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 - President of Stores and Director Peter E. Nordstrom - Executive Vice President, President of Merchandising and Director

Deborah L. Weinswig - Citigroup Inc, Research Division Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division Barbara Wyckoff - Credit Agricole Securities (USA) Inc., Research Division Jennifer Black - Black & Company Inc., Research Division Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division Neely J.N. Tamminga - Piper Jaffray Companies, Research Division Paul Swinand - Morningstar Inc., Research Division Paul Lejuez - Nomura Securities Co. Ltd., Research Division Matthew R. Boss - JP Morgan Chase & Co, Research Division Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division Dorothy S. Lakner - Caris & Company, Inc., Research Division Kimberly C. Greenberger - Morgan Stanley, Research Division Lizabeth Dunn - Macquarie Research Charles X. Grom - Deutsche Bank AG, Research Division Michael Binetti - UBS Investment Bank, Research Division Dana Lauren Telsey - Telsey Advisory Group LLC Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division

Hello, and welcome to the Nordstrom 2012 Third Quarter Conference Call. At the request of Nordstrom, today's conference call is being recorded. [Operator Instructions] And I would now introduce Rob Campbell, Treasurer and Vice President of Investor Relations for Nordstrom. You may begin, sir. Robert E. Campbell: Hello, everyone. Thank you for joining us for the Nordstrom conference call. Today's call is expected to be 45 minutes and will include about 30 minutes for 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 third quarter performance and outlook for fiscal 2012. During the Q&A session, we will be joined by Pete Nordstrom, President of Merchandising; Erik Nordstrom, President of Stores; and Jamie Nordstrom, President of Direct. Before we begin, I want to mention that we, again, will provide slides during our earnings call to help summarize and frame our performance. These slides can be viewed in the Investor Relations section of our website. If you are 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 http//investor.com nordstrom.com (sic) [http://investor.nordstrom.com] And now I'll introduce Blake Nordstrom. Blake W. Nordstrom: Thank you, Rob, and good afternoon, everyone. As we begin, we recognize that a number of you, along with many of our employees, customers and millions of others, have been impacted by Hurricane Sandy. Our thoughts go out to all of those who have suffered and those still dealing with the effects of the storm. While we know it takes time, it's heartening to see how the communities in the Northeast are beginning to rebuild. We'd like to transition into providing an update on our progress for the quarter and how we're making headway with various growth initiatives. As Rob mentioned, we have some slides available for you to follow along with our comments. We are encouraged with our progress to date and how the customer is responding, as reflected in our top line performance, with 12 consecutive quarters of same-store sales increases. We are experiencing continued strength across all areas of our business. As a company, we aspire to continually improve the customer experience. There's no finish line when it comes to this subject as our customers have access to a growing number of choices, with expectations increasingly centered on speed and convenience. Their expanding view of service and our desire to increase our relevance with existing and new customers are creating multiple growth opportunities, whether in stores or through technology. Just as we're striving to provide a differentiated experience in our stores, we're also working to achieve this in e-commerce. Speed, selection and convenience are critical to delivering a best-in-class online experience. Our Direct business continues to drive outside sales growth, achieving an impressive increase of 38% this quarter, on top of last year's third quarter 33% growth. It's encouraging that the third quarter increase was achieved while going up against last year's launch at the end of August of free shipping and returns online. We believe that the continued strength in e-commerce reflects the investments we are making to expand our capabilities. In September, we announced 2 full-line store openings in 2014 at St. Johns Town Center in Jacksonville and a second store at Woodlands Mall in the Houston area. We are also excited about our recently announced expansion into Canada. Our initial plan is to open 4 full-line stores in the Calgary, Ottawa, Vancouver and Toronto markets. Canada represents a terrific growth opportunity as a potential to someday have 7 to 9 full-line stores, as well as a number of Racks. At the Rack, we delivered an 18% increase in total Rack sales on a year-to-date basis. During the third quarter, same-store sales grew 8.1%, marking the highest increase since 2007. We successfully opened 7 Rack stores in the third quarter. Today, we opened our doors at 2 more Racks in Warwick, Rhode Island and in Seattle, bringing our total to 15 new stores and 3 relocations for the year. We recently shared with you our plans to accelerate our Rack openings, and we are on track to go from 119 stores today to over 230 stores by 2016. Underlying this growth is our belief in the ability to increase market share and leverage our strong operating model to procure the best product and expand into both existing and new markets. In addition, during the quarter, we successfully rolled out mobile point-of-sale devices to all of our Rack stores. Our Rack team's execution is a great example of how we can elevate the service experience by reducing lines and improving speed at checkout, which in turn will drive incremental volume. We continue to focus on increasing relevance with existing and new customers. We know that newness is important to our customers. In September, we began carrying merchandise from Topshop in 14 of our stores as well as online. We are encouraged with the early response from customers. We're learning a lot, and our partnership with Topshop is one way we can provide new on-trend fashion at accessible prices. In closing, our overarching goal is to improve the customer experience. It's providing us with multiple growth opportunities, locations, channels, convenience, speed, delivery, and we are encouraged by the progress we're making. Now, I'll turn over the call to Mike. Michael G. Koppel: Thanks, Blake. Our focus on delivering a differentiated experience to our customer continues to create multiple growth opportunities, from strengthening our service and product offering to capturing additional growth through e-commerce, store expansion and new markets. We remain committed to executing a disciplined, measured growth strategy and driving long-term shareholder value. While our business model evolves, consistent with our desire to be the retailer of choice across all channels, we believe it will continue to deliver sustainable growth and high returns. Now I'd like to review our third quarter financial results. As a reminder, our third quarter results reflected the shift of our Anniversary Sale event, which created a favorable comparison to this quarter and an unfavorable comparison in the second quarter. As a result, we expected to see earnings accelerate in the third quarter relative to the first half of the year. For the third quarter, our earnings per diluted share of $0.71 increased 20% compared to the same period in 2011. Earnings before interest and income taxes, or EBIT, totaled $277 million, which was an increase of 15% over last year. Next I'd like to discuss sales. The strength in our third quarter sales performance was broad-based across all channels and multiple merchandise categories. Total net sales in the quarter increased 14%, and same-store sales increased 10.7%. Same-store sales for the combined second and third quarters increased 7.3%, which removes the impact of the Anniversary Sale event shift. Nordstrom same-store sales, which consist of our full-line and direct businesses, were up 11.2%, with men's shoes, men's apparel and kids' apparel as our top-performing merchandise categories. We are also encouraged with the recent sales increase in women's apparel, which outperformed the multi-channel average this quarter for the first time in recent history. Same-store sales at full-line increased 8.1%, with the Midwest and Northwest as our top-performing regions. Direct continues to be our fastest-growing channel, driving sales growth of 38%, on top of last year's 33% increase. Nordstrom Rack continues to achieve strong top line growth, with same-store sales of 8.1% and total sales of 16.3%. Now I'd like to discuss our gross profit performance. Third quarter gross profit, as a percentage of net sales, decreased 37 basis points over last year to 36.2%. The decrease was primarily due to increased benefits related to our enhanced Fashion Rewards program. This program plays an important part in building customer loyalty as our Fashion Rewards members shop more frequently and spend more with us than non-members. With the launch of our enhanced program earlier this year, we have been pleased with our customer response as reflected by increases in new accounts, rewards spend and Nordstrom card penetration compared with last year. To date, we have 3.1 million active members in the program, which represented a 22% increase over last year. Let's move on to inventory. Total sales per square foot increased 10.8%, reflecting the shift in the Anniversary Sale. When removing the impact of the shift, the increase in total sales per square foot was in line with our ending inventory per square foot increase of 7.4%. For the 12th consecutive quarter, the percentage of regular price sales increased relative to last year, which reflects our customers' continuing preference for newness and the ongoing benefits from our multichannel capabilities. Our inventory turn of 5.1x was slightly down from last year, reflecting Rack's growth. Next I'd like to discuss our expense performance. As expected, we experienced improvements in expense leverage in the third quarter. Retail SG&A expense as a percentage of net sales, decreased 30 basis points over last year to 27.9%. The leverage achieved was slightly lower than anticipated, impacted by a timing shift of expenses from the fourth quarter into the third quarter. When we look at our store business, we continue to deliver incremental profits on incremental sales that are in line with recent historical performance. Moving on to Credit. We continue to see improving trends in our credit metrics. Our deliquency rate improved to 2.1% of receivables versus 2.8% last year. We ended the quarter with bad debt reserves as a percent of ending credit card receivables of 4.5%, down from 6.2% last year. Based on the overall performance of the credit portfolio, we reduced our reserve for bad debt by $10 million. We will continue to monitor credit trends to ensure we are appropriately reserved. Our financial position remains strong with $1.2 billion of cash and liquidity of $2 billion. Our adjusted debt to EBITDA of 2.1x is well within the range of investment grade. During the quarter, we repurchased 1.5 million shares at an average price of approximately $55 for a total of $85 million. We have $612 million remaining under our existing authorization. Now I will discuss our updated outlook for 2012, factoring in our year-to-date performance. We are updating our expectations to achieve 2012 earnings per diluted share of between $3.45 and $3.50 from $3.40 to $3.50. In addition, our full-year same-store sales guidance is between 6.5% to 7% from 6% to 7%. While this guidance considers the impacts of Hurricane Sandy, there remains uncertainty, and we will continue to monitor trends in the affected areas. Our updated gross profit outlook is consistent with prior guidance, reflecting the impact of multiple growth initiatives under way. We anticipate retail SG&A to be $340 million to $355 million higher than last year. This falls within the high end of the range we previously shared and results in meaningful improvement in expense leverage for the fourth quarter. In closing, we continue to be encouraged with the momentum in our business. As we begin the fourth quarter, we remain confident in our ability to elevate the customer experience through the execution of our growth initiatives. Based on our progress to-date, we are on track to achieve our long-term financial goals of high single-digit sales 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] With that, we'll take the first question.

And our first question today is from Deborah Weinswig from Citi. Deborah L. Weinswig - Citigroup Inc, Research Division: As we think about the holiday season, as you guys are moving to more mobile POS, how will that impact labor? And especially in the Rack stores, does that give you the opportunity to bring in more merchandise? Erik B. Nordstrom: This is Erik. Deborah, can you repeat that? I missed part of it. Deborah L. Weinswig - Citigroup Inc, Research Division: As we think about the holiday season and as you're doing more with mobile POS, how does that impact your labor? And in the Rack stores, does that give you an opportunity to bring in more merchandise as well? Erik B. Nordstrom: Oh, yes. For the full-line stores, the mobile POS really hasn't affected our labor one way or the other. It's been neutral on that. For the Racks, to your point, it does free up space. Because as we're able to replace fixed registers that come with counters with mobile POS devices, we have the centralized checkouts upfront. We're actually able to pick up selling space right at the front of the store. So that's definitely a positive for us. Deborah L. Weinswig - Citigroup Inc, Research Division: Great. And then secondly, I was wondering if you could provide metrics around the Fashion Rewards customers? Because obviously, it sounds like it significantly helped you drive some business around events, but also drive additional traffic, not only online but in stores as well. Michael G. Koppel: Sure. Deborah, this is Mike. As I noted in my comments, our total active Fashion Rewards customers is up 22% this year. We continue to see those customers outspend those that aren't part of the program and continue to see high growth, particularly in new accounts and debit card and in new customers that are shopping with us in the Rack. So I would tell you, across all metrics, including total increased average spend, et cetera, we continue to see progress with Fashion Rewards.

Our next question is from Edward Yruma from KeyBanc. Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division: I actually want to ask about the slide that's not in the deck. The slide from fourth quarter. I think you had kind of articulated really a vision for improved EBIT margins next year. Obviously you've announced a number of growth initiatives like doubling Rack store count, Canada, New York. How do we think about your longer-term business model as it relates to some of those outlines you've provided earlier this year? Michael G. Koppel: Well, Ed, I think you're referring to that chart that we provided back in February, which was designed to be directional in terms of how we saw the company move over a longer period of time. We're not going to comment specifically about immediate improvement in margins in 2013. We'll do that in February. But I do think it's fair to say, as we did indicate, that we feel that we're right on track with the goals we set out in terms of a high-single-digit sales growth and a mid-teens return on invested capital. We are still seeing an evolution in the business model and the way it's performing. And as the Direct business continues to accelerate, there are more opportunities there and it is a higher, more current expense model than the traditional store model, and that is having some impact. But overall, the outcomes of all that are still going to drive similar economics over time. Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division: Great. And one follow-up question. Obviously, a nice improvement in the women's business. How much of that is due to the new leadership that you have in place? And maybe, how much of it is due to initiatives you've had kind of ongoing over the past year or so? Peter E. Nordstrom: This is Pete. I think Tricia Smith, who is our new leader in women's, deserves some credit for the improvements we've had, but a lot of those initiatives have been in place for quite some time. I think the biggest thing is just we've had an improved execution across the board, and that's probably been the most measurable part of what we've been able to achieve there. Our ongoing efforts around trying to get better aligned with customers and being more relevant based on their lifestyles and occasions has been something we've been working on for a while and will continue because we still have a lot of progress to make.

Our next question is from Barbara Wyckoff from CLSA. Barbara Wyckoff - Credit Agricole Securities (USA) Inc., Research Division: You talked about the growth in the customer rewards program. But could you talk about what percentage of the sales were made in third quarter with that card and that customer versus last year? Michael G. Koppel: Sure. Well, the total penetration of Fashion Rewards is roughly 34%, 35% of our total sales. Barbara Wyckoff - Credit Agricole Securities (USA) Inc., Research Division: Okay. And last year? Michael G. Koppel: It's up from -- I believe, it was a low 30 penetration, 32-ish.

Our next question is from Jennifer Black from Jennifer Black and Associates. Jennifer Black - Black & Company Inc., Research Division: I wanted to know -- I know you talked about Topman and Topshop, and I know it's early. I just wondered when you think you might make decisions about rolling it out? And then I also wondered if you're seeing some differences as far as online purchases with that. And then I have a follow-up question. Peter E. Nordstrom: This is Pete. It's done really well, and we've been really pleased with good results from what we've been able to achieve so far, and I think we're also pleased with our ability to react quickly and get this thing started from idea to actual execution. We did that pretty quickly. So what we're trying to do is be thoughtful about this period of time that we're in. It's the reason that we took on 14 stores for a specific period of time before we want to make future decisions about how to roll it out in a larger way. I think it's safe to say we will roll it out in a larger way, but we don't have any details for the scope and speed of that right now. I think that's something that we'll be able to figure out here in the next couple of months. But it's been very encouraging so far. And as it relates to online, that part of the business has been fantastic. It's all been very good. Jennifer Black - Black & Company Inc., Research Division: So will you expand the assortment then online? Because I know you don't have the full assortment, at least I didn't think you did for Topshop and Topman. Peter E. Nordstrom: Well, I think so. I mean, again, it's an ongoing situation, but it's not dissimilar from any of the rest of the parts of our business. Where we have a chance to expand our selection online, we want to try to do that, particularly with brands and categories that are really important to our customers.

Our next next question is from Lorraine Hutchinson from Bank of America. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: You mentioned regular price selling continuing to improve. Can you just talk about where you are on that metric versus prior peaks? And any opportunities that you see going forward? Michael G. Koppel: This is Mike. In terms of prior peaks, we don't specifically call out that metric. But it's the highest it's been. So we've continued to see improvement in our ability to sell at a regular price over time. And in terms of what the upside is, we just keep working hard at it. And hopefully, we continue that and keep our turns high and have the right product. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: Great. And just the SG&A shift that you mentioned into the fourth quarter. What was that? And can you quantify the impact? Michael G. Koppel: It was SG&A from 4 into 3, and it was primarily related to some marketing costs and some benefit-related cost. We're not going to specifically quantify it, but you'll see the benefit of that in the fourth quarter.

Our next question is from Neely Tamminga from Piper Jaffray. Neely J.N. Tamminga - Piper Jaffray Companies, Research Division: Mike, following up a little bit on that gross profit question, maybe this is for Pete as well. I mean, clearly, women's apparel is a nice call out for you guys. Is this an opportunity to kind of take this very large category up in terms of higher and drive more of that full price selling? And a related question to that would just be what are you seeing from a resource perspective? I mean, obviously we've seen you guys mix really interesting and unique investments with Bonobos and Peek in non-women's apparel group. But are there opportunities within women's apparel where you can kind of do some very interesting sort of investments to kind of flush this out a little bit more? Peter E. Nordstrom: It's Pete. I would say, if the women's business is healthy, that's a good thing for our business because it's a large part of our business. And if done right, it can be a good margin part of the business as well. So I think kind of back to my earlier point about execution, there's just a lot of opportunities for us to do it better. And we've got some pretty good momentum and some good traction now and we're just going to keep going. And it's definitely a positive indicator for our overall health of our business. In terms of the resources, I guess I want to understand specifically again, you were mentioning about opportunities to invest with some -- I'm sorry, I didn't get that part. Why don't you ask that specifically again? Neely J.N. Tamminga - Piper Jaffray Companies, Research Division: Sure, Pete. Just -- you guys have made some interesting partnerships with Bonobos and Peek, I think, is what we've observed out in the marketplace, and those are obviously not women's apparels resources. Are there opportunities within women's apparel, some kind of unique investments or partnerships that you can have going forward in women's apparel? Peter E. Nordstrom: Well, sure. I think that there is -- based on the relationships we've been able to forge across all categories. And so Topshop would be an example of something that's done specifically around women's. And obviously, there's a men's component to that too, but the women's has been the bigger component. We were able to do a partnership with Jason Wu. We have a line coming out, the Miss Wu line, which will be unique to us, which really came as a result of the relationship we have with them. So we're trying to be opportunistic about that kind of stuff. And as those opportunities present themselves, we'll pursue them.

Our next question is from Paul Swinand from Morningstar Inc. Paul Swinand - Morningstar Inc., Research Division: I wanted to ask about -- everybody's talking about newness and fashion and flow, better flow. You guys are already one of the best in the business with your inventory turns. As online continues to grow, does the centralized inventory allow you to actually flow better? Or does it -- is it more like the stores lead and then you flow to the Internet channel? Is there any dynamic there? Peter E. Nordstrom: Well, the multi-channel dynamic is where we actually are buying inventory specifically for online, as well as we're buying for store. And the most efficient way to do that is to place the inventory where the demand is. And to the extent we've got good information, good history, we're able to do that relatively well. But the advantage that we have is when we don't place it perfectly, which we never quite do, we're able to use the resource of the entire company. So it all happens in real time across the company. It's not like one is leading the other. Paul Swinand - Morningstar Inc., Research Division: So it's kind of like one time, it might flow faster to the stores, and then you react another time and you might be faster online? Peter E. Nordstrom: It's a bit of a balancing act. I think, with how fast the online part of our business has grown, that's where we've been trying to catch up a little bit. Paul Swinand - Morningstar Inc., Research Division: Okay. So maybe in the future, your reaction time will shorten online? Peter E. Nordstrom: Well, again, I don't think that quite characterizes it right. That's one leading the other. It's all kind of happening in exact real time. We have complete real-time view of the inventory across the entire company, regardless of what channel it's in.

Our next question is from Paul Lejuez from Nomura. Paul Lejuez - Nomura Securities Co. Ltd., Research Division: Just a follow-up on an earlier question. You said rewards, new rewards customers outspend those not in the program. But how do new rewards customers spend relative to existing rewards customers? And is there a typical pattern of how they may start spending in year one versus how they behave throughout the next couple of years once they're in the program? And then just a follow-up on that SG&A shift, was that just a -- was that a shift in dollars of where the expense was recorded? Or was there actually a timing shift in how you loaded your marketing, doing more in the third quarter as opposed to the fourth quarter? Michael G. Koppel: Sure. Paul, this is Mike. In terms of the rewards, we continue to see the average spend of rewards customers improve. So that's a positive. In terms of their spend over time, certainly the way the program is designed with the various levels, it's designed to get people to continue to spend up to achieve the higher rewards at the higher levels. So that's the way the program is designed. And this past year, we made it more accessible so we could -- so people could feel like they could reach each step with a lower incremental spend. And we've seen a lot of value with that. So we continue to learn from it. We continue to look at opportunities to improve it. And in terms of the SG&A, it was just a question of how the costs were incurred relative to this year and last year. I don't think there's any really big story there. I think we called it out only because relative to our plan, we expected the expense leverage should be slightly better and we wanted to be transparent about that. Paul Lejuez - Nomura Securities Co. Ltd., Research Division: Is that the entire reason that you didn't hit your plan? Michael G. Koppel: Well, we did hit our plan relative to what we expected to do for the third quarter. I mean, the plan that I think -- are you referring to the consensus? Paul Lejuez - Nomura Securities Co. Ltd., Research Division: I thought you just said that you expected it to be better. I was just wondering how [indiscernible]... Michael G. Koppel: It was just the SG&A leverage. It was just the SG&A leverage. Paul Lejuez - Nomura Securities Co. Ltd., Research Division: And can you quantify the drag of what that hit you by? Michael G. Koppel: No, we're not going to call it out specifically. You'll see the benefit of that in the fourth quarter.

Our next question is from Matthew Boss from JPMorgan. Matthew R. Boss - JP Morgan Chase & Co, Research Division: On the credit side, I wanted to touch on that for a second, the bad debt reserve and the performance that you've seen. What's the best way to think about this going forward as we think about the fourth quarter and more so into next year? Can the credit portfolio continue to perform at this level? And what type of opportunity do we have on the reserve line? Michael G. Koppel: Yes. Well, as you know, we don't really talk about opportunity as to how much lower the reserve could go because that is just a direct function of the performance of the portfolio. And to put it into some context, our delinquencies are roughly where they were in 2007 prior to the recession, and our write-offs are a little higher, but they continue to trend down although at a slower pace. So if we continue to see improvement in those metrics, we will follow our methodology and make the appropriate reductions. But clearly, in terms of where we are in the long-term scale and adjustment of the performance, we're likely at the tail end of it.

Our next question is from Erika Maschmeyer from Robert W. Baird. Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division: Could you talk about where you're at in the 5-year plan for your IT spend? Are you still aiming for about $140 million this year? And how much does that accelerate into next year? Michael G. Koppel: I assume the $140 million you're quoting is the capital spend? Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division: Yes. Sorry. The capital spend for IT. Michael G. Koppel: Sure. Yes. Well, we actually are in the process right now of reviewing our 5-year capital plan, and that includes our technology and the opportunities we see. So in terms of where we are, we continue to see opportunities to invest in technology, to improve not only our e-commerce operations but other areas of the business, which continue to scale upwards. So we'll give you a little bit more visibility on that in February after we finish that process. Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division: That would be helpful. And then could you just talk a little bit about some of the prior outperformers? Obviously, women's apparel doing better is a very significant thing. But are you seeing any slowing or any hiccups with accessories, shoes, women's shoes and cosmetics? Or is it just kind of tough comparison and seeing some acceleration in some of the other categories? Peter E. Nordstrom: This is Pete. Actually, it's -- the different divisions are rather closely bundled together. We've had a lot of strength, as you mentioned, in women's and men's apparel, but it's not because accessories and shoes has done poorly. I mean, they're still doing really well. And then particularly, if you look at over multiple years, we've had really strong increases. So no, that hasn't dropped off really at all for us. That's continued on a very consistent, strong rate for us.

Our next question is from Dorothy Lakner from Caris & Company. Dorothy S. Lakner - Caris & Company, Inc., Research Division: I wondered if you could -- just talk a little bit about what -- kind of the way you see the holiday season. You're perhaps not as big a Black Friday business as some others. You're not giving away free TVs or anything like that. So just how do we look at sort of the November, December, how things kind of play out, when you typically see your most traffic? Just an idea of how you see the holiday season kind of laying out. Erik B. Nordstrom: Okay. This is Erik. I think you should view it pretty similar to what our recent history has been. Last December was one of the best months we've had, both online and in our stores over our history. And it is -- you're right, it's not promotionally driven. The day after Thanksgiving is not as big a day as a proportion to our year as it is for some of our competitors, but it's certainly a busy day. That weekend is busy for us, and we get a lot of volume earlier in the month with some of our Fashion Rewards events we have in our stores. So the whole month is busy. But there has been somewhat of a trend over the years to where holiday shopping has pushed more closer and closer to Christmas, and that week after Christmas has been emerging as a more and more important time. Many years ago, that week after Christmas was almost purely a clearance time. And now, it really is a time -- for us, it is, of newness. We get a lot of shoppers who are coming in to buy for themselves, and they're not looking for the old stuff marked down. They're looking for the new stuff, and it's been a real healthy season for us. Dorothy S. Lakner - Caris & Company, Inc., Research Division: That's great. And also, just on November, you've got Half-Yearly for women and kids, but those events have tended to be kind of more restrained given the great control on inventory that you've had. I'm assuming that, that continues to be the case. Erik B. Nordstrom: Yes. It's pretty similar to what we've had over the years. We have less clearance for Half-Yearlies, but more so, it's not so much a supply-driven thing as a demand-driven thing. Our customers are not as interested in the older stuff that we're marking down for clearance as they are in the new stuff. So more of what's been growing in importance events has been our Fashion Rewards events. They are our best customers. And this year, one of the enhancements was customers being able to choose their own personal triple point days. That's something that customers asked us for. We were excited to be able to offer it. And it puts them in control and allows them to get these extra bonus points when they want it. And more and more, it's on regular-priced merchandise.

Our next question is from Kimberly Greenberger from Morgan Stanley. Kimberly C. Greenberger - Morgan Stanley, Research Division: I'm wondering if you can talk about the improvement in your women's business. How broad-based is that improvement? Is it now trending in line with the rest of the chain? And are you seeing women trade off any other categories in the store in order to spend more on that apparel? Peter E. Nordstrom: This is Pete. It's actually kind of surprisingly broad-based across literally almost every category we've been doing better and better. And as Mike mentioned in his comments on this last month, we had women's apparel growth of higher than the average, which it's been a while since we had that. So it's outpacing a little bit the other divisions. Now we have a ways to go, so that's a good part about it. Sorry, and the last part of your question was? Kimberly C. Greenberger - Morgan Stanley, Research Division: Is that spending on women's apparel coming at the expense of any other categories in the store? Peter E. Nordstrom: No. Kimberly C. Greenberger - Morgan Stanley, Research Division: Okay. And my follow-up question for Mike is on the return on capital goal. It looks like, over the last 12 months, return on capital has run around 12.9%. You expressed a great degree of confidence in moving that into the mid-teens. And I'm wondering, what are the metrics that we should be looking for over the next 12, 18, 24 months that would give us the best indication that, that is moving in the right direction. Is it revenue acceleration beyond what you've delivered? Or is it margin metrics? What are the key levers to move that ROIC up into the mid-teens? Michael G. Koppel: Sure. Well, Kimberly, thanks for the question. As always, the most important lever is going to be our top line growth. Because with top line growth, everything falls from that. And so as we said, our goal is to continue to achieve a high-single digit top line growth rate, and that's the first thing we should pay attention to. And then the next thing would be our ability to grow earnings dollars. So if we can continue to generate respective growth in earnings dollars, that will contribute to the return on capital. And then the last thing, and you're going to see that return on capital by the end of the year get back into roughly the 14% range, and most of the reason for that is that we've had some fairly high cash levels. And particularly, last year, it started to build and it's been high this year. And by the time we lap through the fourth quarter, you're going to see that come back up.

Our next question is from Liz Dunn from Macquarie Capital. Lizabeth Dunn - Macquarie Research: I'm curious about the -- and I know it's early, but -- how you're thinking about the investments for Canada and for the New York store. Oftentimes, when we see someone enter a major market like this, it does come with a fair amount of capital and expense. Are those things that you think could lead to heavier investment spending than typical? And when would we start to see that investment spending ramp? Michael G. Koppel: Sure. Liz, this is Mike. Well, first, you're right. Building particularly in big urban locations is a higher capital commitment than in a traditional mall location. We should start seeing some of that capital in 2013, particularly some of the arrangements we have as it relates to Manhattan and then some of the beginning of building stores in Canada. Our expectation is that both of those strategies are going to deliver returns greater than our cost of capital. They may not be at the same level as a traditional mall store, but we do believe we're going to create value and we wouldn't have done them if it was otherwise. Lizabeth Dunn - Macquarie Research: Okay. And then second question that also relates sort of to investment spending. I think I heard you say something along the lines of there is no finish line. Is that how you're thinking about sort of the investments in digital because it is such an evolving space and commitment? Or is there a finish line that you can see a few years out in terms of spending on digital? Michael G. Koppel: Yes. Sure, Liz. Well, first, I think as a point of clarification, I believe the finish line comment was related to our ability to continue to improve in women's apparel versus our investment in digital spending. But all that being said, we continue to see opportunities there. And to know when the end line, I think -- I don't think anybody knows right now. We're in a period where there's a tremendous amount of change and evolution in the way technology is affecting the customer experience. And we want to be an exemplar there, and we're going to continue to invest to assure that we don't lose that status.

Our next question is from Charles Grom from Deutsche Bank. Charles X. Grom - Deutsche Bank AG, Research Division: Mike, just to follow up on Paul's question earlier, just trying to understand the relationship here between comps and retail SG&A leverage. If I recall, back in August, you guys guided leverage of I think 55 to 75 bps on that high-single digit comp, yet you guys only delivered about 29 bps. So leverage when comps were up 11.1%. Just trying to understand the delta there. It looks like maybe 30 basis points to be $8 million to $9 million. Is that all marketing spend and benefit shift? Michael G. Koppel: Primarily. Charles X. Grom - Deutsche Bank AG, Research Division: Okay. So it's not a commission increase. So it is a shift. Michael G. Koppel: No. No. Good job with the math, Charles. Charles X. Grom - Deutsche Bank AG, Research Division: And then I guess my follow-up would be then, therefore, your fourth quarter guidance was for a decrease of, I believe, 45 to 65 basis points on that mid-single digit comp. And I guess if we hit that comp, should we expect the leverage to be greater than that range? Michael G. Koppel: If we hit a comp greater than what's implied in the guidance? Charles X. Grom - Deutsche Bank AG, Research Division: Should the decrease in SG&A be greater than 45 to 65 basis points, somewhere in like 65 to 80 basis points because of that shift? Michael G. Koppel: If our sales performance is better than what we have in the guidance, we should get some leverage. Charles X. Grom - Deutsche Bank AG, Research Division: Okay. What I'm asking, though, is should the leverage be better just because you've got the shift out of fourth quarter and now into the third quarter? Should the decrease be greater? Michael G. Koppel: Yes.

Our next question is from Michael Binetti from UBS. Michael Binetti - UBS Investment Bank, Research Division: So Mike, maybe back to our earlier conversation in the year when you said you see about $1 billion in investment in e-commerce over the next few years, you're clearly very serious about the business, and that's a big number. Can you tell us maybe just at a high level some of the big ideas for that spending that are starting to bubble up as we get further into the year here? Michael G. Koppel: Well, I think when we quoted that number, that was roughly the capital plus incremental spend over a 5-year period. So let's just put that number in context. And when you have the kind of scaling that we're seeing in e-commerce, there's a number of things. One is we have to continue and incrementally invest in the technology and the experience on the website. Also, as the business scales, we're going to have to have more fulfillment centers because as we push more product to our supply chain and also our desire to speed up delivery, we want fulfillment closer to our customers. So there's a number of things in there over the long run that are going to require investments, but those are examples of the 2 big ones. Michael Binetti - UBS Investment Bank, Research Division: Okay. And then just -- since we've gone through a lot of the other things in the quarter, just a couple of modeling questions, Mike. First off, the guidance looks like it expects a little bit of a deceleration in the top line or in the same-store sales number. Can you tell us what makes you feel like we should have a decelerating right now? Is it just a matter of being early in the quarter, guys, and let's see how it goes? Or -- and maybe you could tell us between full price and Rack directionally, which one will be higher in the quarter, something like [indiscernible]... Michael G. Koppel: Well, yes. I don't think it's that specific in terms of full price or Rack. I think it's reflected in our comments and the fact that we've had some impact from Hurricane Sandy. And there's still a level of uncertainty out there in terms of when customer behavior could bounce back to its normal trends. So we're just being cautious.

Our next question is from Dana Telsey from Telsey Advisory Group. Dana Lauren Telsey - Telsey Advisory Group LLC: Can you talk a little bit about -- obviously there was an uptick in regular price sales. How are you -- and that's terrific. How are you managing inventory with that uptick in regular price sales? How's the timing and flow looking for Q4 and how you're thinking about 2013? And does this then for -- portends potentially that margin opportunities for 2013? Peter E. Nordstrom: Well, this is Pete. I don't know if I can answer that exactly. I will say that our ongoing biggest challenge with inventories is to the extent we've been able to have increases kind of month after month and quarter after quarter, it's difficult to keep a lid on not having inventories grow too fast. Because as you can imagine, a certain amount of optimism tends to build with the buying group. So we are really trying to keep a very conservative plan strategy about how we go forward with our inventories and then that we ensure increasing our turns, which are still pretty high. But that's been the best driver of margin performance for us is to continue to speed up the turns and ensure flow, which is speaking to the issue of customers preferring newness.

And our final question today is from Richard Jaffe from Stifel, Nicolaus. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: Just a couple of follow-ups. Given the cash balance sort of at near-record levels, where is the right level or where are you most comfortable having your cash balance? And do you think you'll be putting that cash to use to enhance shareholder value? And then just a follow-on about the HauteLook investment. That is to say, could cash be used for another investment? Has HauteLook lived up to expectation at this point? Michael G. Koppel: Sure. Yes, Richard. This is Mike. We, certainly coming out of the recession of 4 years ago, changed somewhat our point of view, how we felt about liquidity. And we've been maintaining a more conservative liquidity, and that's why you've seen our cash where it is. But at the same time, it's also because we've seen opportunities. And over the last 12 months or so, you've seen our strategy evolve in terms of announcing a variety of ways to grow the business, whether it's through e-commerce or new markets, et cetera. And so number one, we're going to continue to deploy cash into opportunities that we continue to see that are going to enhance shareholder value. And that's the number one thing. In terms of balance, at a little over $1 billion, it might be a little high but it's -- I wouldn't call it materially high from where we want to be. And we'll just keep an eye on it. And clearly, when we see opportunities to repurchase stock, we'll do that in terms of a balanced capital allocation strategy. And you had a question on HauteLook? Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: How is it doing? Michael G. Koppel: Oh, how's it doing. Sorry about that. HauteLook is doing fine. The business is on track to achieve its sales plan for the year, which is going to be roughly a 50% sales increase. Earnings are a little bit below breakeven, and we continue both with our teams here at Nordstrom and the team at HauteLook, we continue to work together to find new ways that we can enhance all the channels we have available to us to sell product to customers. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: Is there more synergy between the 3 businesses, the Rack, the full-line stores and e-commerce? Michael G. Koppel: We are making progress. Thank you. Robert E. Campbell: Thank you for joining us today for our third 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 Webcasts. Thank you for your interest in Nordstrom. Goodbye.

Thank you. And this concludes today's conference. You may disconnect at this time.