regarding that? Glenn K. Murphy: Here's what I'll say about it, I'll say that the promotional environment that -- and I'm sure that there's been a lot of commentary on over the last week as people ahead of us have had their calls and spoken to investors and shareholders. But my view is there's a little bit of fatigue out there when it comes to consumers. So the question is, are we disappointed in the consumer sentiment? Or as we, I'm just being honest, as an industry, have we really not been that innovative in order to give the consumers a value proposition that doesn't look like wallpaper day in day out? Now we've tried to break out of that, and I think we've done a good job at Gap Inc. I think we can do a better job going forward. But if the definition of winning is having a similar promotion on a similar category week in, week out, I think people are going to do that. I think they're going to struggle going forward to the point where the consumer is looking for an event, they're looking for something exciting. At the end of the day, we're in the fashion business. Maybe in my past life, just purely playing a discount or price card might have been effective, but not in this business. So when I think about the fourth quarter -- and again, I think our team every single year since promotions became a little more prominent in the industry, have worked hard to become a little more innovative. And you mentioned, Betty, Gap Cash. Well, there's Gap Cash. Banana Republic are doing the 8 Days of Giving. We've got L'Wren Scott coming out in a couple of weeks, our big launch partnership with Banana Republic. We've got Overnight Millionaire for Old Navy. That's going to start at 7:00 on Thursday. So a little bit of public service announcement here. 7 p.m., Thanksgiving Day, $1 million. So Overnight Millionaire. We have Reserve in Store, which we launched on Tuesday. So we're really working hard, one, and this business is all about product and it's about service. And -- but we're really trying to make sure that we don't become predictable. That's really an acronym you do not want to have stuck on your brand. We are trying to be a little more provocative, find different ways to express value, and I think the team has done a good job. But my belief is they've done a really much better job in the fourth quarter. And it is, at the end of the day, the job of the marketers to speak to customers in a way that doesn't cause them fatigue. Betty Y. Chen - Mizuho Securities USA Inc., Research Division: Glenn, related to that, can you share with us what your thoughts are so far regarding the Gap Cash event in the... Glenn K. Murphy: Yes, it's a little early, but it doesn't actually get -- there's the earn period, which takes about 30 days, that we give customers a break, and then there's a redemption period. And the redemption is not starting officially until the day after Cyber Monday. So not that we'd ever comment on it, but I've been pleased with how Super C-A-S-H as a tool has worked for Old Navy. This is a different spin because Old Navy and Gap are different brands, but at least we've learnt how to actually do that the first time around. Made some mistakes with Super C-A-S-H when it first was introduced a couple of years ago, but that's true of any program. That's been incorporated in Gap Cash, and I think their first time out will be of high expectations. But we won't know much for another 4 weeks. And again, we'll never give specifics but I'm hoping it'll be, as I just finished saying, something that's different and something that's provocative and not predictable that can help Gap brand gain market share. Sabrina L. Simmons: [Operator Instructions]

From Janney Capital Markets, we'll hear from Adrienne Tennant. Adrienne Tennant - Janney Montgomery Scott LLC, Research Division: My question is again on the highly promotional nature. Obviously, Target this morning had talked about this new test in the California market, I guess, for this Black Friday, 40% off all apparel and accessories. And it kind of sort of begged the question, as an industry leader -- can you hear me? Sabrina L. Simmons: Yes. Adrienne Tennant - Janney Montgomery Scott LLC, Research Division: How can you sort of change the nature of the competitive deflationary pressure, generate that customer loyalty back to the brands that is not solely tied to price? Glenn K. Murphy: Well, I think I gave a little bit of that earlier when Betty had her question. Look, another part of this, Adrienne, is that one of the advantages we have is that we're not a one-dimensional business. So in the malls, we have to compete for that business, hopefully using some of the tactics I said earlier, to be able to speak to customers in a much more provocative way and not be -- not all relying on a discount -- I don't know about this test, but just being a 40% off on an easel on the outside of your door, I mean, anybody could do that. But we're in malls, we have outlet stores, we have a very strong online business, we're in strip centers with Old Navy, we have an international business. So when it's all said and done, we said this about 5 or 6 years ago, that one of the reasons we entered into the strategy we did on multiple brands through multiple geographies into multiple channels, we didn't want all our eggs in one basket. So is there deflation in the apparel business? Well, if you look at NPD, they'd say no. But is it a business that has heavy inflation? The answer is also no. And we are trying, and the best you can do, when it's all said and done, is have amazing brands. So if you own a store, you -- like the company you mentioned earlier, they own a store. But if you own brands and you put marketing behind them and you create excitement about the brand and ultimately, in our business, you create some passion about what that brand stands for, then that's what's supposed to sustain you, and we're working towards over a period of time where there may be some deflation.

And next, we'll hear from Lorraine Hutchinson with Bank of America Merrill Lynch. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: Glenn, you talked about not cutting anything that would damage the long term or short term for the brand on SG&A. What did you cut? And are some of those buckets available to offset the deleverage from the lower sales in the fourth quarter? Glenn K. Murphy: Well, Lorraine, I think you know us well enough, and I may have said in my opening comments that one thing Sabrina [ph] and I did when we started working together about 6 years ago was we committed to ourselves we'd run -- we would put together a new economic model, we'd build an economic model that had flexibility to it. And as I said earlier, every quarter has its own unique circumstances or nuances, and Sabrina and I have really trusted our brand presidents and their structure. We give them a chance to actually be successful in the quarter, put their plan in place and stick to the plan and execute it. But like anything in business, if you can't adjust to that, then you're going to have a failed quarter or a failed success in a full year performance. What we've been doing with them is we give them a chance to really deliver on their plan. And when we see that the plan may not be delivered, like in Q3, to the level we expected, we have a flexible model. We can make adjustments. And I should say that last week, the clock started again. And we now have a plan that we agreed on with them many, many months ago, and they're working their way through that plan right now that has the right balance of sales, gross margin dollars and leveraging expenses to produce the earnings we expect. But at the end of the day, let's look -- let's take this from a glass half full. At the end of the day, the sales -- let's assume the sales were better than we expected, assumption. Therefore, the margin is better than we expected, like it was for 7 quarters before this recent quarter. Then we can let them continue their plan or, even in some cases, maybe make some deeper investments to maintain the momentum. These are choices we have as a business. And what we like about it is we're not stuck, and we can make that all the way through the end of Thanksgiving, into Cyber Monday, then run to Christmas, then run after Christmas. So I think the brand presidents understand that. We trust them, that they're making the right decisions. But if we see a business that looks a little weaker than we expected, then we know how to make the adjustments. Sabrina L. Simmons: And I would say, Lorraine, the only thing I'd add is for the fourth quarter, you could certainly count on us to continue to be disciplined. But as I mentioned in my remarks, given the sales from that extra week fall-off, it's unlikely we leverage, especially in rent and occupancy. But with regard to expenses, if we do get some leverage, it's likely to be very modest.

From BMO Capital, we'll hear from John Morris. John D. Morris - BMO Capital Markets U.S.: Glenn, on -- I know you talked about the TV marketing already. I'm curious about the timing of the decision. It's relatively new, right, to pull back on the fourth quarter marketing? And I'm just wondering your thoughts behind that, why, and your thoughts about that as it relates maybe into next year as well. Glenn K. Murphy: Well, John, it really wasn't a pullback. I think that we -- if I did say this in the last quarter, what the intent behind it was that if the third quarter television investment for Gap was outstanding on a number of different metrics, we had the ability, because we have television buy we can always exercise or let go and open up to the market, then Stephen Sunnucks and the team at Gap Global would have chosen to come out this holiday and put the money in place. And I actually thought that television was quite good. We received a lot of positive comments, especially strong on social media. But as we looked at it, we just felt that we had a good plan in place. We had a better media mix. And the need for television, well, a consideration wasn't necessary. But if we look at next year, what I can tell you is that all of our businesses are constantly looking at their media mix. I can't think of a single company you guys are talking to who isn't doing the exact same thing. So what that means with Old Navy is Old Navy is a strong television advertiser, but they're seriously looking going forward about the -- at their media mix. Gap is not a regular user, from a medium perspective, of television, but it's an option for them. I think I've said before, even if Banana Republic had such a great idea, and TV was part of the mix that can make that idea come true and give voice to it and drive traffic and market share in gross margin dollars, we're not against it. It's not part of the repertoire today, but we're not against it. So when it's all said and done, I think that you can count on Old Navy to have the broadest of media mixes. Gap has flexibility to always consider an additional medium, which is television, and we play it sort of -- we have a plan, strategic plan, full year. We look at the media mix and then we make choices as we come into a quarter.

And next, we'll go to Matt McClintock with Barclays. Matthew McClintock - Barclays Capital, Research Division: Glenn, so you're expanding Reserve in Store but only to half of the Gaps. I was just wondering if you could provide some of your thoughts on how you think about the opportunity for Reserve in Store between Gap and Banana Republic. And then you earlier talked about gaining market share through innovative ways and methods. I was wondering, how do you think about Reserve in Store as one of those innovative methods as you look to the holiday season? Glenn K. Murphy: It's a little soon to tell on the second part of your question. I know I've said before that to me, this is -- it could, executed properly, I think it could be a bit of a game changer for us. And we're going to get a really good read. The whole premise behind Reserve in Store was let's test it before the holiday, and let's learn. Because if there ever was a time, the notion of 12:00 at night, somebody's on their tablet or their desktop or their smartphone, going on to the Gap or Banana Republic site, seen something they love, reserving it, getting a confirmation first thing in the morning and then coming in -- because again, it's a reservation. It's not pickup, reservation is, we believe, most appropriate for our business -- and then come in and hopefully our team can expand on their selection by adding different items and products to it, and then completing the purchase. So people are time-starved this time of year. It's a unique service. It's only been broadly available in 650 stores since Tuesday morning. So it's a little early to tell. But I really believe that if we can get a good read, execute it flawlessly and get the marketing that tells customers a story I just told you, which is -- we're open 24 hours. And don't think we're not. You can actually -- it's amazing how many people are actually placing orders after 10 p.m. and before 8 a.m. And that's really the message this time of year. Place the order, we'll reserve it for you. It's sitting there, we'll tell you when we have it. So I think it could be a great foundational component of unique messaging in our category for those 2 brands, maybe even for Old Navy one day, definitely for Athleta, as we look at unique marketing ideas to try to drive our business, as I've said to Betty earlier, that are not dependent on promotional activity that we think is inappropriate when you have brands like we have. Why 200 stores? The Gap team looked at it. They've got great regional coverage. The Banana Republic team were the first to actually test it. They were the ones who were further along, so they were more comfortable going almost chain-wide. I wouldn't be surprised if the Old Navy -- sorry, if the Gap team didn't add more stores in the New Year.

And next, we'll hear from Lindsay Drucker Mann with Goldman Sachs. Lindsay Drucker Mann - Goldman Sachs Group Inc., Research Division: I wanted to ask Glenn, you talked about the fact that you, not to the detriment of your long-term investments when you pulled back on some OpEx this quarter, you still were able to invest in a number of things, including dynamic supply chain. I was just curious, can you give us some specifics on what your investments -- what areas you were investing in and what we should expect from dynamic supply chain for next year? Glenn K. Murphy: Sure, Lindsay. I think what we were trying to communicate, there's certain investments and certain strategic plans the company has that are, regardless of any given kind of signs of ourselves or consumer weakness, we're just going to continue to stick with them because they're part of the company's long-range plan. So in that bucket, you'd have investments like in China, Old Navy International, Athleta growth, some recent growth with Intermix, global outlet, I mean, there's a list of investments we continue to make. To your point, we went forward, whenever it was, sometime earlier this year and said, besides our growth initiatives, we have seamless inventory. So that's just getting going now but will not be delayed because of one single quarter, and we are just getting ramped up now to make the investments in 2014 to get the benefit of a seamless inventory operating model in 2015, omni-channel that Matt just asked about. It would have been easy for Sabrina and I to cancel, delay Reserve in Store, but we'd never do that because that comes with an investment. It's a very important part. And of all the omni-channel plays we have, and I just met with the omni-channel team the other day, roadmap is in place, really excited about some of the ideas they have for 2014. And the last one is what we call responsive supply chain. And again, those don't come with a lot of investments. That's more of a process change than investments. So from that perspective, we are continuing to push ahead. We've made some good progress. It's never enough for me. I would really like to see us go faster on that front. But the team is moving at a pace they're comparable with. As Sabrina said earlier, maybe a little teeny bit of benefit in the early part of 2014. But the majority of a responsive supply chain model we're going to operate will more be in the back half of 2014. But certainly, you never hear from us or our presidents any reason to delay the company's top 4 strategic initiatives. Lindsay Drucker Mann - Goldman Sachs Group Inc., Research Division: But how specifically should we expect the supply chain to be more responsive in the back half then because of these investments? Glenn K. Murphy: I'd say it's multifaceted, we talked about. So first and foremost, it started with fabric. So we've done fabric consolidations. That for the most part is done, we are now completing fabric platforming. And then we have, without giving too much details, probably other people want to call in, we have 3 other components which we've put out publicly, VMI, test and respond and rapid response, and those are all ways for the supply chain we have today and the decisions and assortment strategy be made much later in the process. So when I was talking earlier about the assortment strategy, missed opportunity as far as I'm concerned when it came to denim in August and September of this year, if we had, had in place an operating model that is based on what I just said, we could have made adjustments to the assortment strategy in early to mid-spring to correct if we -- as we looked at our assortments, you know what, we probably need to maybe adjust it slightly. We could have made those with a responsive supply chain. So there's a long, long list, Lindsay, of all the benefits we're going to get, but #1 is getting closer to the market, secondly is dealing directly with mills as opposed to vendors by having private platforming, and being able to make decisions later in the process and keeping your powder dry. And we are all set up to get some initial benefit from that in the back half of 2014. It's not a onetime win. It's something that just continues to evolve and we continue to get better at.

And next we'll go to Barbara Wyckoff with CLSA. Barbara Wyckoff - CLSA Limited, Research Division: A couple of questions about China. Could you talk about the year-to-date results of Gap in China? How are the stores comping? How many do you have at the end of third quarter? And how many of the 160 new stores will be Gap in China versus Old Navy? Glenn K. Murphy: I think -- did you say 160? Barbara Wyckoff - CLSA Limited, Research Division: You said 160 new stores and 80 closures. Glenn K. Murphy: Oh, sorry. Barbara Wyckoff - CLSA Limited, Research Division: So the 160 would be more International, and the closures would be more Gap. Glenn K. Murphy: Well [indiscernible] get to that. Here's what I can say about China. I was just there 2 weeks ago. Again, we feel very good, we're going to end this year with 82 stores, which will be, give or take, 10 outlet stores, and the remaining being Gap specialty stores. I was walking -- our first Old Navy, which is going to open on March 1 in Shanghai, that was under construction with the team. We'll be telling you in February how many Old Navys we're going to open in 2014. But what you're looking at now is the expansion of the strategy from 4 specialty stores initially and an online site, to now I'm saying ending the year at 82. Outlet now becomes part of the picture, and here comes Old Navy. We were really excited recently with what is the -- I'm sure it hit all the newswires here, what if the Black Friday of China, which is 11/11, a big team-all event, and we've been online in China now for over 3 years, and that was just another example to us that the mix in that country of physical stores to online business is going to be much different than it is in the U.S. when the dust settles, say, 5 years from now. So that's why we were so passionate on getting our online site open and making big investments, as we were saying earlier to Lindsay, making investments behind our online site in China, because we do believe the proportionality is going to be different in China and we need to be ready for that. But we feel good about it. The team is great. They're excited, they're making good decisions. We're looking forward to -- we'll announce in February how many stores we're going to have, Gap specialty, but that's going to continue. How many more outlets? That's going to continue, and then give you an update on online and, most importantly, an update on the launch of Old Navy. Sabrina L. Simmons: Yes. And so within the opening number, Barbara, there's -- 35 of those openings are for Gap China. There's no Old Navy China this year. That's going to happen in 2014, and we'll give you that number. But there's 15 to 20 Old Navy Japan in the opening store counts as well.

From Wells Fargo, we'll go to Paul Lejuez. Paul Lejuez - Wells Fargo Securities, LLC, Research Division: Just looking at the fourth quarter, just wondering how you think about the comp drivers for each brand now that it seems like we're probably looking at lower AURs. Just wondering how confident you feel, Glenn, that you could hit 8 quarters in a row. Sabrina L. Simmons: Yes. I'll just start followed by giving a little bit of color on Q3. So given that gross margin ticked down, clearly, our average unit retails were down. And our traffic, largely driven by that stronger dip in September, especially at the end of September, because traffic improved in October, but traffic was also negative for the quarter. So the 2 levers that supported our positive comp were conversion and unit per transaction. Because we're assuming the promotional environment continues into Q4, I would say that we'd love to see traffic stronger. Of course, we'll be working on that, and we'd love to do -- well, we will be doing everything we can to improve our AUR. But again, with the assumption that the promotional environment continues, I would say the 2 drivers will continue to be conversion and UPT. Paul Lejuez - Wells Fargo Securities, LLC, Research Division: And is that across all brands, Sabrina, or can you maybe separate each one? Sabrina L. Simmons: I would say, in general, yes. In general, yes. I mean, there's obviously going to be some differences. But in general, for the 3 big brands, obviously, Athleta is in an entirely different camp given its size, and it's a very different brand. But the 3 other brands, I'd say generally yes. Glenn K. Murphy: And part of this, too, Paul, would be when the quarter is done, is what percent of our business did we actually do on Black Friday, and what percent of our business did we do from December 26 to, let's say, January 10? And it's our -- we know we're going to do big business on Black Friday and Black Friday weekend. We know there's big business to be had on post-Christmas. But based on the sort of general theme that's been going on, can our product and branding and marketing messages that are less focused on discount, can they resonate enough to drive the traffic we need in the conversion side of the business, which lessens the dependency on those more discounted times of the quarter. And that's -- we're -- as I'm sure people have figured out maybe a long time ago, maybe people spoke a lot less strategically about retail in general and maybe fashion apparel, but anybody else you're talking to in the last couple of years, you really got to be thoughtful and strategic when it comes to your gross margin management and traffic management. Here we are the weekend before Thanksgiving, that's a very important time to think through this first weekend. Then you have a run from Monday to Wednesday. It's a season within a season. Thursday now is its own day, Friday is its own day. Saturday and Sunday is a unique pairing. Then you have this run of 2 or 3 weeks before the weekend before Christmas. It's its own unique time of year. Then you have December 26. So say that we don't spend I would probably say maybe too much time overthinking and doing our analysis and talking to customers and trying to figure out trends is what we're spending more time than -- 5 years ago, we never spent this kind of time trying to really figure out day by day and weekend by weekend. And if we figure it out right and make the right decisions, then I think Sabrina is right. Then we'll probably have a quarter that has less pressure on AUR. But that's to be determined still. We've got to -- we're in that first weekend of the run I just talked about. So -- but if we planned it right and thought through it properly, hopefully, it'll produce the results -- as Sabrina said it's -- results, as Sabrina said, we're working towards, which is getting improvement in our AUR, and that's what everybody here is trying to accomplish.

And next, we'll hear from Brian Tunick with JPMorgan. Brian J. Tunick - JP Morgan Chase & Co, Research Division: I guess as we try to parse through the prior 6 quarters to this, there's been questions of how much the color bottom cycle in particular has been such a big driver, I guess especially at the Gap division. So just wondering if you guys have any comments you could share from an internal perspective of how sticky you think your market share gains might be going forward? And are we going to expect to see ongoing 30% to 40% off the entire store into next year, if need be, to protect those market share wins? Glenn K. Murphy: Brian, what I was saying a few calls ago was that I thought we did actually a really good job in the first 8 months of the year when we were up against the anniversary-ing of the trend you just referenced. And I know I've said before that, that trend kind of peaked in September, of October of LY. So we've been through this assortment opportunity multiple times. I just think that's the miss we probably had. As for market share, given the fact that we had the performance we had from February till August, especially in those categories, I think we didn't only hold our market share, we built it. And there have been some people recently that put out their numbers who are pretty dominant in the denim business. So I would say that we've continued to gain share based on the performances we've seen. And our own internal numbers and the external numbers we stare at would indicate that, that while the anniversary has been a challenge, we've not only held our share but gained on top of what we were able to achieve in 2012.

And moving on, from Topeka Capital Markets, we'll hear from Dorothy Lakner. Dorothy S. Lakner - Topeka Capital Markets Inc., Research Division: Just switching gears a minute, just wanted to go back to Athleta. You have opened lots of stores this year, kind of getting up towards that 100-store mark, hopefully sometime next year, and you've also made some adjustments to the assortments there. So I'm just wondering if you could share with us anything you're learning as you've moved some of the assortment towards more, I guess what I'd call, street wear, in addition to the great performance wear that you're offering. How are you thinking about Athleta as you continue to grow the store base? Glenn K. Murphy: Good for you, Dorothy. That's actually a really good observation. My challenge with this all the time is not to swing it too quickly. But yes, there -- I would say that part of what you've observed, which is absolutely correct, was driven as we opened our first stores in New York and realizing that maybe the Northern California aesthetic Of Athleta was a little too much for New Yorkers and some other urban markets we're into. The challenge for us is not to give up on that. We bought the business, we love Athleta, and part of that is that it has a unique aesthetic. It is what it is. It's in Northern California, and we can't just eradicate that. But finding a better balance is what you're observing right now. I'd say that's really worked out well for us. And I think the team, led by Art Peck and Nancy Green, have done a great job of opening up, let's say, the brand aperture a little bit and get people who maybe the previous aesthetic, which is not for everybody, were willing to accept it and maybe our mix and match that with a wardrobe, but just buying exclusively that aesthetic -- or wasn't something that was attractive to as large a customer base as we'd like. When you expand as many stores as we do also, the observation we had to make is if we want to have -- you referenced 100 stores. If we want to have a business at that level or greater, we're going to have to get a bigger tent for customers. So that's been happening now for about 3 months. I think the marketing has now followed with it, so has the website. There's more changes coming. Nothing dramatic, just to keep broadening the brand's appeal, as you referenced. How do I feel about it? I feel great. I really think the team has done a great -- a really strong -- they've done a really strong job of presenting the brand in a different way without moving too quickly. And so far, the customer response has been very positive.

From Sterne Agee, we'll hear from Ike Boruchow. Irwin Bernard Boruchow - Sterne Agee & Leach Inc., Research Division: I guess, Glenn, just a high-level question for you on sourcing. When we start to think about 2014 input cost, can you talk about wage inflation in areas like Malaysia and how that could potentially spread to other countries in Asia? And just any high-level thought you have there would be great. Glenn K. Murphy: Well, it's a little early to tell about one of the larger components of our costing, which is the raw materials. So far, cotton and oil are behaving decently well, so I think -- we feel good about that and the team that's working upstream. So part of it is -- are the raw materials going to be in a place that allow us to hold our current costing or even better it? Too soon to tell, but I like the direction it has been in the last 3 months. As I was answering a question earlier, some of the changes in our supply chain strategies that have been initiated the last 6 months, which is working directly with mills and less with vendors and consolidating fabrics and fabric platforming, that should also give us an opportunity to leverage that change with the vendor community. And you're absolutely right on labor cost. Some increases in Cambodia, in Vietnam, in Indonesia. You referenced Malaysia. We don't do a lot in Malaysia. Bangladesh. So that's a smaller component of our total cost, but it's a component. And that's been going on, and we're making the adjustments. And whether that's by taking more capacity of factories or having fewer vendors, we're doing everything we can to manage around it. But the big win for us is the change in our supply chain. I think that's going to bring some benefits to us. The team is working on that, and that's something we can't control. And we know how to manage one way or the other is if commodity costs behave. And so far, so good.

And our last question will come from the line of Richard Jaffe with Stifel. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: Glenn, a question for you. As CEO, that is say professionally, what would you ask Santa for this year? Glenn K. Murphy: Well, I don't -- I'm a very tough person to buy for. I will tell you that on a number of different fronts. But if we could -- if on a personal note, if everybody in the office here can have a very happy holiday and get a chance to relax after all the hard work they've done, I'd feel good about that. And of course, we always want to make sure that -- and I've always had faith in the consumer. I'm just a glass half-full person. I just believe the consumer is more tailwinds than there are headwinds. And I think they're going to come out and buy. And if we execute properly, then I would consider that to be a very positive Christmas. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: Okay. I was really thinking professionally as a kind thought for your workers and co-workers, and I share that. So happy holidays. Let's all get out there and shop early and shop hard. Katrina O'Connell: I'd like to thank everyone for joining us on the call today. And as a reminder, our earnings press release, which is available on gapinc.com, contains a full recap of our third quarter results, as well as the forward-looking guidance included in Sabrina's remarks. And as always, the Investor Relations team will be available after the call for further questions. Thank you.

Thank you. That does conclude our conference. You may now disconnect.