Good day, everyone, and welcome to the Guess? Fourth Quarter Fiscal 2012 Earnings Conference Call. On the call are: Paul Marciano, Chief Executive Officer; Michael Prince, Chief Operating Officer; Dennis Secor, Chief Financial Officer; and Russell Bowers, Chief Financial Officer, North American Retail. During today's call, the company will be making forward-looking statements, including comments regarding future plans and financial outlook. The company's actual results may differ materially from current expectations based on risk factors included in the company's quarterly, annual and current reports filed with the SEC, including economic conditions, business strategies, results of litigation, tax and other similar proceedings and currency fluctuation. I would now turn the presentation over to Paul Marciano.

Thank you, and good afternoon. We are pleased with our fourth quarter performance, expanding our global business and delivering record revenue even as weak European economy continued to create headwinds for us. We made significant progress in leveraging the Guess? brand in North America Retail, where sales were up as we expanded profitability. In Asia, we gained share with double-digit top line growth. Once again, we focused on some fundamental and solid execution. We manage our resources carefully, especially our inventories. We're taking our brand throughout the holiday season, avoiding much of the massive discounting in the malls. All of that resulted in a solid financial performance, delivering earning per share of $1.05, which was within the level that we anticipate for the quarter. Considering that -- what Europe went through this past holiday season, we are very pleased with these results. Our business model is structured for diversification, and we enhanced that last year by developing important European market like Germany, Russia, Portugal, Netherlands and even Finland. Our top 10 European gross market collectively grew 29% and now represent almost 30% of our business in Europe, a strong complement to Italy, which is now less than 40% compared to 52% 4 years ago. Our successes in newer markets is critical to our long-term strategy, and they were instrumental in helping drive revenues in Europe to more than $1 billion throughout this year, considering that in 2004, revenues were only $43 million when we took over from a licensee there. The Guess? brand has become part of the retail market in Europe today. Our growth strategy in North America was focused on delivering G by GUESS, where we see tremendous potential. We continue to refine the concept, the stores and the product and the customer is responding very well. G once again delivered solid positive comp. We believe we have developed an excellent niche in the G market and are making great progress. In fact, this year our brand broke even for the first time, and our goal for next year is to post the brand's first profits. In Asia, we delivered solid growth for both South Korea and China, posting annual growth rates over 25%. In South Korea, we improved productivity while expanding new doors. Our launch of G by GUESS in South Korea is doing very well, and we now have 47 locations. Overall in Korea, we have developed a strong market share position, and we ended the year with nearly 300 point of sales. In Greater China, the brand continued to develop rapidly as we expand into 63 new location this year. We continued to build relationships with partners to open stores in 7 [ph] new [ph] cities. We also made significant progress in building out our team and infrastructure by improving it to fully develop the market and support the partners in the future. The brand elevation was another important goal for us as we build up our brand equity in market compared to other brands. By visiting our stores, it should be obvious that the product had been significantly elevated. We have improved product quality, specifically in woman, which translated to an AUR increase over 20% in the fourth quarter in our stores in U.S. We are very pleased with our customers' respond to this change, especially in our dresses and denim collection, and we're now focusing on accessories in men. We manage inventory tightly and practically reduced our markdown, electing to focus on the full-price sales that were up during the year. We enhanced the store environment through a combination of reduced stock level and new regional strategy. We also remodeled 31 stores in North America and have seen improved sales. In North American Retail, we ran [indiscernible] carefully during the transitional year. Retail product margin improved, and we worked more efficiently in our store, driving sales cost rate down while not affecting the customer experience. For the full year, we expanded our retail operating margin and increased segment operating profit by nearly 10%, which is a big accomplishment given this year's comps. In Europe, we're definitely a part of many achievements for fiscal 2012. As we look back on the year, our biggest challenge certainly proved to be Europe. During the summer, as consumer were bombarded, we report a weakening economy there. We saw the traffic fall off in early September and began to experience negative comps in our stores there. Marketing -- direct marketing and digital media will be my priority going forward, with social media and CRM us well, and, of course, still including the global brand image with magazine and outdoor advertisement. In our product, this year we plan to continue to innovate and refine our production across all categories. We're very pleased with the progress we're making in our women's business, and our goal is to make similar inroad in both men and accessories categories, as I mentioned. In North America, we feel strongly that the G by GUESS, e-commerce [ph] as well as our Guess? concept in small format can be strong drivers of growth. We also have plan to develop a joint venture for the right partners in Brazil and also supporting our development in India this year. We anticipate economy condition will remain challenging. We clearly see some pockets of improvement in consumer confidence in U.S., but we expect European consumer, mainly in the South of Europe, to be affected in the short term by the austerity plans unless something dramatic happen with credit banking or consumer confidence there. This year, we celebrate our 30th anniversary. Our success is rooted in the amazing brand that my brother and I envisioned 30 years ago. Since day one, we have remained true to the spirit of the Guess? brand to develop an assortment of product that support the sexy, fun and adventurous lifestyle brands. With that, I would like to pass to Dennis.

Thank you, Paul, and good afternoon. Net earnings for the fourth quarter of fiscal 2012 declined 7% to $96 million, and diluted earnings per share was $1.05, down 5% compared to last year's fourth quarter's $1.11. Last year's EPS included a $0.05 favorable adjustment due to loyalty breakage. Fourth quarter revenues increased 3%, reaching $776 million. Growth in Asia and retail expansion in North America and Europe drove the growth, which offset negative retail comps, an unfavorable currency translation impact and last year's $7 million loyalty breakage benefit. Constant dollar revenue growth was 4%. Total company gross profit was flat at $338 million, and gross margin declined 90 basis points to 43.5%. Product margins improved due to lower markdowns in North America and higher European Retail mix. Our occupancy rate was higher given the negative comps and Retail mix and that more than offset the product margin gains. SG&A increased 5% to $202 million, and our SG&A rate increased 70 basis points to 26%. The rate increased primarily from higher selling and distribution costs in Europe, store impairments and increased advertising. Lower North American store selling expenses partially offset these increases. Operating profit declined $8 million, or 6%, to $136 million, which include the $2 million unfavorable currency translation impact. The loyalty breakage favorably impacted last year's fourth quarter operating profit by $7 million. Operating margin declined 160 basis points to 17.5%. Fourth quarter other net income was $6 million, which primarily relates to unrealized foreign currency revaluation gains. Our effective fourth quarter tax rate was 30.9% compared to 30.3% in the prior year's fourth quarter, and we closed the full year with a tax rate of 32.2% versus 30.1% last year. This year's full year rate includes the unfavorable impact of a $19.5 million settlement charge incurred in the second quarter and a different earnings distribution among tax jurisdictions. Moving to segment performance. In North American Retail, fourth quarter revenues increased 1% to $343 million as we continued to expand our store base. This expansion more than offset our 5% comp decline as well as last year's loyalty breakage benefit. Operating income increased 3% to $54 million, and operating margin expanded 30 basis points to 15.8%. We expanded product margin as lower markdowns and price increases overcame the effect of product cost inflation and even the prior year loyalty breakage benefit, while our occupancy rate increased given the cost. Our expense management was outstanding as we operated with lower SG&A expenses versus a year ago despite current quarter impairment charges and a 5% increase in store count. During the quarter, we opened 12 new stores and closed 3, ending the year with 504 stores in the U.S. and Canada. For the full year, North America Retail revenues increased 4% to $1.12 billion, comps declined 3.5% and operating earnings outpaced revenue growth, increasing 9% to $133 million. Excluding last year's loyalty breakage benefit, operating income increased 15%. In Europe, fourth quarter revenues declined 1% to $291 million. In local currency, revenues increased slightly. Revenues from our owned retail stores increased as new store growth more than offset negative comps, which declined in the high-single digits. We ended the quarter with 179 owned retail stores. Wholesale revenues declined in the quarter primarily due to lower accessory and Guess? by Marciano shipments and higher markdowns. Operating income decreased by 16% to $55 million. Operating margin declined 330 basis points to 19.1%. Gross margins declined as product margin improvements were more than offset by a higher occupancy rate due to retail mix and negative comps. SG&A expenses increased to support our Retail expansion as well as higher variable and distribution -- variable selling and distribution expenses and store impairments. The increased SG&A costs, given the roughly flat sales, drove a higher SG&A rate for the quarter. For the full year, our U.S. dollar revenue grew 10% and eclipsed $1 billion. Adjusted operating earnings, which exclude the second quarter $19 million settlement charge, decreased 4% to $186 million. In local currency, full year European revenues grew 5%, while adjusted operating earnings declined 8%. In Asia, fourth quarter revenues increased by 27% to $71 million. All businesses contributed to this growth, led by South Korea and China, as we continued to expand our distribution in those markets. Both these markets posted positive comps and double-digit revenue increases. Operating profit increased 10% reaching $8 million, and operating margin declined 190 basis points to 11.7%. Gross margins declined due to higher promotions and channel mix in our South Korea market, which more than offset improvements in China where we generated higher product margins from a stronger product assortment. For the full year, Asian revenues increased 25% to $251 million, and operating earnings were flat, as expected, at $28 million as we continued to invest in infrastructure to grow the region. In North America Wholesale, fourth quarter revenues increased 8% to $41 million. Operating profit increased 11% to $10 million, and operating margin improved 90 basis points to 23.5% as we benefited from lower markdowns and allowances. For the full year, North America Wholesale revenue increased 4% to $187 million, and operating earnings increased 2% to $47 million. In Licensing, fourth quarter revenues and operating profits were roughly flat at $30 million and $27 million, respectively. These results include $3 million of previously deferred key money as we extended our Middle East licensee agreement in the period. For the full year, Licensing revenues grew 5% and earnings grew 4%, reaching $121 million and $109 million, respectively. To summarize then for the full fiscal year, consolidated revenues grew 8%, reaching just under $2.7 billion, an all-time record for our company. With lower markdowns, retail mix and strategic price increases, we overcame significant cost inflation and drove consolidated product margins higher. That was offset modestly by a higher occupancy rate, resulting in a 50-basis-point decrease to gross margins. With an adjusted SG&A rate that increased slightly, we delivered an adjusted operating margin of 15.5%, down 80 basis points from last year. Adjusted operating earnings increased 3%, reaching $417 million. For the fiscal year, net earnings on an adjusted basis decreased by 2% to $283 million, and adjusted EPS also decreased by 2% to $3.05 per share. For the full year, the favorable currency translation impact on adjusted EPS was about $0.09 per share. Now turning our attention to the balance sheet. Our cash flow this year was very strong. Operating cash flows were $364 million, up 5% from last year. We invested $112 million back into our business in net capital expenditures to support global store growth and infrastructure improvements. During the fourth quarter, we invested $92 million to repurchase 3.2 million of our shares at an average price of $28.60, and we ended with a strong financial position with nearly $0.5 billion in cash, virtually no debt and additional credit capacity and access to capital. Accounts receivable declined 5% over last year to $341 million. Overall, DSOs were slightly lower compared to last year end due to improved North America collections and mix. We've experienced some slowing of European collection, and we have been successful in increasing our insurance coverage. At year end, roughly 57% of our global receivables were supported by insurance coverage, bank guarantees and letters of credit, up from 48% last year. At year end, 70% of European receivables were covered. The inventories increased 12% to $329 million, and finished goods units increased 15%. About half of the inventory growth was driven by our European business to support the higher store base as well as the impact of changing demand. The other half of the growth supports our Asian and North American businesses, where inventories are generally aligned with sales expectation. Our Board of Directors have approved a quarterly cash dividend of $0.20 per share on the company's common stock. The dividend will be payable on April 13, 2012 to shareholders of record at the close of business on March 28, 2012. So now mike will give an overview of our recent business trends and provide our outlook for fiscal '13. Michael? J. Prince: Thanks, Dennis. Now let's discuss our outlook for both the first quarter and the full year of fiscal 2013. On a global basis, our brand remained strong and the business continues to grow despite macro conditions in Europe. For next year, we are planning modest top line growth. As to earnings, at the upper end of our guidance, we expect EPS to be roughly flat to last year when you normalize for increased advertising and marketing investments and the negative impact of the euro. Results include about a $0.03 to $0.04 benefit from the 53rd week and the impact of last year's share repurchase. Additionally, we will continue to focus on our long-term strategies of improving product, increasing retail profitability, developing new markets and building a world-class management team. In North America Retail, we will continue last year's strategy, focusing on better product, lean inventory, tight markdown management and increased full-price selling. Overall, we remain committed to our long-term goal of improving profitability while elevating and protecting our iconic brand. Thus far in the quarter, we're experiencing comps that are down in the mid-single digits. We're now planning that this trend won't improve until we fully anniversary our new strategy. Based on that, along with a larger store base, we expect first quarter revenues to increase in the low-single digits. For the full year, we're planning mid- to high- single-digit top line growth fueled by new store expansion. We're planning full year comps to be flat to down in the low single digits. We expect them to improve as we progress throughout the year, particularly in the second half when we can benefit from our increased marketing efforts, new product initiatives and accessories demand and are up against progressively easier comps. In North America, we plan to open about 35 new stores with roughly half of those stores being G by GUESS, which continues to scale and perform well. Moving to North America Wholesale. Our brand performed very well last year with improved productivity at both Macy's and Bloomingdales. For fiscal 2013, we expect that department stores will continue to manage inventories tightly, looking to improve their turns. Also, we expect to sell into tiered [ph] doors this year given the changes we made last year to exit lower-performing doors that were not brand appropriate or financially accretive. Current orders are up in the mid-single digits, and we are expecting first quarter revenues to be down in the high single digits primarily due to the anniversary of lower door counts at the time of shipments. For the full year, we expect revenues to be roughly flat. In Europe, our development strategy will continue to be balanced across different geographies and channels. We plan to grow in Northern and Eastern Europe. Jobs are expected to decline in the South. We plan to continue to opportunistically open our owned stores and work with licensees to open Guess?-branded stores. During the year, we plan to add about 9 stores in Europe, about 1/3 of which will be owned and operated directly by us. We also expect that our Retail stores will operate with mid-single-digit negative comps as we anniversary a harder comparison in the first half of the year and an easier comparison in the back half. In our Wholesale business, backlog is currently down in the mid-single digits. We're expecting that this business will be down in the first half of the year, given last year's comparisons, with opportunities to partially offset that with growth in the second half. We expect jewelry shipments to be down significantly in the first quarter given the changes we made to our distribution last second quarter. Based on this, we are planning first quarter euro revenues to decline in the mid-single digits. Given the weaker euro compared to a year ago, we expect first quarter U.S. dollar revenues to decline in the low teens. For the full year, we expect euro revenues to increase in the low single digits. Assuming the euro remains at its prevailing rate, this would result in a U.S. dollar revenue decline in the low single digits. In Asia, our fiscal 2013 growth will be driven by continued expansion and our goal of driving productivity improvements. For the first quarter, we are planning revenue growth in the low teens and for the full year. We expect revenues to increase in the upper teens to 20% range. This year, we plan to continue to invest in our infrastructure in Asia, particularly in China. We want to replicate the success of this pillar of growth in Europe by developing many of the same operational capabilities that support our business there. In our Licensing business for both the first quarter and full year, we're assuming that royalties decline roughly 10% mainly due to overall macro conditions. Now turning to gross margins. The overhang of last year's product cost inflation will continue to infect the early part of this year. That pressure should abate somewhat given some relief in cotton prices. However, we expect that relief will be offset by the cost of goods impact of a relatively weaker euro versus a year ago. Along with the impact of mix, that should result in consolidated product margins that are roughly flat to last year throughout much of the year. Given comps and retail mix, we're planning with a higher occupancy rate and therefore, lower gross margins during the year. The pressure on gross margins should be most significant in the first half of the year. For SG&A, we plan to make a substantial investment in marketing and advertising this year to support the initiatives that Paul discussed earlier. Given those investments and the confidence we're anticipating, we are planning this year with a higher SG&A rate compared to a year ago. Therefore, our expectations for the first quarter are for revenues in a range between $560 million and $575 million. We expect operating margin between 6% and 6.5% and EPS between $0.25 and $0.28. We expect the greatest impact of the operating margin decline will come from the higher SG&A rate. For the full year, we are planning for revenues to grow to a range between $2.74 billion and $2.78 billion, operating margin in a range between 12.5% and 13% and EPS in a range between $2.50 and $2.65 per share. Our guidance assumes that currently prevailing exchange rates persist for the balance of this year. The combined impact of currency assumptions, increased marketing and advertising investment should unfavorably impact this year's earnings by between $0.35 and $0.40 per share. We anticipate that the earnings headwinds rate will be most significant in the first quarter, as we will not have anniversaried either the European downturn or the other -- or the changes in jewelry distribution. We expect the earnings decline rate to gradually lessen throughout the year as we begin to lap last year's European performance in the middle of the year and finally lap the weaker euro, again based on our prevailing rate assumption near the end of the year. We see the first opportunity for modest earnings growth in the fourth quarter. We are planning with an effective tax rate of 31.5% and expect to invest between $130 million to $145 million in capital, net of general allowances, primarily for new stores and remodels. Our EPS guidance assumes no additional share repurchases in the year. With that, I will conclude the company's remarks and open the call up for your questions. Before doing so, let me remind everyone to please limit themselves to one single-part question. If time permits, we will allow you to ask a follow-up question. Operator?

[Operator Instructions] Your first question comes from the line of Randal Konik with Jefferies.

This is Shreya Jawalkar filling in for Randy. I just wanted to ask you about North America. You did mention that the business is starting to feel better. I was wondering if you could elaborate more on that. Is this a 1Q event? And also if you can provide some intra-quarter trends during 4Q?

Yes, it's starting to feel better. A lot of it is based on what we did in Q4. We improved the women's product, which was a really big priority for us. That's where we really focused our efforts on, really improving the assortment. Second, we really continued to drive full-price selling. All year long, our full-price selling got stronger for us, and we're really happy with the way that was in Q4. And looking forward, we think that we've really got some opportunities as we anniversary all the markdown improvements and price increases to drive better costs.

Okay. And then also, if you could just elaborate a little bit on the SG&A investments that you mentioned, what kind of programs that you'll be investing in? J. Prince: Yes, this is Michael. On the marketing piece, as Paul mentioned, we're going to increase our marketing efforts into SG&A. And when you think about the marketing investments, we're going to invest, obviously, with the brand's 30th year anniversary. As we mentioned, more targeted social media, more relationships with influencer and bloggers and also reminding people about our strong heritage in denim.

Your next question comes from the line of Jeff Klinefelter with Piper Jaffray.

I just wanted to ask a little bit more about Europe given the sensitivities in that marketplace today. Dennis, I think you mentioned you were down high-single-digit comp in Q4. Michael, I believe you mentioned that your guidance here is for down mid-single digits starting in Q1. I'm just curious if you're starting to see any sort of stabilization. Or what's embedded in that change in guidance trend? And then a little color between North and South. Any sense for how that comp in the fourth quarter split between the northern markets and southern markets?

Yes, I mean the -- this is Dennis. As -- we talked about the -- we experienced a negative comp in the high singles in the fourth quarter. If you go back, remember in the third quarter, we were in the low teens. And actually, the quarter to date results so far -- the first quarter is actually an improvement. So you're seeing still negative, but progressively improved over time. So the way we're looking at the rest of the year is that we're going to see headwinds for the first half of the year, but we'll finally anniversary the lower environment from last year, which should give us some opportunities towards the back half of the year. Having said that, however, the overall assumption for the year is still to be down. J. Prince: Yes, Jeff, when you think about the first half of the year, like Dennis said, we had good comps in Europe. So you're comping a hard comparison for first half this year.

That's helpful. And I think Paul mentioned, I think in his prepared comments that you're watching closely European consumer confidence is going to remain a challenge. And I would concur the austerity measures and things haven't really probably fully been felt yet. How -- what are your contingency plans? How do you manage into that kind of environment? And then just one other thing on Korea. Impressive results in South Korea, hearing about a lot of challenges in the fourth quarter and even into the first quarter in that market. So it seems that you're outperforming the competitors. If you'd provide a little bit more context around that as well?

Yes, so between the North and the South in Europe, you clearly see a big difference. It goes from attitude and consumer reaction toward these austerity plans. The austerity plans in place in Italy and in France and, of course, Greece we know about is -- I mean, they are pretty impactful. And when you see what's happened with the gasoline in Italy, with the gasoline in France, I mean, the jump was gigantic, up 20% cost. So that has an impact directly to the consumer there. In the North, we don't see that negative reaction as weakened sensitivity in the South. And I think that now, it seems like slowly but surely, the banks are getting to some kind of agreement with the IMF. And if it's happening and it's concretized and we see the final point to that, we will see a big reaction to the markets in the next 12 months. But on a short term, we see -- every -- I go there every 4 weeks, and you see that nervousness on the streets, in -- everywhere. In the restaurants, everywhere. You can feel it and touch it. Then you go to Germany, and you don't see that sense of that. In north of Europe, you don't see that sense of that. So we clearly are sensitive to say we have to be in touch with reality, and we know that 2012, which means '13 for us, fiscal, we have to be careful and we have to be watching there constantly. About Korea -- you mentioned Korea. We -- I think we have been performing basically now on fashion when we became #1 brand in the last 2 years. And -- but they have some adversity in the economy and the currency as well. And -- but we continue to operate aggressively, to open stores aggressively and -- from the underwear to the G by GUESS and the Guess? store. And now we are preparing the plan, let's say, for opening in Japan in next 12 months. It would be the first store we'll open, we hope, in the next 12 months in Japan. J. Prince: Yes, Jeff, going back to what Paul said, you'll remember our -- in our Q3 call we said in Europe we're going to control what we can control. And you're seeing us watch inventory very closely. We're watching AR very closely. We're making sure we partner with the best banks in Europe to mitigate risk. So anything we can and will control, we are. And it's still also -- it's still mainly a wholesale business. So we've got the Spring/Summer orders in. We're about 80% to 85% done with Fall/Winter. So we've got pretty good visibility over those sales through the first half of the year.

Your next question comes from the line of Helena Tse with Bank of America Merrill Lynch.

I just wanted to know. Can you discuss in more detail your inventory at the -- at year end, particularly in North America Retail segment? What was inventory on a square footage basis? And how are you thinking about that go throughout the year?

Yes, in North America, we're really happy with our inventory position. On a per-square-foot basis, we're down in the low single digits and we think that what we -- where we're now is in kind of the categories that are performing pretty well. Going forward, we're happy with where that is overall. We do see some opportunity to go a little bit deeper in certain items that we really believe in. This past year, we made a lot of changes with the product, and we made changes in pricing as well. And we learned a lot after we saw the customer response. So we think we can do better. J. Prince: Yes, and just from a global perspective, we thought we got our inventory in check right now. We're up about 12% year-over-year. Part of that is to basically fund our Retail store growth. The other part is in Europe, you have, with the macroeconomic conditions, and -- a few extra cancels and less reorders. You had a little bit uptick in Europe. But what we do with that inventory, we keep it in a warehouse. We sell it through our outlet channel, then liquidate and distribute through basically a 6-month period. And it's very profitable and brand accretive. And the model is built for that. So when we look inventories now going through kind of the remainder of the year, we feel good about where we're at on our inventory position.

That's great. And then in regards to the comp trends, in your fourth quarter comp, can you just give us what the split was between AUR and traffic? And then also, as you go through the year, maybe discuss what your AUR assumptions might be for the first half versus the second half as you sort of lap, I guess, the brand elevation and the sort of the new assortment that you rolled out this past fall?

Yes. As Paul mentioned, AUR was up over 20% in our full-price for Guess?. It was down in the single digits on our moderate-priced brands. Traffic was tough for us. I mean, we walked away from a lot of the markdown business. We have a lot of competitive customers out there that were driving traffic through big promotions, and we chose not to participate in that. So that was a drag on us. And it was -- and we knew it would also -- conversion will be difficult because when you do big promotions like we did a year ago, it's the easiest time to convert customers. So we suffered on that, but we've certainly seen that really stabilize for us in Q1.

Your next question comes from the line of Omar Saad with ISI Group.

I was wondering. You sounded pretty positive on the G by GUESS developments, Paul, in your comments. Can you just update us on where we are with that -- with the store counts there? What your kind of store opening plans are for that business near term, medium term and long term? Do you think there might be an international opportunity, especially as you think about some of the macro issues in Europe and some of your other markets?

Okay. Starting with G, I mean, G had a high-single-digit comps consistently all year. So we were really happy with that trend, the customers really responding to what we have to offer. The -- on top of that, we also had markdown improvements throughout the back half of the year that we -- it was really encouraging to have both comps and markdown improvements. And so we were able to mitigate the cost increases with G by GUESS, which was really challenging for us in that moderate space. For store counts, we plan to open more G by GUESS stores this year than we've ever opened. The majority of our stores that we're opening up this year will be by G by GUESS. It's 20-plus stores. Long-term opportunity, we certainly see it as a multi-hundred potential store concepts. And International, Paul, you want to add something?

Yes. International, Omar, well, we have been opening now stores in, of course, Korea, which I mentioned in the call. We have 47 location now. In Philippines, we have like 9 stores. In South Africa, we opened 5 stores. But don't forget that South Africa and Philippines and Korea, they are doing their own manufacturing locally because of -- the import duties are tremendous. Europe, for now -- no Middle East for now is no. Canada, not yet. That's a strong possibility. And Latin America, possibly. We want to address properties of U.S. market, which we have -- only lack now. I think, I mean, 65 doors.

65, yes.

And we plan to grow, I mean, rather rapidly to 150, 200 stores in the next 3 years, we think, 3 to 4 years. So we are very, very excited about that.

And any update on China and the business and how you're trending there and how you're looking at the opportunity and how you'll learn as you build the infrastructure?

Yes. China, we are totally, I mean, well above plan, but we have -- we put a conservative plan like 2 years ago for the simple reason that in view of the vast territory that it is, we wanted to put realistic plan and not overly confident, overly aggressive plan and then we find out we cannot make it, no. So we are -- in fact, we have our first conference in November, last November, and it went extremely well. So once we continue to pick the pace, I mean, the growth will be between 20%, 25%. And over the years, we might increase 30%, 35% once we really have all the pieces in place of management, support, marketing, brand recognition, all that. But again, China, you cannot look at the short term. Everything, everybody, every brand is looking long term what we are doing, what they are doing, what we are doing. J. Prince: Yes, Omar, I would just add to that, that we've been investing in infrastructure. That's still part of the plan this year. But our goal this year, by the time we get to the fourth quarter, if everything goes according to plan and we hit our top line, we hope to see some leverage in the fourth quarter that we can then carry on into fiscal '14.

Your next question comes from the line of Diana Katz with Lazard Capital.

For the overall company, where is marketing spend as a percentage of sales going for this year? And where was it last year?

Last year, I think it was about 1.5 points, 1.5% of revenues. That's -- we haven't specifically talked about the growth, but we expect to see a pretty significant increase in both the advertising and the marketing investment that Michael and Paul both talked to you. If you talk at that $0.35 to $0.40 range that we share, round, very round numbers. It's probably roughly half of that.

Okay. And then what is the exact, I guess, the EPS driller impact in the first quarter?

First quarter, it's about $0.06.

Okay. And then my last question was just on the segment model for the year. Should we plan any of the geographic segments to show operating margin expansion for the full year? J. Prince: Well, I mean, think -- first of all, the advertising investments are going to affect everybody. But if I exclude that, I think if we can hit some of our plans in North America and really manage the expenses tightly as we have been, there's an opportunity there. It's going to be challenging in Europe with the weaker euro and the way that the economy is behaving right now. In Asia, I mean, what I alluded to just before is that our goal would be by the time we get to the very end of the year, we could start to see some leverage that probably translates into a bit of a headwind for the full year.

Your next question comes from the line of Eric Beder with Brean Murray.

Could you talk a little bit here about when we look at the changes in North America, how have you -- you had -- you're impacted with less discounting in the second half of last year. What is the next level you want to take it to kind of in the -- this year in terms of both discounting and product?

Yes, I think we're happy with where we were with that -- with -- from a markdown level. I don't see us driving substantial improvements in markdowns during the second through the fourth quarters. Our opportunity for markdown improvement will be in Q1, where we still had a lot of markdowns last year. J. Prince: I think the other thing I would point out, last year the focus on the brand elevation really centered on the women's business. So this year we're looking to elevate the accessories business to catch up with where we took women's.

Yes. And I think the best way to achieve that is to just visit the stores and you will see a quite a change on -- understand the display merchandising. That speaks louder than any speech.

Sure. Could you also give us an update on the online business and how that's doing and where you think that's going to go going forward?

Yes. We made a lot of improvements in the online business during the second half of the year. We really invested in better photography and better merchandising in the sites about midway through the year. It resulted in revenues being up over 20% in the fourth quarter, which was our best performance all year. And it's a big initiative for us this year to continue to drive that business and to better integrate it with the activity that's going on in our stores.

[Operator Instructions] Your next question comes from the line of David Glick with Buckingham Research Group.

Just back to the advertising, just a philosophical question. It looks like you're going to be somewhere in that 2.5% to 3% range based on the significant increase this year. I think when you still compare that to many in your peer group, it's still on the lower end. Definitely sounds like a very sound strategy to do what you're doing. I'm just wondering kind of where you see this level of -- going over the next couple of years. Is this kind of a one-year increase and then we should start to see that -- the benefits on the top line as we get into 2013? Or do you think this is kind of "Learn as you go" over the next couple of years and really reinvest in marketing of the brand?

Yes, this is Paul. I think the 1.5% you mentioned is kind of a little bit misleading on a sense that we have basically half of our worldwide business done by the licensees' product. And all licensees' product have a minimum of 3% to 5% obligation to spend in advertising all over the world for distributors. So that's -- the actual door member and -- or that in percentage would be much more in line on the 3% than 1.5%. 1.5% is what we do corporate. And then you go to handbag and shoes and eyewear and watches, each of them being distributed by license by distributors, have now a cascade of different campaign in all different countries around the world, that's one. Two, the reason also is that the expansion we had in the last 3 years international to establish anchor showrooms and anchor stations from China to Europe to -- all that, was a major part of the CapEx. And that's also -- now it's done. We're not going to do it again. So of course, that free up much more capital to be in marketing, advertising and digital media. So clearly, you will not see an increase and then a decrease next year after that. It would be to the opposite. It should go to continue to increase steadily every year. Thank you.

Your next question comes from the line of Dana Telsey with Telsey Advisory Group.

Can you talk a little bit about as you see 2012 laying out compared to 2011, last call you talked about the big challenges in Europe on the consumer side. How are you thinking about in 2012? Does it differ by region? And then also, as you think about the Wholesale business and the Retail business here in the U.S., is there differences between product acceptance? And how do you think about pricing?

Yes, this is Paul, Dana. I think, personally, I still continue -- as I mentioned just before, the pictures and landscape clearly is different of last year. For me, I see an improvement in U.S. coming slowly together. And not only related to the stock market, but also to the fact about the banking and many, many -- and, of course, the jobs increasing. But Europe, honestly, if you're coming in Europe, it's a big question mark. The -- this announcement that the whole Greek crisis is resolved and we're done with that, I still don't believe it and I'm still nervous about. And that's why we concentrate so much in North Europe while -- way, way less affected with that, and Eastern Europe. In fact, as we speak, we're establishing now a base in Eastern Europe, which we never had, as a base to open rapidly some stores in all of Eastern Europe. South of Europe is a question mark. Italy for me, I'm still nervous about. Of course, Greece and Spain, needless to tell you what is the unemployment there. So that is still the shadow I see in 2012 unless something drastic happen with credit backing. Nobody can go to the bank, I'm talking as an individual, and get a loan about anything. Nobody. So that is -- if that open up, this would change completely the landscape of the consumer confidence. Then Middle East, we have no concern. In fact, we think that Middle East is going to grow much more. And East -- I mean, Asia. In Asia, we have -- the Southeast Asia was extremely strong with our distributors. We have China, which I addressed before. And Japan, we have not touched. And India now, we are -- we have a plan of opening 50 stores in the next 3 years on the top of the 25 we already have. So we have covered pretty much a lot. The last piece missing, of course, is Latin America. So this is where we are, in a nutshell, about what to expect.

Okay. Dana, regarding Wholesale, Wholesale is performing better for us than our stores. And really, the biggest difference we see is the traffic. The product is -- and the change remain. The products are getting exposure there to a pretty wide variety of customers, and they're really responding well to it. And the second difference is the promotional activity is apples-to-apples with last year as well. The pricing, it's the same pricing in Wholesale as it is within our Retail stores. So that's not a factor for the difference. J. Prince: Yes, Dana. That's why we see Paul's marketing initiatives so important for this year to help drive that traffic to the stores. That's what a lot of that money for media is for.

Your next question comes from the line of Margaret Whitfield with Sterne Agee.

Yes. Given your focus on Northern and Eastern Europe, could you discuss the breakdown of store openings in Europe, both Southern and Northern as well as Eastern? And could you break down the comps in Q4 at North American Retail between women, men's and accessories? It sounds like women's was the strongest by far. And what do you plan to do on the other 2 areas? J. Prince: Yes. So, just in terms of the store openings, the -- you heard us say that about 1/3 of the 90 will be stores that we're opening. The biggest market there that we want to invest in is Spain. We're going to open stores there. That country performed well last year. It comped positively in the fourth quarter, it comped positively for the full year and there's been a lot of challenges in Spain. So I think that tells you something about how the brand is doing there. Germany is another market where we want to open our own stores. Not quite to the level of Spain, but we're going to open a fair number of stores there. Russia, now these aren't our stores. Russia is a market where we're going to be working with partners to develop stores in that market. Portugal, another market where we're going to be opening.

Yes, the comps in our full-price stores, women's was the best performing category, and accessories and shoes were the lowest performers we have. And shoes in particular was one area where we really cut back our buy. That was something we identified early on that we really needed to clean up the markdown. So we made a lot of progress there on the markdown.

Your next question comes from the line of Susan Sansbury with Miller Tabak.

Dennis, just a couple of clarification points. The jewelry impact in the fourth quarter and for the year?

For the fourth quarter, it was fairly modest. I don't actually have that to hand. I think the first quarter, I said was 6, and the third quarter of last year, I believe was 8.

First quarter of 2012 is going to be 6? J. Prince: Yes.

Yes, but [indiscernible].

Okay. So you don't have it -- just offhand, you don't have a total -- an impact for the total year?

I don't have. But the third quarter was the biggest quarter. It's much less impactful than the fourth.

Your next question comes from the line of John Kernan with Cowen.

I wanted to ask you about how you feel your inventory level or inventory levels are in the wholesale channel within Europe. And are you worried a similar issue similar to what happened with jewelry could happen in another category with your wholesale partners? And then I have a couple of follow-ups. J. Prince: Yes, this is Michael Prince. Yes, we're watching, as I mentioned earlier, the inventory levels very closely. And as I mentioned, cancellations were up a little bit. The reorders were down a little bit. But we feel like the inventory levels are in check. And as we said, we -- if you think about our ability to manage inventory in Europe, we do have the outlet channel, which liquidates to the product and it's only at about 50% consumption right now. So we have the ability to even taken out more inventory if we needed to. But right now, when you look at the accounts we're working with all over Europe, we feel like the inventory levels are reasonable considering where the accounts are.

And if I can add to that, this is Paul. Jewelry, it was a very specific situation where the 2 distributors who basically have 72% of business or jewelry between 2 countries, Italy and France. And that is 72% of the world, total business of jewelry. And when this crisis hit in Italy and France. I mean, this planned austerity and all that. These 2 countries were hit the hardest. And of course, one of the first things I think people cut was unnecessary -- it may have been in their mind to say, "The last thing I want" -- "First, I want the bag," "First, I want the shoes and jewelry," "If I can afford," yes or no. And that's the way we looked at it. But that was the only category where you can find any product of any licensee where you see a concentration of 72% of business in 2 countries. Be sure that this will not happen again, but we have much concentration in 2 countries. J. Prince: Yes. And the other thing is if you think about our Wholesale accounts, we've had relationships with these accounts. They've been accounts for many years. For the Licensing business, I think we've taken over roughly 1.5 years ago, so it was a new business that we took over on the Wholesale side. So I agree with Paul, like we've had a good handle with these relationships and don't see this happen again.

At this time, I'll now turn the call back over to Paul Marciano for closing remarks.

Thank you. We feel overall very confident of all the steps and strategy we're executing, and we will continue to push forward with our brand in mind up and foremost. To conclude, this year we're extremely proud of what Guess? has become, that none of this could have been possible without the contribution of our amazing team of creatives, associates, managers and partners around the world. I want to thank them for continued support. We accomplished a lot this year, and we have so much to do yet. I'm confident also that with this great talent, we can continue to be like many global brand that will be here for -- that has been here for the last 30 years and will be here for the next 30 years. For the next earning release, it would be at the same date of our 3 days conference of One World One Brand in Los Angeles with all the partners, licensees, creative team and management with more than 1,000 participants. So I won't be able to be on the conference call, but Michael, Dennis, Russ Bowers and our Retail President, Nancy Shachtman, will join you. And of course, I would be to the next one. Thank you again, and we'll talk to you next conference call. Thank you.

Ladies and gentlemen, that concludes today's presentation. All parties may now disconnect. Enjoy your day.