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 James F. Nordstrom - Executive Vice President and President of Nordstrom Direct

Deborah L. Weinswig - Citigroup Inc, Research Division Dorothy S. Lakner - Topeka Capital Markets Inc., Research Division Jennifer Black - Black & Company Inc., Research Division Charles X. Grom - Sterne Agee & Leach Inc., Research Division Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division Paul Lejuez - Wells Fargo Securities, LLC, Research Division Paul Swinand - Morningstar Inc., Research Division Neely J.N. Tamminga - Piper Jaffray Companies, Research Division Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division Michael Binetti - UBS Investment Bank, Research Division Kimberly C. Greenberger - Morgan Stanley, Research Division Joan Payson - Barclays Capital, Research Division Paul Trussell - Deutsche Bank AG, Research Division Lizabeth Dunn - Macquarie Research Barbara Wyckoff - CLSA Limited, Research Division Mark R. Altschwager - Robert W. Baird & Co. Incorporated, Research Division Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division

Hello and welcome to the Nordstrom 2013 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. Today's earnings call will last 45 minutes and we'll include roughly 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 first quarter performance and outlook for fiscal 2013. 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 want to mention that Blake and Mike will be using slides that 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 are listening by telephone, you can view the slides by going to nordstrom.com and the Investor Relations section. And now, I'll introduce Blake Nordstrom. Blake W. Nordstrom: Thank you, Rob, and good afternoon, everyone. We continually aspire to improve the customer experience across all channels and encompassing new products, new markets and new technology. We're encouraged by the platform we're establishing that will enable us to drive sustainable, profitable growth. We ended the second quarter with earnings per diluted share of $0.93. This was a credit to the discipline that was demonstrated with respect to inventory and expenses and reflective of the variable nature of our financial model, partially offsetting sales that were softer than anticipated. Overall, our sales trends in the second quarter and throughout the first half of the year weren't as strong as we expected. Total company same-store sales in the second quarter increased 4.4%. Multichannel same-store sales increased 4.2%, with consistent trends experienced across both regions and merchandise categories. Rack achieved a same-store sales increase of 2.4%, improving upon first quarter's increase of 0.8%. The anniversary sale then generated a low single-digit same-store sales increase, which is below expectations, but consistent with trends. Early Access continues to be a benefit valued by our Fashion Rewards members and the strength of our loyalty program was an important driver of the event. Next, I'd like to offer an update on our growth strategy, which fundamentally reflects our desire to be the best in service and experience in serving our customers across multiple channels. One of our overarching strategic themes is to increase our relevance with existing and new customers. We are encouraged with the momentum in our Women's Apparel business, driven by improved execution as well as strategic changes that we are making to help attract new customers. It was a notable achievement that Women's Apparel led all merchandise divisions in our Anniversary Sale performance. The performance of Topshop has been promising. In response, this fall, we will expand it to another 28 full-line stores, bringing the total to 42 stores by year-end. Thus far, in 2013 we've opened 8 Rack stores, bringing the total to 127 and plan to open 14 more this fall. To date, as a group, the newer Racks are achieving results in line with our expectations. Our Rack stores are gaining more experience with the mobile point-of-sale devices that were rolled out last year, allowing us to enhance the customer experience by improving the speed of checkout. Our Direct business grew 37% in the second quarter, as it maintains a focus on improving selection, convenience and the overall customer experience. During the quarter, we made progress on a number of initiatives, including the following: We further expanded our online merchandise selection. We collaborated with Pinterest, where we have over 4.5 million followers, to highlight top items online and in selected stores. Continued construction of a second fulfillment center in Southern California to be completed in the fall and we are developing plans to add a third fulfillment center on the East Coast in 2015. Our preparation for expansion into Canada is on track, with the first of our 5 announced full-line store openings to take place in Calgary in the fall of 2014. We think when we're fully established in Canada, with 8 to 10 full-line stores and 15 to 20 Racks, it can be roughly a $1 billion business for us. We've been focused on improving our multichannel capabilities for a number of years, and our belief in its strength to elevate the customer experience only grows stronger over time. We're working to elevate this experience in-store and online, with both a full-price and off-price offering for each. While each channel represents a meaningful growth opportunity individually, the synergies created by the overall customer experience contribute to our ability to attract, retain and serve customers into the future. We are encouraged by the opportunities we see, and we look forward to keeping you updated on our ongoing progress. And now, I'll turn over the call to Mike. Michael G. Koppel: Thanks, Blake. As we reached the halfway point in the year, we are pleased with our progress. We are on track with our long-term plan, including improvements in the online experience, enhancements to our merchandise offering to increase our relevance with existing and new customers and accelerated store openings in the Rack. We remain positive about our path forward and confident in our investments to serve more customers across multiple channels. Now, I'd like to offer a few comments on our second quarter performance. Earnings per diluted share of $0.93 increased 24% relative to last year. As a reminder, the shift of our Anniversary event resulted in a favorable comparison to last year and is expected to be offset by an unfavorable comparison in the third quarter. In the second quarter, the impact of the event shift resulted in an increase to same-store sales of approximately 250 basis points and an increase to earnings per diluted share of approximately $0.06. Though sales were less than anticipated, the second quarter showed moderate improvement from early in the year. We maintained our focus on managing inventory and expenses, while benefiting from the variable nature of our financial model. The gross profit rate of 35.5%, which was in line with our expectations, decreased by 13 basis points over last year, primarily due to growth in our Fashion Rewards program. We now have 3.6 million active members, up 18% from a year ago. We continue to achieve meaningful growth in both card penetration and sales over last year. In the first 6 months of the year, we opened over 500,000 new accounts. This is on pace to match the 1 million accounts opened last year, which benefited from enhancements to the program made in January of 2012. We were disciplined in our merchandise planning, which allowed us to exit the quarter in a favorable inventory position. Ending inventory per square foot grew 2.6% compared to sales per square foot growth of 3.9%. When removing the impact of the Anniversary event shift, inventory growth outpaced sales growth due to continued planned investments in pack and hold inventory to support Rack's growth. On the expense side, the SG&A rate decreased 105 basis points. This, in part, reflected leverage from higher sales volume due to the shift in the Anniversary sale. It was also a function of a reduction in variable expenses correlated with top line and overall company performance. Overhead expenses, supporting both current operations and future growth, were on plan. We incurred expenses in the second quarter related to both Canada and Rack growth of $4 million or $10 million on a year-to-date basis, which is on track with our full-year estimate of $20 million to $25 million. Now I'd like to provide additional color on our long-term growth. As Blake shared, we strive to be an exemplar in providing a superior customer experience, in stores and online, in full price and off-price and with synergies across channels. While full-line stores will continue to be the foundation of our business, representing the core of our brand, we believe that over next 5 years, roughly half of our sales could come from the combination of Rack, online and Canada. The dynamics of our business model anticipate the following: Continued moderate growth in full-line, including new market opportunities in Canada and Manhattan; accelerated Rack store expansion to increase our reach to new customers and in response to customer demand; and aggressive growth online driven by our investments to expand in this channel and our customer base. Over the last year, we have shared our view of the evolving business model as we continue to grow. We expect to drive value creation through sales and EBIT growth, combined with a more productive capital base. As we previously discussed, we believe our growth investments will limit operating margin expansion over the next several years. That said, our overarching long-term financial goals remain the same, to achieve high single-digit sales growth and mid-teens return on invested capital. Now, let's turn our updated -- let's turn to our updated expectations for the year. We have revised our plans to reflect results in the first half of the year, as well as our view of a continuation of current sales trends through the remainder of the year. As a result, we reduced our annual same-store sales outlook to 2% to 3% compared to the prior outlook of 3% to 5%. Our current outlook of earnings per diluted share is $3.60 to $3.70, relative to the prior outlook of $3.65 to $3.80. Please refer to the Performance Summary document located on our website for more color on our line item guidance. In closing, our enthusiasm about our investments and the many opportunities in front of us remains strong. We are confident in our ability to successfully execute our growth strategy, as we deliver a differentiated customer experience in-store and online. With that, I'll turn the call over to Rob. Robert E. Campbell: Thank you, Mike. I should have mentioned earlier that also joining us for Q&A is Jamie Nordstrom, President of Direct. [Operator Instructions] For now, let's take the first question.

[Operator Instructions] Our first question comes from Deborah Weinswig with Citi. Deborah L. Weinswig - Citigroup Inc, Research Division: And if you look at the quarter and the performance, can you just talk about how things progressed during the month and -- by month? And also, if you look at the Rack business versus full-line, if you could compare and contrast that as well. Michael G. Koppel: Well, Deborah, this is Mike. I think on one of the charts that we provided, we illustrated the cadence of sales by month for the quarter. And I think the story was after a softer first 2 months earlier in the year, our overall sales trends were pretty consistent in the last 4 months of the first half of the year. So I wouldn't go any deeper than that because I think the overall consistency is reflective of that. Deborah L. Weinswig - Citigroup Inc, Research Division: Okay. And then in terms of your Fashion Rewards customers, do they continue to outperform the rest of your customers as well? Michael G. Koppel: Yes, they do.

Our next question comes from Dorothy Lakner with Topeka Capital Market. Dorothy S. Lakner - Topeka Capital Markets Inc., Research Division: I just wanted to ask about Anniversary and how the cadence of the sale has changed with the emphasis on Fashion Rewards and just the greater flexibilities, given to customers to shop online, et cetera, with Early Access? Just comparing to the last few years, how have things changed? Erik B. Nordstrom: This is Erik. There is -- has been some shift in the cadence over the last couple of years. Our Fashion Reward program continues to be a tremendous strength for our overall business. And it's -- there's 2 big impacts around Anniversary. It's -- the Direct is with Fashion Reward customers participating in Early Access and that's grown healthily over the last couple of years. The other big impact of that though is, by having that Early Access as part of the Fashion Rewards program, we opened up a lot of accounts, especially around Anniversary. And the benefits of Fashion Reward customer serve us all through the year. So it's been a real win-win for the company and I think for our customers. And you mentioned some of the shift to online. And I think that's just another example. Customers -- they want to shop how they want to shop. Our job isn't to dictate how they want to shop. Our job is to serve them as best as we possibly can. And we've had a number of years, where we've had strong mobile channel capabilities. And we find that during sale time, in particular, customers like to use online, both to shop directly and our percentage of our business goes up online during sale events, but they also like using the web as a tool for their store shopping. So that synergy that we've experienced good value for a number of years on heightens during Anniversary. Dorothy S. Lakner - Topeka Capital Markets Inc., Research Division: And just one follow-up, in terms of Anniversary, you mentioned that you're pleased with the progress in Women's Apparel. What about the other parts of the Women's business? Are you seeing some kind of trade-off between Apparel versus Accessories? Or did you feel like those other categories kind of continued to carry their weight? Peter E. Nordstrom: This is Pete. I'd say they pretty much continue to carry their weight. We had actually a fairly level of performance, I mean some did better than others but not dramatically. The place where we're probably must challenged related to Women's Apparels in the Juniors segment.

And our next question comes from Charles Grom with Sterne Agee. Okay. Our next call actually comes from Jennifer Black with Jennifer Black and Associates. Jennifer Black - Black & Company Inc., Research Division: I know you were just talking about some of the categories. I wondered if you could give us a deeper view into what categories performed well and what categories underperformed. And I'm just curious about the strength in Men's and then also I'm really curious about Women's individual departments. Peter E. Nordstrom: Jennifer, this is Pete. Without getting into too much detail, Women's across the board actually did fairly well. Individuals has been strong. Our coat business has been strong. We've had good Studio and Narrative business kind of through this year so far. And that's been carried through with the event. For sure, our efforts around Savvy and Topshop, in particular, have helped drive new customers into Women's. If you look at the total lift that we're getting in Women's, a big part of that is how we've just kind of shifted our center of gravity and put more energy and investment of inventory in those classifications. That's worked out pretty darn well. Men's has really performed quite well with Men's clothing. Kind of interestingly, if you look out over a period of time, has really been on a good trajectory there. Really solid business for us. We've executed really well there. And the team deserves a lot of credit. As I mentioned, the challenging part is really BP. Our Women's Juniors has been the most challenging. And I think we own a lot of that. We've traditionally done a pretty good job of -- doing a good job with items there. And for whatever reason, we didn't hit it as well this season as we have before. The good news is that department turns relatively quickly. We can learn things fast and we have a chance to make adjustments. So we're working on it, We think we can improve it. Jennifer Black - Black & Company Inc., Research Division: Great. I just -- I have one follow-up. I wondered what your thoughts were on the duration of the sale, as far as how long it's open to the public. Peter E. Nordstrom: That's a good question. We talk about that a lot. It's a weighted decision because we do so much business on all those days. Even the worst Anniversary sale day is significantly better than a non-sale day on the terms of just pure volume. So we need to be careful about making those kind of decisions. Obviously, Early Access has impacted that. I don't know, if we look at the balance of the wholesale, we did more business on this Anniversary Sale than we've ever done in the history of the company. So I think, if you look at it from that point of view, it's been successful. There's a lot of risk, obviously, with the inventory investments we need to make. And it's a lot of pressure and strain on the people and stores to execute it because it's a high level that's taken to do it. So I don't -- all this stuff goes into question for us. We balance the historical stuff that we have with our new strategies that we're trying to implement. And as Erik mentioned, the way Early Access and online have impacted the sale, but we have to be mindful what that means and how it might impact how we execute the sale in the future. But those are the things that we're actually working on right now while the results are still fresh in our mind. And we'll probably have a much better idea about a month or so from now exactly how we'll amend it next year.

Our next question comes from Charles Grom with Sterne, Agee. Charles X. Grom - Sterne Agee & Leach Inc., Research Division: So I'm just wondering if you guys could speak to your expanded merchandise selection online. Obviously, the Direct business being up 37%, nice uptick on a 2-year. Could you amplify on that for us? James F. Nordstrom: Yes, Charles, this is Jamie. We started about 2 years ago to do some pretty simple things with selection. Number one was make sure that all the merchandise we were buying for any of our stores we were also putting online, which had not been our strategy prior to that. We had -- we had curated an assortment for our website, much like we would do that for a store. And so roughly 2 years ago, we said no, if we're going to carry an item in any store, we should also have it on our website. So that's been the bulk of our selection expansion efforts. And then more recently, this year, we've gone beyond what we carry in the stores. And it's not anything radical or something that would stick out, but it's brands and styles that we may not be able to physically fit in a store, but are super relevant to our customers. So an example would be a great brand like Burberry. We may have 50 styles of Burberry in one of our stores, but they make 400 styles for the season. And we can carry all that on our website and there's a lot of demand for that. So that's a flavor of what we're focused on right now. Charles X. Grom - Sterne Agee & Leach Inc., Research Division: Okay, great. And one for Mike, on Slide 13, the EBIT margin expectations, I was wondering if you could just walk through the -- how big a GAAP there is between the 3 segments, in terms of the actual operating margin percentages? And then, did I hear you correctly in that, as you kind of think about the next 5 years, with a high single digit sales growth, that we should expect essentially no margin expansion in the retail business, essentially staying pretty flat. Is that sort of the message you guys are trying to get across? Michael G. Koppel: Yes, Charles, we're not breaking out to that level of specificity in terms of the percentage differences. But I think directionally, those slides give a pretty good story, in terms of the overall fundamental ability for those businesses to drive margin. And then, in terms of the overall, in the aggregate, yes, our message is for the next several years, we don't expect overall company margin expansions.

Next question comes from Lorraine Hutchinson with Bank of America Merrill Lynch. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: Could you comment on any geographical areas of strength during the quarter, and also any commentary that you have on early fall selling post the sale? Erik B. Nordstrom: Okay, this is Erik. Geography, pretty darn consistent. For a while, our Southern parts -- both our Southeast and Southwest regions have done well, as well as the Midwest. Nothing really stands out unusually either and for our regions. Now what was the second question? Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: Early fall selling trends? Erik B. Nordstrom: Oh, early fall. Do you have anything... Blake W. Nordstrom: Well, we had some really good performances in what would be kind of typically fall type of classifications things like boots, for example. I think the number one item we had in terms of pure dollars was a boot. So that -- I think that bodes well for what we think is going to happen in the fall. Our coat business has been pretty strong and that's continued on. So I -- we -- as the sale has progressed over the years, there's a bit more of a buy now, wear now thing happening, but we still have customers that are really interested in what's new, particularly as it relates fall. And so we get some good indications. And I think for the most part, we feel like we're pretty spot on there.

Your next question comes from Paul Lejuez with Wells Fargo. Paul Lejuez - Wells Fargo Securities, LLC, Research Division: Can you maybe talk about the expense reductions that were made intra-quarter to respond to the slower sales environment. If you could kind of bucket those out for us. And also wonder if you adjusted bonuses during the quarter, if you maybe reversed an accrual? Michael G. Koppel: Paul, this is Mike. I think as we've shared in the past, roughly 40% of our operating model is variable. And what primarily drives that is the commission-based sales structure in the full line stores, as well as the fulfillment costs for anything that we ship to customers. And when our sales are down relative to our plan, those naturally adjust to that. And so one piece of it is just the variable nature of the model. And the second piece, which you brought up in terms of incentives, yes, we did make some adjustments in the second quarter based on overall reduction in our expectations for the year. Paul Lejuez - Wells Fargo Securities, LLC, Research Division: Can you quantify those for us, Mike? Michael G. Koppel: No, I think at this time, we're not going to quantify the details of that.

Our next question comes from Paul Swinand with Morningstar. Paul Swinand - Morningstar Inc., Research Division: Just I think -- I forget if it was the prepared remarks, but I think your -- you said you had some expense in Canada and I know you're targeting next year for the first opening. What -- can you give us just color on what's really different up there, maybe on both the investment side, but also the operational and the merchandise side? What do you expect to be different, what do you think the challenges are and how do you think you'll address them? Michael G. Koppel: Sure. Paul, this is Mike. Well, let me just start with this year and then I think Erik will talk a little bit about some of the operating challenges going forward. The biggest difference right now is to open stores in a different country is going to require a different technology support and different functionality in terms of how we operate the business. And that's probably the most significant upfront difference. And then of course, we have to make early on investments to build our team and to get some of the merchandising and buying processes in place. So those are the things that we're experiencing right now, up to and prior to the opening of the store. And then with the opening, I'll turn that over to Erik. Erik B. Nordstrom: Yes, as Mike touched on, there's a tremendous challenge just operationally. Pretty much every business function needs some change to operate in another country, which probably isn't big news, but we haven't done that before. So there's a lot of work for us. But in the end, we will be successful if we deliver a great experience for our customers. And as we talk to customers more and more, and that's what we're doing a lot of, we're doing a lot of listening, what we hear more than any other thing is bring us a great Nordstrom store, don't bring us Nordstrom light. And that's what we're focused on. So it's not a different strategy, how we execute it, it's going to have to be different some of the systems and logistics and things. But we're focused on making those stores the absolute best Nordstrom stores they can be. And we are confident that if we do that, that will be successful.

Your next question comes from Neely Tamminga with Piper Jaffray. Neely J.N. Tamminga - Piper Jaffray Companies, Research Division: Jamie, I was wondering if you can speak a little bit to the mobile strategies, what you guys are working on here near term. And I think there was some discussion at some point, maybe the last 2 calls, about your launching a tender-agnostic loyalty program. I'm just wondering where you guys are in that process and if we could see some hints of that this fall? James F. Nordstrom: Neely, we continue to see an increase in the amount of customers that are engaging with our website through mobile devices. It's outpacing just the overall growth, which I think is -- and something that's happening in history [ph]. So we've been focused on making sure that our mobile optimized website, as well as our apps, are meeting customers' expectations. So we've recently relaunched an upgraded version of our iPhone app. We've added some features to that, and customers are responding pretty favorably. We do believe that, that's going to keep going for a while. We think the amount of customers that want to engage with us through their phone has a lot of runway left. And so we're putting a lot of effort in making sure that the experience they get when they interact with us through their phone is a pretty good one. I'll let Mike handle the loyalty part. Michael G. Koppel: Neely, in terms of the non-tender loyalty, I think we've shared with everybody previously that we did a test in our cosmetics area last fall. And we're currently in progress in terms of building an infrastructure that's going to allow us to test a broader base, non-tender program. And we should be able to start that testing sometime in the near future, we don't have an exact date, but we're working toward a test in the near future.

Our next question comes from Ed Yruma with KeyBanc. Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division: I know historically, when you've had Anniversary Sales that have been slightly weaker than planned, you've had to kind of run some of that excess inventory, either through full-line or at Rack. And I know while you're pleased with the aggregate amount of inventory, I guess if you could comment specifically on Anniversary Sale inventory and your comfort level with it. Peter E. Nordstrom: This is Pete. We actually -- we did a pretty good job in our sell-throughs and we met our plan in all those cases and exceeded last year. Where we have a tougher time is if it's some of the product is NPG product, where we own it, we made it. And in those cases, I think we have to really think about how we're going to be able to mark it down an efficient way and work through it. But there's a lot of upfront plans that we work on with our vendors that enables us to swap out product, or in some cases they take it back, or what have you. There's -- it's just really a product of working with our best vendors that we have the best partnerships with to do a collaborative thing here to the mutual benefit of everybody. And so we found that the mutual participation and partnership has been great. So we're actually in good shape there. I think, again, that the challenge will be in just a very couple of isolated places we have, some of our own products that we're going to have to work through here in early fall. Michael G. Koppel: Ed, I would also add that we've considered any pockets that we might think a risk in our going forward expectations for the year. And I will also say that those pockets are pretty small. Edward J. Yruma - KeyBanc Capital Markets Inc., Research Division: Got it. I notice you also left the credit revenue forecast unchanged. I guess how should we think about that line longer term? I know you're getting, obviously, continued strength within Fashion Rewards. Your trends there, I think, are well ahead of that guidance so you've put up year-to-date. And with interest rates rising, could that be a potential upside source longer-term? Michael G. Koppel: Ed, as you know, we don't look at that line as a, I would say, explicit growth line in terms of driving revenue. It's an outcome of what we believe is a very good credit offering. That being said, the growth in the receivables is up a little bit. That's naturally going to grow a little bit of that revenue. There is a portion of our accounts that have variable-based pricing based on interest rates. And if in the future, we should see rising interest rates, that there would be some impact from that. But keep in mind that well over half of our accounts are transactors. They pay off monthly and we don't earn any finance revenue on those. So I wouldn't necessarily look at that as a standout explicit driver.

Your next question comes from Michael Binetti with UBS. Michael Binetti - UBS Investment Bank, Research Division: So if you think about -- step back and just look at the Anniversary sale, think about what we've -- how you guys have talked about over the past few years and you've expanded Early Access and it seems like you're -- I don't feel like you got to the headline number you wanted to on the sale with the low single-digit number this year. Maybe you can talk about the components of that growth rate? And maybe was it a volume issue after years of such heavy volume for that sale? Or do you think maybe you need to tweak pricing or anything like that. Erik B. Nordstrom: This is Erik. Really -- the story is our trend Anniversary is very consistent with our trend all year long. Were our expectations higher? Yes. Our sales year-to-date are below our expectations going through the year. But our volume results during the Anniversary Sale were very much in line with our year-to-date trend. Michael Binetti - UBS Investment Bank, Research Division: Just a quick follow up. Maybe -- obviously, you did a really good job of balancing the retail SG&A dollars and the sales environment in the quarter. Is there a similar ability to flex that in the back half of the year if the sales environment doesn't play out to the guidance? Michael G. Koppel: Yes, this is Mike. Certainly, anything related to the volume -- the top line volume that's either driven in the stores or driven through fulfillment in the stores or fulfillment through our Direct business is going to have an impact on our variable costs. So the answer is yes to that. In terms of the management incentives, likely, the impact of that wouldn't be as meaningful as it was in the first half of the year just because in the second quarter, there was little bit of a catch up for a six-month adjustment. But that being said, we continue to operate the model consistently and do expect that if our performance is good, it will cost us more to do that business. If it's less, it will cost us less.

Our next question comes from Kimberly Greenberger with Morgan Stanley. Kimberly C. Greenberger - Morgan Stanley, Research Division: Mike, I'm hoping that you can help us with the small trim in the earnings sides for the year. If you could just help us understand, what piece of that, or is it equal parts of both, came from the slight shortfall in the first half and how much is it a revised outlook for the second half of the year? Michael G. Koppel: Sure, Kimberly. Most that -- I would say entirety, if you look at the results for the year, it's all about the drop in the comp sales. We originally went into the year with a 3% to 5% expectation. We dropped it to 2% to 3%. We made the appropriate adjustments in volume and margin, and then the appropriate adjustments in the SG&A. And that's really what's driving it. There's no other story outside of that other than volume. Kimberly C. Greenberger - Morgan Stanley, Research Division: And would you say the lower revenue expectations or the lower comp expectations are sort of equally in the first half and the second half? Or is there something about the trend that you've seen in the business recently that's giving you a little bit more pause for the second half of the year? Michael G. Koppel: I would say at this point in time, the trend we're looking at the back half of the year is pretty consistent with what we saw in the first half. And that's how -- and that's what's reflected in the numbers.

Our next question comes from Joan Payson with Barclays. Joan Payson - Barclays Capital, Research Division: Just going -- digging a little deeper on your back half guidance, it looks like there may have been a slight change to the fourth quarter comp guidance embedded in that. And could you just talk about maybe the third quarter versus the fourth quarter and if there are any calendar shifts that you're looking at in particular that might have changed that? Michael G. Koppel: Sure. In terms of any shifts, the biggest difference is the fact that we expect the third quarter to be down because of the movement of the Anniversary Sale. Last year, 1 week of the A Sale was in the third quarter. This year, it all fell in the second quarter. So relative to the expectations for the back half of the year, the third quarter is expected to be below what the overall average is and the fourth quarter roughly the same. And because of the large amount of volume in the fourth quarter, it tends to carry the back half of the year.

Our next question comes from Paul Trussell with Deutsche Bank. Paul Trussell - Deutsche Bank AG, Research Division: Just taking a step back and thinking about the bigger picture, your sales have certainly slowed down quite a bit this year versus years past. And you're not the only retailer to experience that. What do you think is the mindset of your customer today? Are they feeling challenged? Is it just a lack of want for apparel and accessory, the lack of newness in the fashion in the stores? Just be interested in your take on that. Michael G. Koppel: Paul, this is Mike. I think if you step back even further than the period of time that you suggested, we're in a business that tends to travel in cycles. And we did -- we have had a very strong last 3 years coming off the recession. We're up against 3 very strong stack years. We think that's a piece of it. There's been all kinds of stories out there in terms of all the different macro factors that may be affecting consumer spending. We think there's probably a story in every one of those thoughts. But in the end, our job is to stay focused and execute on what's given us, and that's what we're doing. We feel very good about the future. And we think that this is just one of those shorter-term blitz within a long cycle.

Our next question comes from Liz Dunn with Macquarie. Lizabeth Dunn - Macquarie Research: I just wanted to dig into that last question a little bit. Is there any category that you've seen take a sort of sharper drop-off than others? I'm specifically interested in Women's Shoes, Jewelry, Watches, Cosmetics, how are those performing relative to the very strong trend that we've seen for several years. Peter E. Nordstrom: This is Pete. There's nothing to indicate a drop-off in our business, as it correlates to some kind of macro trend. And usually that's applied to like a designer agenda or something. We've had really continued good strong growth in all the luxury and designer parts of our business. I mean, as I've mentioned a couple of times already, the most challenging part of our business has been Women's Juniors, but that's not related necessarily to any kind of macro factor that we're aware of. It's probably a lot to do with just how we execute. So yes, the shoe thing has still gone well for us. Some of the changes that we had in Shoes is reflected upon specific items, for example, that we've grown into very, very large items over the last couple of years. And when those change at all, then we feel that, but this is not -- it's not unusual. I think Mike talked about it a little bit. This is kind of a normal cycle of how the business goes and we've been through these cycles before and we just keep moving on.

Our next question comes from Barbara Wyckoff with CLSA. Barbara Wyckoff - CLSA Limited, Research Division: Two little quick questions. If you could do over the quarter, what would you do differently, merchandising, sales, anything else? And then could you just update us on HauteLook? Blake W. Nordstrom: That's a good question. If we could do anything over, what would we do differently? I think part of it is we have an ongoing challenge with figuring out how to work both the retention and the acquisition side of how we're reaching out to customers. And I think an ongoing issue for us is to find the appropriate balance there. I think as it relates to Anniversary sale, really anything I think if we can figure out how to invest in a way that acquires new customers, then I think that's something we would do. We have thoughts on that and we're applying it to everything we're doing going forward. But I guess in terms of the benefit of hindsight, that would probably be something that we would look to change maybe a little bit. And in HauteLook? James F. Nordstrom: This is Jamie. Our HauteLook business is really good and give credit to that team down there in L.A. They're firing on all cylinders and are well ahead of plan for the year. And I think the net effect of that is it gives us a lot of confidence in the future and opportunity in that online off-price space. We think that there is a really compelling customer opportunity there for us. And the team at HauteLook is building a platform for us that's going to give us a lot of growth in the future, so we're pretty excited about that.

Our next question comes from Mark Altschwager with Robert W. Baird. Mark R. Altschwager - Robert W. Baird & Co. Incorporated, Research Division: Maybe just starting up with the follow-up on the questions regarding sales outlook and the consumer mindset, anything you'd highlight in terms of trends by price points, just strength and either the high end or the low end within the assortment? Peter E. Nordstrom: Yes, it's Pete. As I said before, it's nearly impossible to draw any kind of correlation between that. Whatever ups and downs we have in the business right now isn't necessarily related to a specific price point like that. Mark R. Altschwager - Robert W. Baird & Co. Incorporated, Research Division: Okay. And Then shifting gears on Rack, as the Rack expansion has continued, any changes to your expectations on the sales ramp and profitability? And then specifically, as that concept heats up, are you finding the sites that you want? And has the cost equation shifted at all from a real estate perspective? Blake W. Nordstrom: This is Blake. On those questions to the Rack, it's meeting our expectations and we haven't seen any change in terms of real estate, availability or costs or a number of the factors that you mentioned changing from what we've been experiencing last year or 2 or 3. So we're encouraged by the customer response to that business and the opportunities going forward.

Our next question comes from Richard Jaffe with Stifel. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: I'm just wondering about the integration of HauteLook for full-line stores and the Rack businesses. I'm wondering how those are coming along and if there's developments we can look for in the near future in terms of shopping, returning and mixing of brands. James F. Nordstrom: Richard, this is Jamie. Yes, we do have plans. I would say we are in the very early stages of some of those integration plans. Since the acquisition, we've tried to not hinder HauteLook's growth by trying to do too much integration, but we're getting to the point now where we're going to be able to start doing and talking about some things that we're doing to enable the HauteLook customer to participate more fully in the multi-channel experience with our full-line stores and our Rack stores. And nothing to really get in to details about today, but we'll have more to talk about, I think, over the next 6 to 12 months on that front.

I'd like to turn over for closing remarks to the speakers. Robert E. Campbell: Thank you for joining us today on our first 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. In addition, at the end of the slide presentation, we've included an overview that summarizes today's discussion. Thank you for your interest in Nordstrom. Goodbye.

This does conclude today's conference. Thank you for participating, and you may now disconnect.