Robert E. Campbell - Vice President of Investor Relations and Treasurer Blake W. Nordstrom - Principal Executive Officer, President and Director Michael G. Koppel - Chief Financial Officer and Executive Vice President Erik B. Nordstrom - Executive Vice President, President of Stores and Director Peter E. Nordstrom - Executive Vice President, President of Merchandising and Director

Deborah L. Weinswig - Citigroup Inc, Research Division Dorothy S. Lakner - Caris & Company, Inc., Research Division Charles X. Grom - Deutsche Bank AG, Research Division Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division Jennifer Black - Black & Company Inc., Research Division Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division Adrianne Shapira - Goldman Sachs Group Inc., Research Division Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division Barbara Wyckoff - Credit Agricole Securities (USA) Inc., Research Division Kimberly C. Greenberger - Morgan Stanley, Research Division Paul Swinand - Morningstar Inc., Research Division Lizabeth Dunn - Macquarie Research Alex J. Fuhrman - Piper Jaffray Companies, Research Division Dana Lauren Telsey - Telsey Advisory Group LLC

Hello, and welcome to the Nordstrom 2012 Second Quarter Conference Call. At the request of Nordstrom, today's conference call is being recorded. [Operator Instructions] I will now introduce Rob Campbell, Treasurer and Vice President of Investor Relations for Nordstrom. You may begin, sir. Robert E. Campbell: Hello, everyone, and thank you for joining us for the Nordstrom conference call, which will last 45 minutes and include 30 minutes for your questions. As a reminder, all forward-looking statements on this call are subject to risks and uncertainties that could cause the company's actual results to differ materially from the expectations and assumptions discussed due to a variety of factors that affect the company, including the risks specified in the company's most recently filed Forms 10-K and 10-Q. Participating in today's call are Blake Nordstrom, President of Nordstrom Inc.; and Mike Koppel, Executive Vice President and Chief Financial Officer, who will discuss the company's second quarter performance and outlook for fiscal 2012. During the Q&A session, we will be joined by Pete Nordstrom, President of Merchandising; and Erik Nordstrom, President of Stores. Before we begin, I wanted to mention that Blake and Mike will be using slides that can be viewed in the Investor Relations section of our website. If you're listening to this conference call as a webcast, you should already see the title slide. If you're listening by telephone, you can view the slides by going to investor.nordstrom.com. With that, I'll turn the call over to Blake. Blake W. Nordstrom: Hello, everyone. I'm happy to provide an overview of our company's progress as we reached the halfway point of 2012. There's a lot of momentum in our company with multiple initiatives driving substantial top line growth and full-line Rack and our Direct business. We just completed our Anniversary Sale and once again we were thrilled by the customer response with high volumes of traffic both in-store and online and sales through July that were above our expectation. The overarching theme in our company continues to be about improving the customer experience across all channels. It is reflected in our top line results and in the increasing number of growth opportunities that are emerging. I'd like to take a few moments to review our progress along these lines in the second quarter. There are several slides we've made available on our website in the Investor Relations section as a supplement to our comments. The first slide highlights some of our recent growth initiatives. We are excited to announce in June our plans to open a full-line store in New York City. In one sense, it's the culmination of efforts for over a decade defined what we believe is an outstanding location for our flagship store in the world's premier city for retailing. In another sense, it's a beginning as we go through the process of preparing for what we hope will be the highest volume store in our company and an opportunity to further elevate and extend our brand. We look forward to its opening, which we anticipate will occur in 2018. The Rack continues to execute well, increasing its market share while achieving high sales productivity, EBIT margins and return on invested capital. Recognizing its growth potential several years ago, we embarked on a more ambitious store expansion plan for the Rack. Over the last 4 years, the number of Racks has more than doubled to 110 today. Based on what we've experienced during this period and how our customers responded, we see an opportunity for even greater acceleration in its growth. We will continue with our plan to open a total of 15 Racks this year, and then increase to 24 openings in 2013. Its' likely that we'll have doubled our size again by 2016 with over 230 Rack stores. We are encouraged by the performance we've seen in this business and by the ongoing growth opportunity it represents to serve more customers. Our Direct business followed its 44% sales increase in the first quarter with a 40% increase in the second quarter. It largely reflects the meaningful investments we're making to improve the customer experience in e-commerce, expanding selection, improving the site experience, expediting the checkout and delivery process and ultimately making it easier for our customers to shop. This year for the first time, our Fashion Rewards customers had the chance to shop online during the 9-day early-access period prior to the start of the event. And with the launch of the Nordstrom iPad app, coming later this month, we are excited to introduce some novel features that we think customers will appreciate. We continue to leverage technology to improve the customer experience. We are constantly adding to the functionality of our mobile point-of-sale devices and their use in our stores is increasing. By the end of the year, they will have all of the capabilities of our existing cash registers. We've successfully tested mobile point-of-sale in the Rack and have seen its effectiveness in improving the shopping experience by speeding up the checkout process. We are in the process of rolling out around 1,500 of these devices to all of our Rack stores by the end of the third quarter. For a number of years, we have leveraged strategic partnerships that we view as enablers to improving the customer experience. They've happened organically as an outgrowth of our ongoing efforts to elevate merchandise and channel execution. We've made acquisitions of Jeffrey and HauteLook and established partnerships with kidswear brand Peek and more recently men's online apparel retailer, Bonobos. These relationships provide opportunities such as increased access to product and customers and deeper knowledge of how to market to and build relationships with customers using technology. The most recent for us is our announced U.S. exclusive partnership with Topshop and Topman, internationally renowned leaders in offering newness in fashion at great prices. In September, we'll begin carrying merchandise in 14 of our stores as well as online. We'll learn a lot during this initial phase and anticipate expanding distribution in the future. As we said last quarter, we're moving fast and it's in response to the multiple opportunities that are in front of us. Growth is an increasingly meaningful part of our story, as we seek to continually enhance our platform for sustainable improvements in performance. Now I'll turn over the call to Mike. Michael G. Koppel: Thanks, Blake. In wrapping up the first half of the year, we are encouraged with the momentum in our business. As we aggressively pursue opportunities to evolve with the customer, whether it is in-store or online, we are seeing the benefits reflected in our top line results. We are excited about our investments in e-commerce, the acceleration of Rack expansion and our plans to open a flagship store in Manhattan. We have many efforts underway to improve the service experience and to stay relevant with existing and new customers. Our financial position is strong, and we're seeing favorable trends in every channel. We have a demonstrated record of results from major technology and business initiatives from the implementation of perpetual inventory system some time ago to our more recent multi-channel efforts, which have driven significant profitable growth. This gives us confidence as we aggressively move forward on multiple growth opportunities to execute successfully and deliver long-term shareholder value. Moving on to results. I'd like to make a couple of comments on our biggest sales event of the year. This year's Anniversary Sale exceeded our expectations, delivering same store sales increases in the high single-digit range on an apples-to-apples event-to-date basis through the end of July. This sale event, which drives significant volume for us, started 1 week later relative to last year causing 1 week of the sale to fall into our fiscal third quarter. As a result, the event shift drove an unfavorable comparison for the second quarter, but is expected to have a favorable impact to the third quarter comparisons. Taking that into consideration, we are pleased with our second quarter financial results, which exceeded our expectations. Our performance reflected strong top line results with earnings per diluted share of $0.75, compared to $0.80 last year. Next, I'd like to focus on sales. With 11 consecutive quarters of same-store sales increases, our sales performance continues to exceed expectations. Total net sales in the quarter increased 7% while same-store sales increased 4.5%. Nordstrom same-store sales, which include our full-line and Direct businesses, were up 4.9%, with Handbags, Women's Shoes and Cosmetics as our top-performing merchandise categories. Same-store sales at full-line increased 1.1%, with the South and Midwest as our top-performing regions. Direct continues to be our fastest-growing channel, with sales growth of 40% over last year. With 6 doors open to date this year, Nordstrom Rack delivered a total net sales increase of 19% and same-store sales increase of 7.7%. Let's now move on to gross profit. Second quarter gross profit, as a percentage of net sales, decreased 98 basis points over last year to 35.6%. The decrease is primarily attributable to a combination of planned deleverage in buying and occupancy expenses, resulting from the Anniversary Sale event shift and strategic growth initiatives, including our enhanced Fashion Rewards program and free online shipping and returns. We launched our enhanced Fashion Rewards program earlier this year and have been pleased with the favorable response, which is indicative of our efforts to develop new customer relationships and deepen existing ones. In the first half of 2012, new accounts grew by over 20% on top of last year's 66%. Additionally, our rewards customers are spending roughly 20% more with us relative to last year and we continue to see increases in the overall penetration rate on our cards. Now, I'd like to discuss our inventory performance. Total sales per square foot increased 4.5% while our ending inventory per square foot increased 17.7%. Our elevated inventory levels largely reflected a planned buildup of inventory related to the second week of the Anniversary Sale, which shifted into August. In addition, a portion of the inventory increase is a function of our growth initiatives, including the expansion of our Rack business. As a result, our inventory turn of 5.3x was down from Q2 of 2011, but we are on track to meet or exceed our all-time high in inventory turn achieved in each of the last 2 years. The percentage of regular price sales continued to increase relative to last year, which reflects our customers continuing preference for newness and the ongoing benefits from our multichannel capabilities. Now I'd like to review our expense performance. Retail SG&A expense as a percentage of net sales, increased 61 basis points over last year. The increase was driven by higher planned fulfillment costs associated with increased speed of delivery and increased planned technology costs related to the acceleration of our e-commerce investments, which began in the latter half of 2011. As Blake mentioned, these investments support our ongoing efforts to enhance the overall customer experience through our e-commerce capabilities, expanded product selection and improved convenience. Consistent with the first quarter, our in-store business delivered incremental profits on incremental sales that are in line with our recent historical performance. Moving to credit. We continue to see improving trends in our credit metrics. Our delinquency rate improved to 1.9% of receivables versus 2.7% last year. We ended the quarter with bad debt reserves as a percent of ending credit card receivables of 4.6%, down from 5.6% last year. Our financial position remains strong, with $1.3 billion of cash and total liquidity of $2.1 billion. Our adjusted debt to EBITDAR of 2.2X is well within the range of investment grade. During the quarter, we repurchased 7.5 million shares at an average price of approximately $49.50 for a total of $373 million. We have $696 million remaining under our existing authorization. Now I will discuss our updated outlook for 2012, which factors in the year-to-date performance and our plans for the second half of the year. Due to the impact of the Anniversary Sale event shift, we provided directional comments in the earnings release on the timing of certain line items over the remaining quarters of 2012. We increased our expectations to achieve 2012 earnings per diluted share of between $3.40 to $3.50, including a benefit of $0.08 from year-to-date share repurchases. In addition, we raised our full year same-store sales guidance to between 6% and 7%. Our updated gross profit outlook incorporates our current view of the impact of multiple growth initiatives underway across all channels. The increase in our SG&A guidance also is a function of growth in our business with higher sales volume causing increased variable expenses. Consistent with what we shared last quarter, we expect to see improvements in expense leverage in the back half of the year, as we begin to anniversary some of our existing strategic growth initiatives. In closing, our focus on enhancing the customer experience is delivering strong growth and increasing market share. As we look ahead to the second half of the year and beyond, we are excited about the opportunities we see and the expanded ways to serve our customers. We are on track with achieving our long-term financial goals of high single-digit top line growth and mid-teens return on invested capital. With that, I'll turn the call over to Rob. Robert E. Campbell: Thank you, Mike. [Operator Instructions] Now let's take the first question.

Our first question today is from Deborah Weinswig from Citi. Deborah L. Weinswig - Citigroup Inc, Research Division: I was very impressed with the Rack strategy through 2016. Can you just talk about if there's any change in terms of the real estate perspective? And how should we think about owned versus leased and what is with strip mall versus outlet? Give any color you can provide will be very helpful. Blake W. Nordstrom: Deborah, this is Blake. I think we've shared in the past that our customers really prefer a convenient parking easy in and out. So being in a strip mall type environment with attractive co-tenancies has really served us well, and we have not done many in terms of the traditional kind of outlet mall. We've done a couple and we have found that they are not quite as productive. One of the questions we had a while back as we accelerated growth was the availability of real estate. And to date, we've been very pleased with our ability to find good locations, in many cases, near our full-line stores. And so for the foreseeable future on the plans that we announced, we feel really good about our prospects of finding that necessary real estate. Deborah L. Weinswig - Citigroup Inc, Research Division: Okay. And then, what could you learn from the early access to the Anniversary Sale online? Blake W. Nordstrom: Erik? Could you take that, please? Erik B. Nordstrom: Sure. Well, what we learned that we weren't great at planning it. It's being able the first year, we planned a little more shift than what actually occurred online. We know from other times of the year that our customers like to shop the channels on their terms. So we knew that it would be a positive overall, net positive, but -- quite a bit of a challenge, another piece of complexity as far as how much are planning for the stores and online. But besides that, it was pretty seamless. We had slight technical glitch the first day from the increase in traffic. Being that, again, anytime we do something really big for the first time online, it's hard to get a practice run on that. So there's a little learning technology-wise. But from a customer response, it worked very well. People appreciated the alternative. But there's also something with Anniversary Sale with the vast majority of our customers like coming in the store and seeing the full selection, touching it and feeling the energy in our stores. Michael G. Koppel: Deborah, this is Mike. I would just add one other thing. From a Fashion Rewards perspective, we continue to gain a lot of new Fashion Rewards customers through the early access program and the additional benefits and that should help to play out over time as we continue to build that base. Erik B. Nordstrom: Yes, it's a good point. I heard -- I don't know Mike said, as you think about early access, I'd ask you to think about it in 2 ways. One is certainly what it does for the Anniversary Sale in that time period, defined time period. But for what the second part -- and really is bigger. It's one of the best examples we have of the strategic benefit we have from owning our own credit card. Early Access is one of the most attractive benefit to our Fashion Rewards program, and it really is a big driver that's opening new Fashion Rewards accounts all through the year and gearing up for the Anniversary Sale. So we feel those benefits of significantly more Fashion Rewards account all throughout the year and not just stamp the Anniversary Sale.

Our next question is from Dorothy Lakner from Caris & Company. Dorothy S. Lakner - Caris & Company, Inc., Research Division: I wanted to ask about Women's apparel. You've brought or put in place a new GMM. You have a plan in place, I believe, that you want to execute. I just wondered if you could give us a little bit more color on your progress there. You seem to see -- two, have seen a little bit of a pickup during anniversary, realized it's very early days but if you could just give us a little bit more color on what your plans are there. Peter E. Nordstrom: Sure. This is Pete. We've put a new leader in place, so it's been probably about 60 days or so, we'll go now. And it's an internal candidate, her name is Tricia Smith. She's been with us for the last 22 years, I think, quite some time. She's a proven leader around here with a great track record of success. She was always a really good candidate. We kind of took our time because we wanted to really thoroughly vet outside Canada and we felt like we did that. And after weighing all those choices, we ended going with Tricia. And I think the benefit we get is that she was really able to start right away and get traction very quickly. There was no real learning curve there because she was incidentally familiar with all the issues we've been going through. I actually believe in this timeframe that we have that we were able to get traction very quickly in this transition, and not have to wait. So you're right, the business has actually improved in Women's. And I think the wave of an emotion on that for a while. In July, actually, our Women's business as a division finished above the average of the multi-channel. So it's positive for us, and I think we're going to continue to evolve our merchandise offering, and we keep saying these words be more modern and more relevant. And that seems to be the most appealing recipe for a broad segment of our customers.

Our next question is from Charles Grom from Deutsche Bank. Charles X. Grom - Deutsche Bank AG, Research Division: Mike, could you just speak to the change in your retail SG&A leverage assumption in the second half? I think you guys were guiding 70 to 90 bps of leverage and now you're saying kind of 60 to 70 basis points. Is it just a function of variable expenses associated with higher sales or are you guys increasing your tax spend, can you just clarify that for us? Michael G. Koppel: No -- yes, Chuck. This is Mike. No, the only difference is the fact that there's -- it is top line growth related. It's all volume and growth related. Our plans in terms of the initiatives we have in place are consistent with what they've been the last several quarters. Charles X. Grom - Deutsche Bank AG, Research Division: Okay, great. And then, my follow-up will be just given the strength in July and the Anniversary Sale, should we still expect August comps to be up mid-teens or was there more of a pull-forward effect in July that could dampen that August comp? If you could just clarify that for us, it would be great. Michael G. Koppel: Well, we haven't guided comps on a monthly basis. But you should expect to be -- comps to perform higher than last year because of the shift into August -- of the Anniversary Sale into August.

Our next question is from Edward Yruma from KeyBanc. Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division: I think earlier this year you have provided kind of a chart that diagrammed your thought around return on invested capital and margins. How does that change now that you've decided to accelerate Rack openings in 2013? Michael G. Koppel: This is Mike. Really, nothing has changed materially. The Rack has a little bit different geography in terms of its financial performance and that's a -- that the gross profit is lower but SG&A is also lower, but the EBIT margin tend to be slightly better than full line. And the return on capital is very strong. So I think if you look at it relative to the entire enterprise, it's not a material impact to those line items. But certainly if you look at the overall growth opportunity to the company, it is. Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division: Great and one follow-up, if I may. For the stores that you've changed and added mobile POS to a Rack locations, what have you done with the incremental space that you freed up and how does that change your square footage profile going forward? Blake W. Nordstrom: Edward, this is Blake. Today, we haven't done anything material on the space. But it's a good question because that is one of the factors and determinants to embrace and also on adopting this mobile point-of-sale because we think we do have the opportunity to free up some space and reduce the amount of register we have at the front. So whether that's flex space or add to our accessory division, it provides more selling square footage on the floor and so it's one of the additional benefits. But it's driven with trying to improve the customer experience, the point-of-sale, and reducing the lines and a more one-on-one experience and the byproduct as we might free up some space. And so we hope the balance of this year to start implementing that.

Our next question is from Jennifer Black from Jennifer Black & Associates. Jennifer Black - Black & Company Inc., Research Division: I've wondered if you could talk about the results of the 2 e-mail blasts that were sent with the secret rewards card to your HauteLook and the Nordstrom non-cardholders, and I wondered if you received the response that you were looking for? Michael G. Koppel: Jennifer, this is Mike. Yes, we did try that as a test this time. And the response was, I would say, relatively in line with what we've thought but it wasn't, I would say, a significant impact to our business. But it's all part of our learning and testing new marketing techniques with our multiple channels. Jennifer Black - Black & Company Inc., Research Division: Great. And I have a follow-up. I wanted to know if you had more full priced merchandise on the floor during anniversary because it looked like you did. And did your customer purchase more full priced merchandise, that being non-Anniversary merchandise items during the sale when double points started. Peter E. Nordstrom: Yes, this is Pete. It's a good question. Yes, I think, our results would bear out that we did well with the full price offering. But I think probably the best story there is our sell-through on the anniversary product was up significantly over last year, and that bodes really well for our profitability going forward, as we can kind of clear through that. So we exceeded our plans as you look at it through the end of July, and what we accomplished to the sale there. But I -- typically or basically, sales look well for us when we can establish a good balance, and I would say that what happened here for the sale, again, through July, definitely was in line and exceeded our expectations.

Our next question is from Erika Maschmeyer from Baird. Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division: Could you talk about how you've aligned your processes and teams to align the buying personnel across HauteLook, Rack and full-line? Kind of how long have they been working together and how much more opportunity do you think there is here to really leverage your various channels? And also along with that, could you please share HauteLook's sales increase? Michael G. Koppel: Sure. Erika, this is Mike. We've made some pretty good progress this year in terms of, number one, just understanding the opportunity across our various channel to better lever our relationships in the market. And it's not only been HauteLook with Rack but it's also been HauteLook, Rack and full-line. And our ability to understand the great relationships we have with some good brands and being able to provide various channels to sell their product through at different stages of their life cycle. So we're making good progress there. We have a lot to go. It's a lot of work and it requires a lot of coordination. But some of the early results of that have been very good. So we're going to continue to work on that going forward. In terms of where we are with sales, we still anticipate a 50% to 60% sales increase with HauteLook this year over last year. The business continues to be operating at or slightly above its plan, and we continue to be encouraged. Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division: That's great. And then, could you just please clarify, you mentioned that multiple investments will impact gross margin in the back half of the year. I believe before you'd talked about kind of near flat, down 10 to up 10 basis points. Could you share a little bit more here about what changed? Michael G. Koppel: Sure, Erika. And it's on the gross profit line, just to be clear about that. It's a continuation. We've had a stronger, I would say, stickiness to our Fashion Rewards program and a number of those benefits get reflected in gross profit. So we're seeing a stronger uptake there. We continue to see the free returns, the free shipping and free returns slightly impact that line. And then certainly, with the growth of the Rack, which is growing at a faster pace than full line, that line item tends to average down a little bit because the gross profit Rack is slightly lower.

Our next question is from Adrianne Shapira from Goldman Sachs. Adrianne Shapira - Goldman Sachs Group Inc., Research Division: Mike, I just had a few questions. First, on the Early Access on the Fashion Rewards. Obviously, some learnings but great success. And I'm just wondering how you're thinking about perhaps in taking those learnings and introducing that Early Access in other future events, maybe during the holiday season or other times in the year? Michael G. Koppel: Adrianne, at this point, we don't have any plans for Early Access for our other major events. As you know, our only 2 other major events are Half Yearly clearance sales. We do offer double points for those. But at this point, we haven't looked at Early Access. Blake W. Nordstrom: I would say, Adrianne, this is Blake. I think we look at it throughout the year just in total of the subject of loyalty. And Early Access was one way for us to connect better with our customers and provide meaningful value for them. And we're looking throughout the year to do that and there's lots of ways to do that. So we're encouraged by it. But as Mike said, I don't see us replicating that Early Access, how we can execute it in other times during the year. But there is learnings with having a good relationship with the customer and how we, in a personalized way, can serve them. Michael G. Koppel: Yes, and in many ways, the Early Access online was the progression of how that sale has functioned. In the past we did it by folks just coming in the store. And over the years, we've made that process more efficient. And now -- and with the continued emergence of online as relevant channel, it kind of played very well into that. Adrianne Shapira - Goldman Sachs Group Inc., Research Division: Great. And then my second question, Mike, as it relates to inventory we appreciate the explanation in terms of the inventory growth. But now as we think about Rack assuming an accelerated run rate of growth, how do we think about inventory plans and how are you striking that and what sort -- what should we be thinking about sort of as a normal run rate, given the higher comp and also the higher Rack growth? Michael G. Koppel: Well, as we've said in the past, we don't give guidance on the inventory. But I will say that certainly you'll see that moderate toward the back half of the year as just from the fact that the anniversary had a significant impact on that growth in the second quarter. But particularly with the Rack where we've been more aggressive in our channels and procuring products and we're growing that, you're likely going to see that a little faster than the average for the near term.

Our next question is from Lorraine Hutchinson from Bank of America. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: I just wanted to ask about the CapEx implications for the new Rack openings for next year and then also any updated thoughts on use of free cash flow after the CapEx? Michael G. Koppel: Sure, Lorraine. This is Mike. In terms of the Rack impact, quite frankly, it's relatively immaterial to the CapEx. Those stores are primarily all leased stores and the FF and the build-out is relatively small. And so in terms of some of the flexibility we have in CapEx, it's really not going to impact that at all. I'm sorry, the second part? Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: Any update on uses of free cash flow? Michael G. Koppel: Oh, Yes. I would say, Lorraine, it's still very consistent. We try to maintain a balanced capital allocation program based on, number one, putting our investment back into the business where we continue to get some very high returns and balancing that with returning the shareholders through our dividend program and through our share repurchase. And as you can see, this past quarter, we had a pretty advantageous periods, we repurchase shares and we took advantage of that.

Our next question is from Barbara Wyckoff from CLSA. Barbara Wyckoff - Credit Agricole Securities (USA) Inc., Research Division: Can you talk about the percentage of cross shopping between Rack and Nordstrom? Update us on that. Full-line stores, what about cross shopping between Rack and HauteLook? And another question on HauteLook. At what point do we think about HauteLook becoming accretive? Will that happen at Christmas time this year, or fourth quarter, or next year, or what? Blake W. Nordstrom: So Barbara, this is Blake. We've shared in the past that there is some synergy, there is synergy that we value and the customer values between the full-line stores and the Rack. We've never broken out a specific number that we are able to approximate it. It's not the majority of the business, it's considerably less than that. But there is the customer that goes back and forth that likes both shopping environments and there are opportunities for us as a company to, again, in a personalized way whether through our loyalty and other manners communication, their vehicles, create a meaningful connection for the various channels that we have. There's also relationships with HauteLook that you talked about as well. And so, I think, as Mike said earlier, we're on a pretty steep learning curve there. We're finding on how to use these tools, how to work more closely with these customers and how to leverage and maximize the various channels we have. We think it definitely is an advantage. Our customers certainly view it that way, and we're excited over the next couple of years to try to maximize that. Michael G. Koppel: Barbara, as far as the second part of your question, as far as the accretive impact of HauteLook, we expect HauteLook this year to approach the breakeven level. And I don't think you're going to see the accretive this year and our plans going forward, certainly, we would expect that at some point in time.

Our next question is from Kimberly Greenberger from Morgan Stanley. Kimberly C. Greenberger - Morgan Stanley, Research Division: I'm wondering if you can look into the second half of the year and let us know what the comp rate needed would be in order to keep the SG&A as a percentage of sales flat. In other words, what's your leverage point? And then looking at credit earnings here, it looks like in both the second quarter and the year-to-date period, credit income or rather the credit earnings number is running a bit below last year level. Do you think that continues into the second half of the year? And maybe you could just talk about some of the drivers there. Michael G. Koppel: Sure, Kimberly. This is Mike. In terms of the first part of your question, I mean, we are levering SG&A in the back half of the year. In terms of the break even, we really haven't broken that out. But I think if you look at the path of the business and look at the top line growth and the fact that we are starting to anniversary some of that acceleration of spent last year, we are seeing some leverage. In terms of the second part of your question, there were 2 basic drivers as to why the credit business was down. The largest one is that we had the Fashion Rewards component that's included in the credit business and that was the biggest increase because we continue to see a very strong uptake in terms of new customers and in terms of utilization of benefit. And then also because the company had taken on more debt over last year, we did see an increase in the allocation of interest expense to that business. The other thing you're also seeing is that last year, we had larger reductions in the reserve than we had this year. And so that's having an impact as well. So those are the drivers. But in terms of the overall health of the credit business, in terms of the traditional credit metrics, it continues to be very strong.

Our next question is from Paul Swinand from MorningStar. Paul Swinand - Morningstar Inc., Research Division: I guess, I'm thinking about the Rack, I know you've shared the strong return metrics for it and obviously the increased growth is interesting, exciting. But with all the off-price channels being up, can you give us some comfort or any indication, analysis that you've had that you can go -- that it's a differentiated product. I guess, I'm just worried about to sort of skating to where the puck is now versus where it's going to be. Maybe you could talk about how the Rack performs versus when other off-price competitors are in the area. I'm not sure how to frame the question, but can you give us some cover that it's as differentiated as the Nordstrom full-line stores? Blake W. Nordstrom: Well, Paul, this is Blake. And I think you're asking a question. But we do believe there is differentiation, though, I don't think we approach it or try to execute it in the sake of differentiation. But there is a different experience within our Rack than there is whether that be HauteLook or catalogs or full-line stores. We have said, though, that there is a synergy. The Rack just like the full-line stores, benefits from a strong and vibrant retail community. So if we are neighbors next to strong competitors, the customer ultimately wins. But there's a strong selection there and we have a good results. So just like the full-line stores, we aspire to be in the absolute best retail locations across the country. The real driver there is our ability to -- there's issues like people and we talked about real estate and supply chain but product, having the best product and having the best brands and the right trends and tremendous values and so has been alluded to during to this call, our ability to work with our vendor partners and really talk to them about being accretive and being positive to their brand and reputation across all channels, and do we have an opportunity to maybe get access or first call on that product. And so as we've gotten a little larger, it's actually benefited us to be able to, at times when there is closeouts, take all the merchandise. And so it's gotten better as we've gotten larger. And really when we look at the top vendors within full-line stores, we currently carry 49 out of the 50 top vendors in the full-line stores in our Rack. And at this moment in time, we're encouraged. The last part is there's tremendous flexibility with the Rack. So as we announced, I talked about this growth, if for some reason down the road we run into some hurdles, real estate people, IT, but predominantly merchandise availability, we can pretty quickly back off. But right now, given the strong consumer demand, given our results, given the gains we're making into our execution with the Rack, we definitely have the confidence to take this next step. Michael G. Koppel: And I would add just one other thing because I think Blake is probably a little bit humble to say this. But I think with our Rack stores, we certainly have the differentiation of the credibility of the Nordstrom brand. And so everything we're doing to improve the customer experience, helps us differentiate the Rack experience from other off-price, and I think more recent example is the mobile POS in our ability to move brands from full-line into the Rack. So I think those are points that help us as we continue to grow.

Our next question is from Liz Dunn from Macquarie. Lizabeth Dunn - Macquarie Research: In terms of the Rack, I'm sorry, I don't mean to beat a dead horse. Have you done any research that sort of tells you what your core customers' viewpoint of the brand is and how that's changed at all with the growth in the Rack? And as we see that business grow, will you see the -- I'm assuming you'll see the amount of transfers kind of get down to below 10%. Does that impact the customers experience in that channel at all? And then finally on the Rack, it seems as though this growth is really highly scalable. There isn't like a bunch of new people or processes that you'll need to add in order to fund this growth. Blake W. Nordstrom: This is Blake. I think there were a couple of questions in there. You might -- I was writing them down. You might have to help me on the first one again. Could you summarize that first one again? Lizabeth Dunn - Macquarie Research: I'm just looking for -- does the presence of Rack out there in the marketplace damage at all the impression that your full-line customer has about your brand? Blake W. Nordstrom: Right, thank you. And that reminds me now that you did talk about what work that maybe we did or we learn from our customer and their view about it. That was really the impetus prior to the economic downturn in '08, where we were working in '06 in '07 about growing it. And we have purposely put more of our focus on the full-line stores and they kind of have some restraint on Rack growth. And there was such an outpouring of demand or desire from the customer to have more selection, more choices, more locations that we picked up this growth. And with that, it's been very, very favorable. It has far exceeded our expectations. Trust us that we are very sensitive to the Nordstrom brand and the core business, the full-line stores. Today, we think it's been very complementary, and we think it has benefited the company as a whole. So I think it's fair to say as a management team, that it is a very important subject for us and one that we put considerable thought and energy behind it. And that's why we feel strong at this point and why, maybe, we've taken some time because some of your peers have asked us in the past, why don't you accelerate this growth? And so I think we've been very purposeful about it and will continue to monitor that. But at this point, the customers very favorably. Your last comment was about the balance of merchandise. And yes, as we accelerate that growth, it lessens to a degree, the amount from full-line stores. But I would remind you that we have a very robust e-commerce business. So even with this accelerated Rack growth, if we look at it in total, from a multi-channel point of view, it really is a materially changing much from a percentage point of view, the amount of goods we get from both online and the full-line stores. So we're very comfortable with those balances at this point.

Our next question is from Alex Fuhrman from Piper Jaffray. Alex J. Fuhrman - Piper Jaffray Companies, Research Division: I just wanted to ask a little about the mobile check out devices that you're rolling out to Rack and specifically also you talked about adding some functionality to the hardware, I think, at your full-line stores as well. What is the increased functionality we should expect to see rolled out? And I guess, the hardware you have on these devices, how many years of extra functionality add-ons do you think that can support? Blake W. Nordstrom: Well, in terms of the full-line stores, Erik, do you want to talk about what's happening there? Erik B. Nordstrom: Yes. I believe we're up over 75% of our fixed POS capability is now on to our mobile device. And by end of the year, we'll get 100%. And as we get into next year, we'll actually have -- we'll have more functionality on the mobile devices than we have on the registers. We've added a lot this year, things like return capabilities. There's some personal book capabilities that still need to be added so that will get us to the 100%. The mobile device -- I think you asked it this way, they're fairly different, the benefits and the usage in the full-line stores and the Rack. Full-line stores, there's a lot more functionality that we look to have on them. And while there is certainly some speed and convenience benefits, there is more of the benefits of that one-to-one personal interaction between the salesperson and the customer. It can happen -- it doesn't happen at the counter with other people around. It can happen in the dressing room, it can happen at the shoe store. And all that functionality is going to be around our personal book features and being able to more personalize our connection with the customers. For the Rack, it's a little easier to understand and draw the direct line benefits. It's speed. It just makes that line significantly shorter. And as Blake touched on earlier, there is that space-saving of taking prime real estate at Rack when we have to checkout counters and being able to reduce those. The benefits are clear, we can -- and the functionality is there right now. So we can be much more aggressive in rolling out the mobile POS devices in the Rack. But full-line stores, the rollout is -- it coincides with the increase in functionality.

And our final question today is from Dana Telsey from Telsey Advisory Group. Dana Lauren Telsey - Telsey Advisory Group LLC: A lot of discussions around, obviously, growth and partnerships. How do you see the partnerships going forward contributing to sales and margin expansion? And what are the categories would appeal to you in terms of a partnership? And just lastly on Christmas, anything in terms of planning Christmas this year, whether it's days, inventory plans, how it will be different from last year? Peter E. Nordstrom: Yes, this is Pete, I'll take the partnership thing. To date, that's all worked on a very kind of organic way. It's not like we've set out to go -- get into these partnerships. They've just evolved in a very natural way, which I think has been the reason why they have been successful. We typically gone for things that are probably smaller with a chance of getting bigger over time, which is probably good thing, too. I would say, the latest partnership deal we have with Topshop is a big one, potentially, for us. And that came up relatively organically, it happened very quickly. The folks at Topshop have been great to work with. I think they see where the mutual opportunity is and was easy to get along. So we're super excited about that one, and we think that we're going to learn a lot here in the next few months and we have a chance to expand this really throughout maybe all our stores. So I think we'll continue to look at things that are opportunistic for us. And in the case of Topshop deal, specifically, and was similar when we got involved with Jeffrey is, it was taking a product opportunity and using a brand like that, that can help make us better. And with the Topshop example, they are highly credible and super well-regarded amongst young, fashion customers and we had a chance to get a line with them in a way exclusive in this country and frankly got us -- it is going to act as a catalyst for us to, again, make our offer more modern and more relevant. So it's a good deal for us. Michael G. Koppel: Dana, this is Mike. And the second part of your question, regarding Christmas. We haven't made any material changes to our plans or outlook. Every year the calendar shifts, but it seems like every year people still buy. They may buy more in fewer days or less in more dates, but they still buy. And at this point in time, that's how we're thinking about it. Robert E. Campbell: This is Rob Campbell. Thank you for joining us today for our second quarter earnings call. As a reminder, a webcast replay of this call will be available for 1 year on the Investor Relations section of nordstrom.com under webcast. Thank you for your interest in Nordstrom. Goodbye.

Thank you, and this does conclude today's conference. You may disconnect at this time.