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

Deborah L. Weinswig - Citigroup Inc, Research Division Jennifer Black - Black & Company Inc., Research Division Neely J.N. Tamminga - Piper Jaffray Companies, Research Division Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division Paul Trussell - Deutsche Bank AG, Research Division Matthew R. Boss - JP Morgan Chase & Co, Research Division Kimberly C. Greenberger - Morgan Stanley, Research Division Dana Lauren Telsey - Telsey Advisory Group LLC Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division Michael Binetti - UBS Investment Bank, Research Division Lizabeth Dunn - Macquarie Research

Hello and welcome to the Nordstrom 2012 Fourth Quarter and Full Year 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. Today's earnings call will last approximately 45 minutes and will include about 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 fourth quarter and full year performance and the outlook for fiscal 2013. Blake is traveling today, so he is participating in the call, but not with us at our headquarters. Before we begin, I want to mention that similar to last quarter, we are using slides to supplement our remarks. If you are listening to this conference call at the webcast, you should already see the slides. If you're listening by telephone, you can view the slides by going to the Investor Relations section at Nordstrom.com. And now, I'll turn over the call to Blake Nordstrom. Blake W. Nordstrom: Thanks, Rob, and good afternoon, everyone. The fourth quarter and 2012 results we announced earlier today reflect the ongoing consistent strength of our performance. 2012 marked our third consecutive year of double-digit total sales and EPS growth, our third consecutive year of adding over $1 billion in sales and our third consecutive year of same-store sales growth of over 7%. This accomplishment is largely attributable to the high level of execution we've achieved across all channels and to the investments we've made to fuel this performance. Our #1 goal is to provide a superior customer experience. We aspire to be the retailer of choice wherever and whenever customers choose to shop with us. And we understand that our customers' definition of service is changing. We're excited about how we're combining our people, culture and technology along with new capabilities to expand our relationship with our customers, both in-store and online. This focus on being a leader in delivering a superior customer experience has created multiple growth opportunities. And as we've shared with you over the last couple of years, we're aggressively taking action. All of them are in support of our overarching strategic priorities of: Improving the customer experience, enhancing the merchandise offering, increasing relevance with existing and new customers, aggressively growing our online capabilities. More specifically, on this call a year ago, we shared with you 5 specific goals for 2012. Number one, build out our IT infrastructure to fuel our e-commerce growth. Number two, enhance the overall web and mobile experience. Number three, expand online merchandise selection and develop a more customized approach to all aspects of our engagement with customers. Number four, add to the functionality of mobile point-of-sale devices and expand their usage in full-line and Rack stores. And finally, number five, begin implementation of enhanced tools to improve the initial allocation and assortment of inventory. During the course of the year, we made progress on each one of these initiatives. Increasingly, we are using technology as an enabler in improving the service experience for our customers across all fronts. We've made notable improvements to the web and mobile experience. As examples, we've made enhancements to search, navigation and checkout. We've added numerous features, including updated recommendations and 360 video on certain product pages. We've improved the speed of fulfillment and delivery and we provided Early Access online to our Anniversary Sale. Going forward, we plan to further elevate the shopping experience with features that provide more interaction and personalization. Customers are increasing their usage of mobile devices in shopping with us. On an average day, more than 100,000 unique customers access Nordstrom on a mobile device, with nearly twice that amount during the holidays. In 2012, sales from a mobile device accounted for over 20% of Direct's total sales, compared to less than 4% in 2010. There's more we can do here to build on the customer mobile experience to make it even more compelling. Our online merchandise selection has expanded by over 50% and now is virtually at parity with our full-line selection. The selection will further expand to have the appropriate depth and breadth in our online offering. In our stores, we are enhancing the service experience through the use of our mobile point-of-sale devices. In the third quarter, we successfully launched mobile devices in all of our Rack stores to make the checkout process faster. In the first quarter of 2013, we will remove a portion of our cash registers in our Rack stores, which will add incremental selling space. In our full-line stores, our mobile devices now have virtually the same functionality as our cash registers. Their usage has increased, and our goal is to be largely mobile by 2014. On the merchandise front, we started to see improvement in our women's apparel business in the latter half of the year. We also launched Topshop in 14 stores and online with its fast-turning, on-trend fashion at accessible prices, which is helping us deliver a more relevant shopping experience. We anticipate continuing improvement in our women's business in 2013 and an expansion of Topshop into more stores. We continue to benefit from improved buying tools to better customize the offering by stores. Going forward, we will invest in scaling our merchandise systems to support our future growth. During the year, we enhanced our Fashion Rewards program to simplify it and make the benefits more accessible to our customers. In response, we've opened a million new Fashion Rewards accounts in 2012. This program continues to help us reach new customers and deepen our relationships with existing ones. So we've made meaningful progress on our stated priorities of a year ago. It's noteworthy that even with all of the investment spending associated with the strategic initiatives we've undertaken, our ROIC of 13.9% represented an increase over 2011 and was the highest in the last 5 years. Our Direct business, which generates the highest return and where we have been investing heavily, contributed to this improvement in ROIC. At this time last year, we commuted our -- communicated our intention of expanding into Canada. Today, we have more clarity on our expansion plans, with an initial announcement in 2012 of 4 full-line stores and a view that we ultimately could have between 8 to 10 full-line stores and 15 to 20 Rack stores. We've announced Karen McKibbin as President of Nordstrom Canada to lead this effort, and she has started building a dedicated team. We look forward to serving both existing and new customers in these new markets. At this time last year, our plan was to open roughly 15 Racks per year. Today, the plan is to double the number of Rack stores to more than 230 over the next 4 years, with roughly 24 openings in 2013 and more than 30 in 2014. Rack's total sales were up 20% in 2012, with same-store sales up 7.4%. Its sales productivity, even with the 15 new stores reached its highest level in recent years, over $550 per square foot. Our Direct business increased nearly 30% in 2011 and in 2012, grew 37%, generating $1.3 billion in sales. It's our fastest-growing channel and it is expanding our reach to existing and new customers. We see substantial opportunities for outside growth to continue as we further improve the online customer experience. At this time a year ago, we were still searching for a Manhattan full-line store location. Today, we have a great location near Columbus Circle, with a planned opening in 2018. During the year, we also announced future full-line openings in Houston, Jacksonville, Minneapolis and Milwaukee. Our ongoing focus on providing a superior customer experience and increasing our relevance with existing and new customers has positioned us well for the significant growth opportunities we are pursuing. To be clear, we are a growth story, with a business and operating model consistent with that. It is these growth opportunities, whether Canada, Rack, e-commerce, Manhattan and other new full-line stores, and the improvements to our existing stores, that drive the investments we're making. Some of these investments yield immediate benefits, while others will benefit the future. We are confident that in total, they will provide a platform for sustainable, profitable growth, which we characterize by high single-digit total sales increases and mid-teens return on invested capital. Now I'll turn the call over to Mike. Michael G. Koppel: Thanks, Blake. As we look back on the year, we have surpassed our financial expectations and successfully executed against our long-term growth strategy. As Blake mentioned, we are positioned for growth through our aggressive pursuit of multiple strategic opportunities. We believe the continued momentum in our business, which is reflected by 3 consecutive years of double-digit sales and earnings growth, is driven by these ongoing investments to serve more customers and deliver a superior experience. At this time last year, we shared with you our 2012 financial plans, including adding over $1 billion in sales and achieving earnings per share of $3.30 to $3.45. We exceeded those plans by delivering sales growth of 12%, or $1.3 billion, and earnings per diluted share of $3.56. In 2012, we reached a record high in total sales productivity of $470 per square foot. An even more notable accomplishment was that our sales per square foot, excluding e-commerce, of $417, surpassed 2007's peak of $405. This demonstrates our continued belief that a well-executed multichannel strategy is about growing all channels. As Blake noted, we increased ROIC to 13.9%, which represented our highest return over the last 5 years. This was particularly meaningful since we accomplished this while making capital investments of over $2 billion during this period. Now I'd like to highlight our fourth quarter performance. Our results exceeded our expectations, with sales growth of 13%, same-store sales increases of 6.3% and growth in earnings per share of 26%. You can find more detail of our financial performance for both the quarter and the year in the Performance Summary document, which is posted on our website. Our Fashion Rewards program played an integral role in contributing to our overall results. A year ago, we made improvements to our program to provide increased customer flexibility and to make the benefits more accessible. In response, we opened 1 million new accounts during the year, with cardholders continuing to spend more and shop more with us than non-members. In 2012, sales from our Fashion Rewards members increased over $800 million, or 23% over last year. We now have 3.3 million active members, which increased 27% from last year. Nordstrom card penetration reached nearly 36%, up from 32% a year ago. Our execution in recent years has put us in a strong financial position. In each of the last 4 years, cash flow from operations exceeded $1 billion, and we have ample liquidity. Our capital allocation practices are disciplined and balanced. Additionally, our Credit business is healthy, with key metrics having improved to prerecession levels. Next, I'd like to share our current thinking on our growth plans over the next several years. Our ongoing focus to provide a superior customer experience, coupled with our execution and strong financial position, has enabled us to undertake multiple growth initiatives. We believe these plans for future growth will provide a sustainable platform for achieving top quartile total shareholder returns. Over the next 5 years, we plan to nearly double our capital expenditures relative to the last 5 years, due to investments in Canada, Manhattan, e-commerce and Rack. Our current 5-year capital plan is $3.7 billion. Roughly 20% represents entry into Canada and Manhattan, and approximately 55% is planned for a combination of new full-line stores, Rack stores and remodels. The remaining 25% relates to e-commerce and technology investments, including initiatives to improve our e-commerce delivery and fulfillment, online and mobile experience and personalization. We are confident that these investments are creating significant long-term shareholder value, and they are changing the dynamics within our P&L. For example, our growth is altering our sales mix. We believe that within the next 5 years, Rack, Direct and Canada will make up approximately half of our sales. Our stores, which create the most visible representation of our brand, will continue to represent the majority of our overall business, but customers will clearly use e-commerce in the future more than they are today. Given the infrastructure investments to support expansion into Canada and incremental growth-related costs associated with the Rack, and higher depreciation expense from ongoing e-commerce investments, we expect no expansion of EBIT margin over the next several years. EBITDAR, which strips out the growth-related expense components of depreciation and rent, is expected to grow faster than EBIT and illustrates the impact of these investments. Operating leverage in our existing stores continues, and collectively, their EBIT margin is planned to increase in 2013. We are not relying on EBIT margin expansion to create value. As our financial model evolves with our growth, our overarching focus is on achieving high single-digit sales growth and mid-teens return on invested capital. We know these factors, combined with our growing capital base, will drive significant shareholder value. Now I'd like to discuss our 2013 plan. To provide you with an apples-to-apples comparison, we removed the impact of the 53rd week from 2013 comparisons to 2012. We expect sales growth between 6% to 8%, with same-store sales increases between 3.5% to 5.5%. This reflects low single-digit growth in full-line and Rack stores and over 20% growth in Direct. Our plan achieves earnings per diluted share of $3.65 and $3.80, representing an increase of 4% to 8% over 2012. Included in our guidance are upfront infrastructure expenses for Canada, as well as organizational and incremental preopening expenses related to Rack store expansion. In 2013, we expect these costs to be approximately $20 million to $25 million. The 53rd week will impact the quarterly cadence of 2013 compared to 2012, including the shift of our Anniversary Sale event between the second and third quarters. Our earnings release provides additional color on these impacts. With respect to our line item guidance, which is compared to 53 weeks in 2012, gross profit rate is expected to decline between 10 and 30 basis points, primarily due to accelerated Rack growth and higher expenses associated with the growth in our Fashion Rewards program. Retail SG&A as a percent of sales is expected to improve 10 to 30 basis points due to leverage on higher sales volume. The increase in credit SG&A reflects the absence of the $30 million reduction in bad debt reserves in 2012. Turning to capital. We anticipate net capital expenditures in the range of $750 million to $790 million. This is a significant increase from $455 million in 2012 and is primarily related to Rack and full-line store growth, improvements in e-commerce delivery and fulfillment and our Manhattan store development. We expect net depreciation and amortization in 2013 to be approximately $390 million, up from $366 million in 2012. Free cash flow is planned to be approximately $130 million for 2013. This is down from $340 million in 2012 due to our capital expenditures. We expect cash flow from operations to be approximately $1.3 billion, up from $1.1 billion in 2012. In closing, we are pleased with our progress to date. We're excited about the numerous opportunities ahead of us and confident in our ability to successfully execute our growth initiatives. We remain disciplined in our approach while moving faster in our execution. Overall, we believe our relentless desire to provide a superior customer experience will lead to continued growth in our business and increasing shareholder value. With that, I'll turn the call over to Rob. Robert E. Campbell: Thank you, Mike. [Operator Instructions] Now we'll take the first question.

Our first question today is from Deborah Weinswig from Citi. Deborah L. Weinswig - Citigroup Inc, Research Division: Mike, can you discuss the gross margin performance in the quarter? Maybe just give us a little more color? Michael G. Koppel: Sure. Well, our gross profit benefited this quarter by an improvement in markdowns year-over-year. We saw some significant improvement in our women's apparel business, which was reflected in that. And that was partially offset by the increased cost as it relates to our Fashion Rewards program. But overall, a relatively good merchandise margin performance. Deborah L. Weinswig - Citigroup Inc, Research Division: Okay. And as you guide for the future, you talked about not relying on EBIT margin expansion to drive future growth. Can you maybe -- and obviously, there's a lot of moving pieces and Internet growth and growth in the outlets, in the Rack business. As we look at all the moving pieces and not much full-line growth, how shall we kind of think about one offsetting the other? Michael G. Koppel: Well, I think the first way to look at it is the chart that we shared that showed the change in the growth in the businesses and how they're contributing to the overall sales of the company. I think in terms of the EBIT margin expansion, the most important thing to remember is over the next several years, we're going to be investing to ensure we have a long-term sustainable growth platform. And the investments such as the accelerated technology investments, the upfront investments required to move into Canada, the acceleration of the Rack, all those things have a medium-term impact on our margin performance, but are there to assure that we've got a platform to deliver much larger dollar earnings growth over the long term.

Our next question is from Jennifer Black from Jennifer Black & Associates. Jennifer Black - Black & Company Inc., Research Division: My first question is on Savvy. In some stores, where you've reconfigured the department and brought in merchandise at very sharp price points, I just was curious to know the reception to that. And I'm not sure how many stores you have done that in. Blake W. Nordstrom: Jennifer, this is Blake. The Savvy departments, as you know, have gone through a transformation. We've been working on it for some time, and the official launch in the stores was February 15. It's all stores, and we've taken a pretty dramatic change with the merchandise offering. And so the goal is to try to help attract customers that maybe we didn't have an offering before or wasn't as compelling. And part of that was keeping the fashion-forward trend part of it, but trying to make the price points more accessible. And it's a pretty dramatic change, average price, from what Savvy was before to this new Savvy concept. And so we've only got a couple of days under our belt, but I think we're really excited about that offering and the early reception we've gotten so far. Jennifer Black - Black & Company Inc., Research Division: Great. And my follow-up is if you could talk about California, Southern Cal, O.C., L.A., San Diego, Northern Cal. Blake W. Nordstrom: Well, I happen to be on the phone at our Grove store right now. So I'm in Los Angeles right now. And Southern California and California in general has consistently, over time, represented some of our most productive stores. And in the last couple of years, with the cycles in the economy, it's had some impact there. In addition to women's apparel improving, we've been pleased with California improving as well. Southern California still represents some opportunities for us, but the most important thing is the trend is improving. And so we're encouraged.

Our next question is from Neely Tamminga from Piper Jaffray. Neely J.N. Tamminga - Piper Jaffray Companies, Research Division: So Mike, can you -- a little bit of insights on Rack for my first question. Second, the follow-up, would just be a little bit more on the e-commerce delivery and fulfillment initiative. So I think you guys had listed about 16 Rack stores. Could that number actually end up being higher this year? And would that higher -- more Rack stores actually already be contemplated then in the CapEx indications that you are giving to us? Michael G. Koppel: Yes. Those are the stores that have currently been announced. Our CapEx plan has allocated for more stores for 2013. Neely J.N. Tamminga - Piper Jaffray Companies, Research Division: Okay, okay. It seemed to me -- I think at one point, you guys were talking about getting to about 230 by 2016 and that would suggest maybe a mid- to high-20 sort of number for Rack. Is that about the right way to look at that? Michael G. Koppel: Yes. That's in the range. Neely J.N. Tamminga - Piper Jaffray Companies, Research Division: Okay, cool. And then on the -- can you give us some specific insights on the initiatives? You guys have cited specifically e-commerce delivery fulfillment. Are these physical centers? Or what specifically are those initiatives that you are allocating capital for? Michael G. Koppel: Sure. In terms of the fulfillment and the 2013 allocation, it's about additional square footage to improve our fulfillment base. And it's also about improving some of the -- we have to increase capacity in Cedar Rapids just because of our unit flow-through has gotten so large, we have to install some new equipment. So it's about staying ahead of the curve because we're seeing some pretty accelerated growth in that channel.

Our next question is from Edward Yruma from KeyBanc Capital Markets. Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division: Can you talk a little bit about the return on invested capital profile of both Direct and of the Rack business, and particularly as it relates to the step-up in CapEx? I mean, is it expected that ROIC can continue to improve despite CapEx being stepped up so meaningfully for 2013? Michael G. Koppel: Sure, Ed. Well, as we've stated, our long-term goal is a mid-teen return on invested capital. And I think what one of the interesting factors has been, over the last several years, with adding an accelerated capital of over $2 billion, we've still increased the ROIC. So we do expect to see forward progress there. In terms of the profile of the channels, as we've stated before, Direct, because of the way the technology investment behaves, we have more upfront expense, a faster write-off tends to have a lower capital base and thus has a higher return on capital. Rack is a more traditional return because we do have to capitalize the leases. It tends to have a more longer term fixed base and does operate at a higher-than-company average, but at a more traditional return on invested capital. Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division: Got you. And you do this from time to time, metrics on what your Fashion Rewards customer looks like relative to your normal consumer. But what does your multichannel consumer look like relative to someone that shops strictly in your physical channel? Michael G. Koppel: Sure. Well, clearly, I think one of the things that we've shared is our customer -- the customer who's shopping online, shopping mobile, tends to have a slightly younger profile, as is the Rack customer. Our multichannel customer is, I would say, an aggregate of our best customers. And I don't believe there's any particular profile in terms of how you categorize that demographically, other than they happen to be our best customers.

Our next question is from Erika Maschmeyer from Robert W. Baird. Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division: Can you give a bit more detail around the complexion of your infrastructure investments into Canada? How much of that is labor, distribution, kind of preopening -- other pre-opening expenses? Michael G. Koppel: Sure, Erica. Well, just to step back, the $20 million to $25 million that we called out for 2013, roughly 2/3 of that relates to Canada. And it's mostly around the development of our technology infrastructure to support that business, as well as the buildout of the team that's going to run that business. We're starting to build out the merchandise team and the operating team there. And so that's basically what hits 2013. In 2014, we'll start to see that expand. And some of the other costs that you're suggesting will come to light in 2014. The balance of that investment relates to preopening and accelerated Rack growth, both organization and the preopening costs required to open more stores. Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division: That is very helpful. And then just a follow-up to one of Jennifer's questions. How are you communicating the new Savvy concept to the customers that you might not have been attracting before? Michael G. Koppel: Blake? Blake W. Nordstrom: You bet. We're taking a multipronged approach. We've been bringing this merchandise in over the last month or 2, so there's been a transition. And so working with the existing customers in the store, we're using all forms of communications, all the different channels within social. This is not about running a traditional ad or TV program, but it is trying to utilize the strong foot traffic in our stores and the various means that we stay communicated with our customers and how our customers have shared with us how they want us to communicate with them. And so again, I think, already in a couple of days, we've had a terrific reception. So in many cases, it's less about having kind of a formal word out. It's more about executing in the department of the merchandise offering and having the salespeople and the product knowledge and the fashion expertise to help our customers. So those vendors that were in Savvy, 70% to 80% of them have been moved into other departments. So we've really retained, for the most part, that merchandise. We just allocated in different lifestyle departments. And we think we really are starting to fill a void with some of these aspirational price points and higher fashion trend items that maybe was lacking a little bit in our offering.

Our next question is from Lorraine Hutchinson from Bank of America. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: Can you talk a little bit about how you formulate your comp plan? And if there is upside to the same-store sales growth in 2013, is there is some opportunity for SG&A leverage? Michael G. Koppel: Lorraine, this is Mike. In terms of a comp plan, in the overall operating plan we shared, it's consistent with our internal operating plans. The comp plan was built on a low single-digit comp for our full-line and Rack stores, and a slightly greater than 20% comp for our Direct business. In terms of any leverage, we could get leverage if sales outperform. And that's consistent with how we've shared in the past. We will update that on a quarterly basis if we think we're going to get more operating leverage from our sales performance. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: Great. And then as you look to your new Rack openings for this year, can you talk about the maturity curve of the new stores and how you're planning that from a cash flow perspective over the next couple of years? Michael G. Koppel: Well, in terms of the maturity curve, overall, the Rack stores tend to mature at roughly a 3-year point, and then they get to a more normal growth. In terms of cash flow, I don't have any granular kind of guidance to give you in terms of the individual store performance, other than the fact that it's -- our overall ability to generate cash, as we said with 2013, is consistent with which the way it's been in prior years. And as a matter fact, in 2013, it's slightly better.

Our next question is from Paul Trussell from Deutsche Bank. Paul Trussell - Deutsche Bank AG, Research Division: Just a follow-up, Mike, on your top line commentary. Is the low single-digit comp for the full-line and the Rack and the 20% growth for Direct, is that just your baseline view? Or is there something that you've seen in the business that's kind of leading to that 3.5% to 5.5% comp view, just given that if we adjust for your Anniversary Sale last year, you guys haven't had a comp below 5.8% since you were negative in 2009. And obviously, we saw acceleration in the Rack last year. We saw acceleration in Direct sales last year, and both those segments are becoming bigger pieces of your business. So just -- if you can add any color to that, that'd be helpful. Michael G. Koppel: Yes. I'll repeat what I said earlier, and that is it's reflective of our internal operating plans. We like to plan our business in a way that helps us gain as much leverage when we do have upside, and to instill discipline within the organization around inventory and expense. And that's consistent with how we've done it. And if we do beat those plans, that our intent is to be able to drive additional earnings from that plan. Paul Trussell - Deutsche Bank AG, Research Division: So there's no change in your thoughts around the macro environment or your core consumer? Michael G. Koppel: There's nothing at this point that would suggest any change in our customers' behavior.

Our next question is from Matthew Boss from JPMorgan. Matthew R. Boss - JP Morgan Chase & Co, Research Division: Could you talk to merchandise margins in the quarter and also where merchandise margins stand today versus long-term peak? And finally, with credit rewards and Rack becoming a larger piece of the pie, where, how should we think about gross margins over the long term in the model? Michael G. Koppel: Sure. Well, in terms of margin for the quarter, as I stated earlier, we had a very good merchandise margin performance in the fourth quarter. And a lot of that was driven by the improvement in the women's apparel business. We're starting to see much better sell-throughs in women's apparel. That's a strong business for us, and we expect it to continue. In terms of long term, we have a number of dynamics that are affecting merchandise margin. One is the fact that as Rack continues to grow and accelerate, it has a lower merchandise margin than full-line. Now it has an equal to better bottom line margin, but it's going to affect the geography within the P&L. Our overall merchandise margins right now are at or around their all-time highs. We don't expect any significant expansion there. Clearly, we've seen a little bit of contraction from Fashion Rewards. But on the other hand, Fashion Rewards is generating a tremendous amount of top line value for us, and as importantly, long-term customer value. In terms of merchandise margin, our thoughts around that are not to expect any kind of significant increases. Matthew R. Boss - JP Morgan Chase & Co, Research Division: Okay. And then last is on longer term store growth. As you think about the full-line, what is the best way for us to think about it in terms of longer term and are there -- do you see opportunities for potential closings as well? Michael G. Koppel: Well, in terms of long term, our expectations around full-line are a low single-digit comp overtime. In terms of closings, we periodically evaluate stores as operating agreements do come up. At this point in time, from an economic standpoint, there's nothing that would suggest that we should be proactively closing stores. But if a store happens to be in a situation where the operating agreement is up and we believe there's a better opportunity in the same market, we might make a change there. But nothing material from a store closure basis. And overall, from a full-line standpoint, Canada is a huge opportunity. We tend to talk about full-line in terms of the 4-wall U.S., but long term, Canada has a lot of upside for us.

Our next question is from Kimberly Greenberger from Morgan Stanley. Kimberly C. Greenberger - Morgan Stanley, Research Division: I'm looking at -- I'm wondering about the inventory. It looks like it's up about 18% year-over-year. I'm wondering if the 53rd week had any impact on your year-over-year inventory growth? And how do you think about planning inventory relative to your sales plan, just as we look out to 2013? Michael G. Koppel: Sure. The impact in inventory is not from the 53rd week. It's primarily from the growth in the Rack. Just to give a little color on that, part of our success with the Rack last year is we have taken a more aggressive posture in terms of procuring product for the next season. It's called "pack and hold". We're doing it with our top brands. That has been the most significant driver of our inventory increase. If you look at our full-line and Direct business, the turns are roughly even with what they were last year. They were in line with sales. So that is mostly about the Rack. In terms of next year, our expectation is that growth in the "pack and hold" is going to start to moderate. So we should see that growth start to level off as we go forward. And our goal has always been to continue to improve our turns. Kimberly C. Greenberger - Morgan Stanley, Research Division: Mike, I'm wondering if because of the shift in your Anniversary Sale, from straddling Q2 and Q3, if there will be any sort of quarterly volatility that we should think about in your inventory levels in the -- particularly as we finish Q2 and go into Q3? Michael G. Koppel: Sure. Well, as you recall last year, we had the last week of Anniversary go into August, which means the third quarter benefited from that from a P&L standpoint, but the second quarter saw higher inventory levels, because we still had a full week of Anniversary left. So what you'll see this year is the inventory levels coming out of the second quarter should be down versus last year because we'll have a full week of that high selling within the period.

Our next question is from Dana Telsey from Telsey Advisory Group. Dana Lauren Telsey - Telsey Advisory Group LLC: As you think about the investments you're making in Direct, and we keep hearing more and more going towards mobile, what are you seeing in terms of mobile purchasing, in terms of pricing? Does it -- is it a different in average transaction or category? And just lastly, on the Fashion Rewards, how are you thinking about Fashion Rewards in terms of SG&A and margin go forward? Michael G. Koppel: Sure, Dana. Thanks for your question. In terms of mobile, I think Blake stated in his comments that this past year, we saw 20% of our online volume come from mobile. So we continue to see that as a large channel within the channel for growth. I mean, the growth in people who have smartphones in the next year or 2 is projected to surpass desktop computing. So that's an area that we've invested very strongly, whether it's mobile in the stores with checkout and service or whether it's our iPhone app or our iPad app, we're going to continue to invest in that. And I think long term, it's going to be about creating a more personalized experience, whether you're online or in the store or whether you're using mobile or at a desktop. And those are the areas that we continue to put our investments. And then -- I'm sorry, in terms of the Fashion Rewards, could you please repeat that? Dana Lauren Telsey - Telsey Advisory Group LLC: Sure. How do you see that -- the long-term impact on sales and margins for Fashion Rewards? Michael G. Koppel: Sure. Thank you. Well, with the investments we've made in 2012, clearly, our existing customers and new customers love our Fashion Rewards program. And we expect to continue to find ways to deliver more benefits to our customers. This past fall, we tested a non-tender-based program in our cosmetics business. Going forward, we're going to continue to look for opportunities to offer Fashion Rewards to more customers and not just those that choose to have one of our tender. So we think it's terrific for our customers and it builds a long-term loyalty value there. In terms of its impact to margin, we have seen an impact to that measured in the multiples of 10 basis points. Over time, that should level off, but clearly, it's driving some pretty significant top line growth.

Our next question is from Richard Jaffe from Stifel, Nicolaus. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: A question on Fashion Rewards. What percentage of your sales is coming from the Fashion Rewards program? You mentioned 36% on the card, but I assumed that meant your credit card, not Fashion Rewards. Michael G. Koppel: Well, Richard, just to clarify, all of our current -- all of our Fashion Rewards customers have one of our tenders, whether it's our co-branded Visa, our private label or our debit card. So that 36% is representative of sales on any one of those 3 tenders. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: And obviously, it would all be Fashion Rewards then? So that means -- that's helpful. Michael G. Koppel: Yes, yes. That's correct. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: Could you just comment on your efforts to develop the HauteLook business, perhaps efforts to integrate it into your existing businesses, your full-line and your Rack business? And the profit picture for that business longer term? Michael G. Koppel: Sure. Well, last year, HauteLook was able to generate roughly a 40% increase in its sales and very nearly -- near a breakeven, exceeding its bottom line plan. We continue to see opportunities there as we're offering our customers various ways to do business with us, whether it's flash sale, whether it's off-price in the store, regular price online. And we do believe that over time, our ability to use more of the resources available to us to procure more product, to more effectively fulfill product to our customers, utilizing the resources we have at Nordstrom Inc. is going to help the HauteLook model. So going forward, we definitely see opportunities for both companies to take advantage of the strengths that they both have to deliver a better offer to our customer.

Our next question is from Michael Binetti from UBS. Michael Binetti - UBS Investment Bank, Research Division: So I think the comment that the market is likely to focus on the next few weeks, obviously, the EBIT margins over the longer term and the next few years, because of all the investments you guys see. Michael G. Koppel: Yes. Michael Binetti - UBS Investment Bank, Research Division: As we look out to the out years, for those of us that are modeling the business, there's an opportunity for sales growth to accelerate based on these opportunities? Or do we need to think about the out year estimates trending and it seems like the earnings estimates trending, call it in the high single-digit range? Michael G. Koppel: Yes. Well, as of right now, our goals are to increase top line sales at high single-digit and return on capital in the mid-teens. We believe that over time, that's going to generate value. If we're fortunate enough that we achieve those sales, then we might get more leverage out of that. But right now, that is what our focus, and it's tough to see anything clearer than that in the moment. Michael Binetti - UBS Investment Bank, Research Division: Okay. And if could you just help me think about the -- understanding the leverage a little bit, maybe between the channels? I guess, since you mentioned that your comp buildup is based on e-commerce at 20% growth, that's well below last year. The growth rate, as it gets bigger, it's a bigger piece of the mix, obviously harder to grow, but you're still putting a lot of investment power behind it. So as that part of the business drives some upside on sales, is -- Mike, is that when you would start saying you'd start to think about a little bit higher leverage in our models? Michael G. Koppel: Well, frankly, all channels -- an improvement in sales in all channels is going to deliver leverage, not just the Direct model. We've had years where we've had some very strong comps in our full-line stores and our Direct stores, where we're generating leverage. As a matter of fact, right now, in '12 and plan for '13 is we generated operating leverage in our traditional 4-wall channels. So we don't expect that not to be the case. But when you're investing at the level we are as it relates to a brand-new channel offering like Direct, as it relates to a brand-new market like Canada, those kinds of things are going to require multiple years of investments in order to get there. And that -- subsequent to that, I think time will tell as to whether or not we get leverage long term.

And our final question today is from Liz Dunn from Macquarie Capital. Lizabeth Dunn - Macquarie Research: I guess my main question is, does this sort of change in your CapEx plan over the next couple of years? It must change your viewpoint on sort of buybacks and dividends. I mean, I know you have historically managed dividends through kind of a payout ratio. Is that still the way to think about it? And how should we think about buybacks? Michael G. Koppel: Yes, Liz. Well, thanks for the question. Our framework around our capital allocation is not changing. We still look at that 25% to 30% dividend payout ratio. That's still part of our decision-making. In terms of repurchase of stock, we still do that based on an approach that looks at long-term value -- long-term fair value of the company. So at this point in time, we don't see that having our capital plans negatively impacting those policies. Now of course, that's all based on current course and speed. If there's any significant change in the economy that we can't foresee, those are clearly levers. Robert E. Campbell: Thank you for joining us today for our fourth quarter earnings call. As a reminder, a webcast replay of this call, along with our slide presentation, 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 does conclude today's conference. Thank you for participating. You may now disconnect.