Jane Singer - Vice President of Investor Relations Jane T. Elfers - Chief Executive Officer, President and Director Michael Scarpa - Chief Financial Officer and Executive Vice President

Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division Gabriella Carbone - Janney Montgomery Scott LLC, Research Division Janet Kloppenburg Brian J. Tunick - JP Morgan Chase & Co, Research Division Taposh Bari - Goldman Sachs Group Inc., Research Division Dana Lauren Telsey - Telsey Advisory Group LLC Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division John Zolidis - The Buckingham Research Group Incorporated Jay Sole - Morgan Stanley, Research Division Susan K. Anderson - Citigroup Inc, Research Division Dorothy S. Lakner - Topeka Capital Markets Inc., Research Division

Good day, everyone, and welcome to The Children's Place Fourth Quarter and Fiscal 2012 Conference Call. [Operator Instructions] Please note, this call may be recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Ms. Jane Singer. Please go ahead, ma'am.

Thank you, Zach. Thank you for joining us this morning. With me here today are Jane Elfers, President and Chief Executive Officer; and Mike Scarpa, Executive Vice President and Chief Financial Officer. We issued a press release earlier this morning announcing fourth quarter and fiscal 2012 financial results. A copy of the release can be found on our website. Before we begin, I'd like to remind participants that any forward-looking remarks made today are subject to the Safe Harbor statements found in this morning's press release as well as in our SEC filings. These forward-looking statements involve risks and uncertainties that could cause our actual results to differ materially. The company undertakes no obligation to publicly release any revision to these forward-looking statements to reflect subsequent events or circumstances. After the prepared remarks, we will open the call to questions. [Operator Instructions] Thank you. And now, I will turn the call over to Jane Elfers for her opening remarks. Jane T. Elfers: Thank you, Jane, and good morning, everyone. We had a strong finish to 2012, resulting in record sales, our first annual comp increase in 4 years, an 11% increase in EPS and $205 million generated in operating cash. I'd like to highlight the significant progress we achieved on our strategic initiatives in 2012, starting with the senior leadership team. Since my arrival, a top priority has been upgrading talents at the senior leadership level. During 2012, we made significant progress on completing this initiative with 3 key hires: First, Mike Scarpa, Executive Vice President and Chief Financial Officer. Mike joined us at the end of November. He has more than 30 years of financial and operational leadership experience with publicly-held apparel companies. He joined us from Talbots, where he was Chief Operating Officer and Chief Financial Officer with responsibility for finance, treasury, planning and allocation, supply chain, information technology and corporate strategy. Prior to Talbots, Mike spent 25 years with Liz Claiborne, where he held several senior financial positions, culminating in his appointment as Chief Operating Officer. I've known Mike for several years and I'm thrilled that he decided to join the team. We're very fortunate to be able to partner with such a strong finance and operating executive. Greg Poole, Senior Vice President, Global Sourcing, joined us last September and has more than 27 years of global sourcing and supply chain leadership experience. Greg joined us from Talbots, where he served as Executive Vice President, Chief Supply Chain Officer and was responsible for product development, global sourcing, global logistics, distribution, quality assurance, social compliance and technical design. Previously, he served as Senior Vice President, Chief Procurement Officer for Ann's, and he also held several senior-level sourcing positions at GAP, culminating in his role as Senior Vice President, Sourcing and Vendor Development. And John Moroz, Senior Vice President, Global Logistics and Distribution, joined us in January. John brings 35 years of multichannel, multi-brand and multi-geography experience. He joined us from Fifth & Pacific, where he was Senior Vice President, Global Operations. Getting the right leadership in the finance and operating areas of the business is critical to unlocking margin growth, and these 3 seasoned executives have already made a meaningful impact on our business. Merchandise improvements, Big Kids. Our primary focus continues to be on improving the performance of the Big Kids business by differentiating the merchandise to keep kids in our brand longer. The Big Kids accounts for almost 2/3 of our apparel business, and these divisions comped positive mid- to high-single digits in 2012. Accessories and footwear. We expanded our non-apparel offerings to make it easier for moms to buy complete outfits. Accessories and footwear, which are account for about 20% of sales, comped positive low- to mid-single digits during 2012. Baby. We undertook several initiatives to improve our Baby business in 2012, including new talent in design and merchandising. We created a baby play zone in stores and reduced the duplication between Newborn and Baby sizing. Baby improved sequentially from the third to the fourth quarter, and we expect to continue to see improvement during fiscal '13. Canada. We hired a Vice President of merchandising exclusively for Canada with significant experience in Canadian kids apparel to help us ensure we maximize country appropriate assortments as well as further focusing our marketing efforts for the Canadian consumer. Outlets. As you may recall, The Children's Place did not have an outlet strategy prior to 2011. We started introducing made-for-outlet assortments at the end of 2011. And by midyear 2012, we had fully executed our made-for-outlet strategy, just in time for the back-to-school season. As a result, comp sales rebounded in the third and fourth quarters after 13 straight quarters of decline. In addition to positive comps, outlet margins significantly strengthened in the second half of 2012. For fiscal '12, outlet margins lagged Place by approximately 400 basis points compared to 600 basis points in fiscal 2011, and we expect the outlets to achieve margin parity with U.S. Place stores in fiscal 2014. E-commerce. In 2012, total e-commerce sales increased to $215 million. E-commerce has increased 7% of net sales in 2009 to 12% in 2012, and we expect it to reach 15% of sales over the next couple of years. E-commerce will be key in driving growth margin expansion, as it is our most profitable channel. Over the past year, we've been working to upgrade our e-commerce infrastructure in order to support our aggressive growth plans. Specifically, we've upgraded our core e-commerce platform and implemented a new catalogue, content and promotions management system. We also improved the user experience through changes in site navigation, enhancing the browse and check-out features, as well as significantly improving the product presentation on the site. Our Canadian e-commerce site is live on the new platform, and our U.S. and international e-commerce site will go live this spring. International expansion. Prior to 2011, the company was focused solely on the North American market. We've put together a tight team to develop and implement an international strategy and now have 16 stores open in the Middle East. We're very pleased with the early results and enthusiasm for our brand in those markets, and plan to open another 25 stores in the Middle East in fiscal 2013. There is a void of high-quality, value children's retailers in those markets, and we believe we have the potential to build significant market share. International is an important growth vehicle for The Children's Place, and we are in talks to expand into additional markets, potentially as soon as the fourth quarter of this year. Loyalty. Customers who purchase in stores and online spend 3x more than single-channel shoppers. We launched our loyalty program last October to increase multichannel purchasing and to provide incentives for customers to increase their share of wallet with The Children's Place. We currently have 3.6 million active customers enrolled, and this program will be a key lever in our marketing efforts going forward. Sourcing. Mike and I attended our global vendor summit meeting in Hong Kong 2 weeks ago. Over the next 24 months, we will be intensely focused on improving our supply chain capability to ensure a constant flow of high-quality goods at optimal speed and cost while mitigating the impact of macroeconomic challenges. With the new leadership in place, we are focused on executing 4 key strategies: One, we're migrating a significant amount of our business into lower-cost manufacturing countries. Close to 40% of our merchandise was sourced from China in fiscal '12, and we expect to reduce that to less than 20% over the next 24 months. We started to consolidate our vendor network in order to develop stronger, more strategic relationships with our key partners. Third, we've engaged William E. Conner and Associates, a Hong Kong-based company, as our partner to develop and source footwear and accessories. This will allow us to continue to drive outsized growth in these categories, while our owned sourcing offices focus their efforts on the significant opportunity that exist within apparel, from vendor consolidation and country migration. We're also in the process of strengthening the sourcing capabilities of our Asian offices to better support our overseas vendors in real-time while simultaneously reducing our operating expenses. We had a strong finish to 2012, and I want to thank the team for all their accomplishments. During 2012, The Children's Place significantly upgraded the senior team, generated record sales of $1.8 billion, increased comp retail sales 2%, increased e-comm's sales 22%, grew U.S. market share, opened our first stores outside North America, made significant strides towards optimizing our supply chain, increased earnings 11% to $3.23 per share, generated $205 million in cash from operations and returned $89 million to shareholders through our buyback program. Moving forward to our outlook for Q1 and fiscal '13. We started 2013 with a significant drop, week 1, which we believe was due to a combination of factors, with weather being the biggest. Mall traffic was down significantly and sales of spring apparel were particularly soft. We were encouraged to see positive comp sales for the rest of February and into early March. However, you may recall that we had record heat last March, and starting with the 2nd week of March this year, temperatures have fluctuated anywhere from 15 degrees to 50 degrees colder than last year throughout the majority of our markets. This insurmountable weather challenge coinciding with our peak Easter selling period has significantly impacted our traffic and the sales of warm weather apparel versus last year and has resulted in a negative 8% comp quarter-to-date. We are approaching the rest of the quarter cautiously, without visibility into a change in the weather and the generally tough macro environment. For Q2 through Q4, we are projecting an improvement in the run rate of the business. Thank you. And now I'll turn the call over to Mike.

Thank you, Jane, and good morning, everyone. I'm going to start with an overview of the fourth quarter under the retail method of accounting for our inventories, which is consistent with the guidance we gave going into the quarter. I will then discuss our decision to move from retail to cost accounting and to capitalize additional supply chain costs. Then I'll move on to the key operational and initiatives we are undertaking in fiscal 2013, and will conclude with our guidance. For the fourth quarter 2012, net sales increased 11% to $509 million. But excluding the 53rd week, net sales increased 6.7%. Comparable retail sales increased 4.3%. The positive comp was driven by a 3.1% increase in transactions and a 1.2% increase in average transaction value. Comparable store sales increased 1.4% in the United States and increased 1% in Canada. E-commerce comp sales increased 29.8%. Under the retail method, gross margin rate improved 200 basis points to 37.8%. The benefits from an increase in merchandise margin were somewhat offset by higher supply chain costs and costs associated with the rollout of our new loyalty program. Gross margins increased in both the United States and Canada during the quarter. SG&A was well managed in the fourth quarter. The rate delevered only by 20 basis points to 26.7% of sales. We were able to largely offset the year-over-year increase in bonus and equity comp by more effectively managing store and other administrative expenses. On a non-GAAP basis, depreciation and amortization expense in the fourth quarter, which excludes accelerated depreciation for the East Coast distribution center closure, was 3.5% of sales compared to 4.1% last year. Non-GAAP operating income increased 250 basis points to 7.6% of sales at $38.7 million. Non-GAAP earnings were $1.15 per diluted share compared with $0.87 in the fourth quarter of 2011. Moving on to the balance sheet. Our cash balance at the end of fiscal 2012 increased 18% to $209 million. We generated $205 million in cash from operations during the year, and the company repurchased 1.8 million shares for a total of $89 million and invested $90 million in CapEx. Balance sheet inventory at the end of the year increased 13% in dollars and 11% per square foot, primarily due to in-transit inventory. Saleable inventory increased 2% in dollars and was flat per square foot. As a result of the 53rd week and the earlier Easter timing, in-transit inventories increased $27 million. During fiscal 2012, we opened 64 stores and closed 18. We operated 1,095 stores at the end of the year with a total of 5.25 million square feet. This represents a 2% increase in square footage compared to last year. In the fourth quarter, we made 2 changes to our accounting policy. We changed our method of inventory valuation from the retail method to the cost method, and we began capitalizing additional supply chain costs instead of reporting them as period expenses. Cost is a more precise method of valuing inventory and is the SEC's preferred accounting method. Internally, our merchant teams managed their business on the cost method while finance has been reporting on the retail method. Aligning merchants and finance on the cost method will be a much more effective way to run the business. Historically, the company capitalized some, but not most of the supply chain costs. Similar to the cost method, the preferred accounting treatment is to capitalize supply chain costs in order to match the cost of sales with the recording of sales. We are now recording a more appropriate level of supply chain costs and inventory, which will be expensed when the product is sold. From a timing perspective, we thought it was important to make the changes during the fourth quarter so we could start fiscal 2013 clean using the new inventory valuation method. The change has been applied retroactively to prior periods for 5 fiscal years, 2008 through 2012, and the last 8 fiscal quarters, which are included as attachments to this morning's press release. The impact of the change in accounting methods is relatively small on an annual basis. For example, net income for fiscal 2012 increased 1% under the new accounting method, whereas net income for fiscal 2011 declined by 4%. The important thing is that this accounting change is the preferred method of accounting for inventory. It will increase internal alignment and it will increase the organization's focus on margin expansion. I will be providing guidance for the first quarter and fiscal '13 under the cost method. Going forward, I believe there is tremendous opportunity to improve our operations and strengthen our financial performance, and we are currently focusing on 4 initiatives: managing company-wide expenses; increasing hurdles for return on invested capital, which will impact our store expansion decisions; making progress on systems implementation; and developing alternative channels of distribution. Company-wide expense management. We need to take expense out of our business. I believe there is an opportunity to reduce store expenses, particularly in payroll by better aligning store payroll hours with volume group and store size. In the last 3 months, we have seen considerable progress in managing store labor, and we should see additional progress when we implement a workforce management system in the third quarter of this year. This system will enhance our ability to align the hours of our sales force with peak selling periods and driving overall efficiency and productivity. We are also increasing the rigor around corporate expense management. Since my arrival, we have gone back and revisited all of our departments' operating budgets. Our goal for 2013 will be to reduce the absolute level of SG&A spending versus last year, despite the full year impact of the additional stores added in 2012 and the incremental SG&A associated with planned openings for 2013. Improving operational efficiencies and reducing costs is an imperative and we are making it a priority in our culture. In order to improve operating margins over the next 3 years, we need to set higher hurdles for return on invested capital. As the company mentioned in prior calls, we completed a comprehensive fleet review in 2012 to identify the North American fleet potential and market voids. The team is further leveraging that analysis by conducting a market-by-market portfolio review, utilizing a four-wall contribution hurdle rate in addition to the cash contribution metric that was used in the original fleet review. We believe this additional review will inform management with a fact-based set of parameters we can use in determining opportunities around both store openings and closings. We are planning openings in fiscal 2013 to be approximately 55 compared to 64 in 2012, and are currently anticipating a square footage increase of approximately 2%, which has been factored into the guidance we are providing for fiscal year '13. Systems implementations. In addition to the website enhancements Jane mentioned, we are the middle of an ERP implementation that has been in process for about 2 years now. We completed the implementation of the SAP financial system at the end of fiscal 2012. The next major module will be the core merchandising, which we expect to be operational in the next 12 months. In addition, we are exploring opportunities to implement systems to enhance our planning and allocation capabilities. We will be starting with the implementation of buy-in size optimization, followed by allocation and auto-replenishment. Each module will start with a specific product assortment, and we will widen the assortments as the implementation progresses. Developing ultimate channels of distribution. We are pleased with the initial results of our franchise stores in the Middle East and plan to expand the number of stores in countries of operation. In addition, there has been significant interest from various wholesale retailers in partnering with The Children's Place brand. In February, Mary Lee Gallagher joined as Vice President, Wholesale to develop a wholesale strategy and business channel for The Children's Place. We expect the International and Wholesale businesses will become a meaningful contributor to operating margin over time. And combined with continued strong e-commerce growth, increased four-wall contribution from North American stores and strong expense management will enable the company to significantly improve operating margins over the next few years. Now I'd like to move to the first quarter of 2013. Quarter to date, our comp sales are down 8%, and we believe we will end the quarter with comps in the negative high-single-digit range. As a result, we project the first quarter earnings per share will be in the range of $0.60 to $0.65 compared to adjusted EPS of $1.14 in the first quarter of 2012 under the cost method. We expect to deleverage gross margin by 300 to 340 basis points, primarily as a result of 220 to 240 basis points of deleverage of fixed expenses on our negative comp sales. We expect SG&A dollar spending will decline in the first quarter, but will deleverage as a percent of sales by approximately 100 basis points due to the negative comp. We expect inventory per square foot to be up low-double-digits at the end of the first quarter, due primarily to a higher in-transit as timing of 2013 floor sets in the first half of the year require earlier shipment due dates to the 53rd week in 2013. We project fiscal 2013 earnings per share to be between $2.90 and $3.10 on negative low-single-digit comps. We expect gross margins to be down approximately 20 to 60 basis points for the year, and we expect SG&A to leverage 20 to 30 basis points. This guidance excludes unusual costs or events that are reported in our non-GAAP adjustments. It also assumes that currency exchange rates will remain consistent with today's rates and does not include the impact of further potential share repurchases in fiscal 2013. We expect depreciation to increase to approximately $74 million due to more capital being deployed throughout the year and system projects coming online. We expect our tax rate to be approximately in the 33.5% range, and we expect capital expenditures to be between $90 million and $95 million. Finally, I want to say that we remain committed to using our strong balance sheet and cash generated by operations to invest in our business to support long-term profitable growth and to consistently return cash to our shareholders. During fiscal 2012, the company repurchased 1.8 million shares for approximately $89 million. At the end of the year, we got $80 million available under our current share repurchase authorization. At this point, we'll open the call to your questions.

[Operator Instructions] We'll move first to Lorraine Hutchinson with Bank of America Merrill Lynch. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: Just -- obviously, the first quarter, off to a bit of a difficult start. As you think about the second quarter and beyond, do you expect to have any of this inventory carrying over? Or should we start with a clean slate and look for earnings growth in each of the subsequent quarters?

Well, from an inventory perspective, obviously, with the negative 8% comp through the first part of first quarter, inventories will be a little heavier than what we had expected as we go into the second quarter. The good news about inventory, though, is that we bought our spring fashion actually down and put the investment behind the 6-month seasonal spring basics and our replenishment 12-month programs. So we feel as we go into the second quarter that we're in a fairly good shape from an inventory perspective. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: And then, Mike, you listed a number of cost reduction issues. Any way to put some dollar figures around your goals there?

Well as I said, we definitely want to, in absolute terms, spend less in SG&A than we did in the prior year. We spent about $507 million last year. And our goal is to obviously get under that, despite adding what I'll say is approximately about $25 million of expense in terms of the new store openings. So our goal is to come in lower than where we were a year ago. We see opportunities obviously in store payroll. We've done a good job over the last 3 months and expect to continue reducing overall hours in our store fleet as we go through the rest of 2013. Corporate expenses have gone under our microscope and we continue to reduce period-on-period. And then we've done some good things in our distribution center last year. As you remember, we've consolidated our warehousing, and our distribution centers are performing very well. We have one left in the United States and one in Canada. And the one in the United States has really performed very efficiently over the first couple of months of operations under a consolidated basis.

We go next to Adrienne Tennant with Janney Capital Markets. Gabriella Carbone - Janney Montgomery Scott LLC, Research Division: This is actually Gabriella Carbone calling in for Adrienne. I was just wondering if you could share with us trends you're witnessing in different regions of the country, if you're seeing better sales trends in the regions having more favorable weather? Jane T. Elfers: Sure, Gabriella, it's Jane. February, as we said, week 1 was very tough, and then we comped positive for the next 4 weeks. The last 2 weeks have been painful, and this 1 has started off similar with all the snowstorms across the country. We have 20 to 40, 2-0 to 4-0, 20 to 40 point comp swings month-to-date between our Western and Southwestern markets and our Midwestern and our Northeastern markets. And when you look at these comp swings, they're even significantly more pronounced within key item categories, like shorts, tanks, sandals, flip flops, swims and sunglasses. For an example, just in our short category alone, we have a 95-point swing in comp short sales between the West and the Midwest. And the comp swings are even more pronounced in Canada as the entire country has been cold. So there are extraordinarily significant changes from region to region. Gabriella Carbone - Janney Montgomery Scott LLC, Research Division: Okay. That's helpful. And then my second question is regarding the Baby business. On the last call, I remember you speaking to keeping Baby at about 30% of the business but directing your focus more to key items, such as like knits and fleece and decreasing receipts on dressy. Is that something you did for Easter? Or is that something we'll see more for holiday? Jane T. Elfers: No, that's something we did for Easter. As Mike had mentioned on inventory, we pulled back our fashion inventory in the spring season and really took our shots more on the key item basics.

We'll move next to Janet Kloppenburg with JJK Research.

Jane, just to stay on the current business trends, I was wondering if there were any disappointments by category other than the weather, separating out the weather effect that -- categories that you just discussed or the regional differences. I'm just wondering if, for instance, the Baby catalog -- Baby category is performing to your expectations and how the factory business is running at this time? And I'm also wondering if, given the trends, you are able to modify your inventory receipt flow for the second quarter? And also -- well, Michael, how you're thinking about inventory planning for the back half of the year? That would be helpful a lot. Jane T. Elfers: Sure. Well as far as misses, I think, as we said, we comped positive weeks 2, 3 and 4 in February and into week 1 in March. And then when we come up against the weather, what we're seeing is, we haven't seen any of the key item basic hot weather categories open up. So we haven't seen shorts or tees, sandals, flip flops, any of those businesses open up. What we are seeing right now is the consumer that is coming in. Our traffic has certainly really been impacted by this weather to a great degree. But the customer that is coming in is converting and buying true Easter product. So we're in pretty good shape as far as Easter inventories are concerned, particularly since we did buy them down going into spring. So we're anticipating ending next week, post-inventory, very clean in that fashion, and where we really have the ownership is in the key basics. From a flow point of view, we certainly have the ability to flow the receipts. There's a lot of receipts coming in April and May, and we have receipts in our DC, so we're able to keep the receipts in the DC until we need to flow them into the stores. But as far as changing the total number of receipts, we really don't have the ability to do that. We own what we own for the first half the year.

And not to get ahead of the game in terms of how we're planning in the second half of the year inventories, but we would see salable inventory in the flattish range. Obviously, we want to increase our overall turns. But we are making an investment in our replenishment goods, which will allow us that we believe to capture more sales than we did a year ago.

And we'll move next to Brian Tunick with JPMorgan. Brian J. Tunick - JP Morgan Chase & Co, Research Division: I guess, a couple of questions. I guess, first, can you remind us maybe about the store base? How many leases are coming up over the next year or 2, and sort of what your typical lease terms have been? And then maybe on the gross margins, just curious about the loyalty programs, sort of what impact you are seeing there relative to the guidance you're providing for the quarter and for the year. And on the timing of those sourcing benefits you talked about, Mike, in the IT initiatives, what do you see a some longer-term gross margin goals for the company?

Okay. So I'll start with the store portfolio question first. We have roughly about 40% of our leases coming due with either -- with expiration or kickouts within the next 3 years. Our typical lease terms are 10 years. And like I said, we're currently undergoing a fleet review on a market-by-market basis. We've added another financial hurdle when evaluating our stores. We're also now putting -- taking into account four-wall contribution and not just cash contribution. And based on this review, which is currently ongoing, I believe there's an opportunity to refine the overall portfolio. From an overall gross margin perspective and operating margin perspective, we have a lot of initiatives underway as a company. Obviously, some are directed from an IT perspective and others from a supply chain. But we've -- we're going to start to see some of the IT initiatives start to take fruition in 2014. And obviously our sourcing strategy, which Jane talked about regarding country migration, vendor consolidation, obviously, the move that we made to the agent in terms of footwear and accessories and the strengthening of our Asian offices, we hope that that will play into our average unit cost over the second half of this year and as we move into 2014. From a loyalty perspective also, we've seen a pretty good reaction, initial reaction to our loyalty program. We actually are seeing that individuals that have signed up for loyalty are actually spending about 4% more than our consumers who are not part of that program. So it's early days. We've just really implemented them about 4 or 5 months ago, so stay tuned. But we think that this is going to be a cornerstone of our marketing program on a go-forward basis.

And we'll move next to Taposh Bari with Goldman Sachs. Taposh Bari - Goldman Sachs Group Inc., Research Division: I guess I wanted to start a question for Mike. Can you just quantify the extra week benefit in the fourth quarter, both in terms of the EPS, if you could give us clarity around the gross margin and SG&A benefit as well?

Sure. We did roughly about $20 million of sales in the 53rd week. And I think overall our operating margin was around $1 million. So it didn't have a very significant impact overall on the quarter. Taposh Bari - Goldman Sachs Group Inc., Research Division: Okay, that's helpful. And then just wanted to ask a follow-up on the wholesale opportunity that you guys outlined. If you could just provide some are color around what types of, maybe not specific accounts, but what types of channels you'd be considering entering. And you'd mentioned that, that was a margin accretive channel. I was just curious to get some more clarity around that. Typically, with some of these traditional wholesalers, when they enter retail, they claim that retail is a margin accretive channel, so I just wanted to get some more clarity there.

Sure. We've done a small test so far with Sam's Club, and we think, based on early results, that the product sold through very well and it's an opportunity for the company to explore that channel of distribution. We just brought somebody into the company about a month ago to help us formulate a strategy. So at this point, it's a little early to be talking about what we're thinking. I would suggest that next call, we'll have much more information that we can share with you regarding our plans.

We'll move next to Dana Telsey with Telsey Advisory Group. Dana Lauren Telsey - Telsey Advisory Group LLC: Can you talk a little bit about -- Jane, as you were talking about the Big Kids product, what are you seeing there on terms of Boys and Girls and how do you see the transformation of the products from now until back-to-school and any of the initiatives there? And then, Mike, of the buckets that you mentioned, whether it's systems, hurdle rates on returns, where do you see the long-term operating margin potential for the business and how much comes from each bucket? Jane T. Elfers: Thanks, Dana. On the Big Kids transformation, we were really pleased with 2012, where we ended up in Big Kids, both Boys and Girls. I think that the merchandising and design team has done a terrific job over the last couple of years, really differentiating Big versus Baby and really putting a focus on that consumer and what they're really looking for. Right now, in the business, we see a reaction to our spring fashion in both the Big and Big Girl and Big Boys. And as I said, I think that we'll be the very good shape when we exit Easter as far as that product, with very little carryover inventory. I can't really speak to the summer categories in either gender, Big Girl or Boy, just based on fact they haven't opened up yet, but I feel that the design and the styles that are in place are going to be very well accepted when the weather does break open. The only thing we have to go by is the Southwest and Western markets, and the response to this summer product out there has been very strong.

And from an operating margin perspective, I've been with the company just about 4 months now, and I do see tremendous opportunity to increase our overall operating margins in all of the areas that you did mention. We're currently working with our senior team to quantify and put strategies behind all the different initiatives that we have. So again, being here 4 months, I'm not in a position really to be quantifying specific buckets and specific opportunities. I would suggest that you give me a couple more months, and on the next call, we'll be able to outline a little more in detail in terms of what those buckets could represent to overall margin over the next 2 to 3 years.

We'll move to Richard Jaffe with Stifel, Nicolaus. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: A follow-up about the Outlet center opportunity. With the made-for-outlet product being fully rolled out, what do you see the opportunity for Outlet in terms of a physical expansion, store count, average store size as you become more committed to the product line? Jane T. Elfers: I think from a store rollout point of view, we are in most of the strong outlet centers throughout the country. And we certainly are involved in any major projects that come online. So we feel good about -- there's probably just a handful of locations and outlets that we'd like to be in and that we're not in. So from real estate point of view, I think we're in good shape. From a product point of view, we're over 80% now made-for-outlet product. And we'll continue to try to get that closer to about 85%, but we are in good shape as far as the rollout strategy. And as we mentioned on the call, had a very strong end to the year in Outlet. And we predict that we'll continue to be able to make progress in outlets over the next couple of years. And certainly, on the margin line, we're looking for parity with the U.S. Place by the end of '14.

And currently, right now, the operating expenses of the Outlet group is lower than our U.S. Place stores. So if -- when we do gain parity in terms of the gross margins, we'll really see a big increase in total operating margins in terms of the comparison to Place. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: And just one more question, total number of stores that will be outlet and the average square footage of an outlet store versus the regular stores? Jane T. Elfers: Yes, there are about 6,000 square feet versus an average, around 4,000, 4,200 square feet. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: And the number of stores?

Currently, we have about 125 outlets.

Next to John Zolidis with Buckingham Research. John Zolidis - The Buckingham Research Group Incorporated: I was wondering if I could to dig into this change in the evaluation for new stores, looking at ROIC versus cash contribution margin. Obviously, those 2 things are related. So I was wondering if you could talk about what the incremental criteria are that you're putting into place on your capital projects for the sparse. And I don't know if that relates back to outer uses of cash and how you view that overall. And if you could comment on share repurchase versus store openings, just more color on what you're doing differently on evaluating use of capital, especially in the stores?

Sure. Obviously, the focus for the company is to improve its overall operating margin. In the past, the company has really been focused on cash contribution and not so much in terms of four-wall contribution. Obviously, the four-wall would include the depreciation and amortization of the lease hold improvements costs. So as we started to evaluate new stores coming to the portfolio, we want to make sure that the new stores that we're adding are indeed accretive to the overall four-wall profitability of the fleet itself. Also as we look at a market-by-market approach in the opportunities potentially to close some doors, we're looking at four-wall contribution overall and the impact that it has on our total operating income. So it's just an added measure of scrutiny that we've put into place. And it's informed us in terms of some of the new store opening decisions that have been made. And we hope that it will be able to -- it will inform us in terms of potential closures. John Zolidis - The Buckingham Research Group Incorporated: Sorry, I just wanted to follow up with that. Just, not every company uses cash contribution margin or four-wall contribution margin in exactly the same way. In some cases, companies use those 2 terms interchangeably. Could you define the difference as far as Children's Place is using it?

Obviously, it's a different calculation once you throw in depreciation and amortization. The company historically has looked at the cash contribution. My sense though is as we've tried to increase our operating margins from what has been a mid-6% range and obviously the goal is to get it up into the double-digit range, we need to put that further scrutiny on new stores that we're opening and really take a look at the portfolio and understand what stores are making money from a four-wall prospective and which ones aren't, and the decisions around potential closures of some of those stores. So it's something that we've added in terms of our real estate portfolio committee, it's something that's reported on now, and it's just like I said, it's an extra measure that we want to look at. As far as share buyback, the company has purchased about $90 million last year, similar amount the year before. We have $80 million that was remaining at the end of the fiscal 2012. And obviously, we work very closely with our board in -- around decisions on repurchasing shares and returning that money back to shareholders. So I don't expect any difference in terms of potential opportunities around share repurchase as we go into '13.

And we'll move next to Jay Sole with Morgan Stanley. Jay Sole - Morgan Stanley, Research Division: Jane, as you look out into 2013 in the competitive landscape, where do you see The Children's Place having the most advantage versus the peers? And maybe if you can talk about it in terms of age and categories and price, that will be really helpful. Jane T. Elfers: Sure. I think we overall have a competitive advantage. We have the #4 market share in the country in kids apparel. And the strength and scale of our brand, I think, has allowed us the opportunity to continue to expand share even during our turnaround. The numbers just came out and Children's Place expanded market share by another 40 basis points, even with the new players and spinoff divisions out there, so that we're real optimistic about our ability to continue to expand chair as our growth strategies mature. I think from a -- Bigs versus Little Kids, our competitive advantages is that we carry from 0 to 14 size and we can outfit from newborn to big kids. And I think also the fact that we can do head-to-toe outfitting has been a big plus for The Children's Place. When you look at what we do carry, we do carry lifestyle-specific end use product, so I think the ability for us to go from a very casual to dress up is also a competitive advantage for us in our price ranges. And we continue -- expect to continue to leverage that throughout 2013 and beyond. Jay Sole - Morgan Stanley, Research Division: Okay. But let me ask you one more. You talk about the senior leadership changes that you've made. Where are you now just in terms of having the total team in place that you feel like it's the right team to lead the company forward? I mean, do you feel you need to add more people? Or are you satisfied with where things stand? Jane T. Elfers: No, I don't feel like I need add more people. I feel like we made a significant upgrade, particularly in the operational and financial leadership positions at Children's Place during 2012. So we really feel good about where the senior team is right now, how the senior team is interacting and collaborating. And by far, since I've been here, I feel the best about the team we have, and I'm really excited about the potential to go forward.

And we'll move next to Susan Anderson with Citi. Susan K. Anderson - Citigroup Inc, Research Division: I was wondering if you could talk about product costs for 2013. Do you guys still expect to get a benefit on the cost side from lower cotton in the first half? And then, I assume it goes away in the second half. And then, should we see higher costs from other things like transportation? Jane T. Elfers: Where we're at right now is, for product cost, we're looking at mid- to high-single digit decreases in AUCs throughout the first 6 months of the year. That is on apparel, not on the accessories. Accessories is more flat to LY. And then as we go into the second half of the year, we start to anniversary the cost decreases from LY, so those the AUC decreases will certainly start to level out in the back half the year. Susan K. Anderson - Citigroup Inc, Research Division: Okay, great. And then I think you said you're expecting April same store sales to be about the same as what they're trending now. So does that mean you're assuming that they stay down 8% for April?

No. I think what we said was we had a big comp store decrease in the first week of February, followed by 3 weeks of positive. And February was down basically in the low-single-digit range. We expect March to be down and down significantly based on the weather impact. And then we see a slight rebound as we end up into -- in April, giving us a high-single-digit comp decrease for the quarter.

And we'll move next to Dorothy Lakner with Topeka Capital Markets. Dorothy S. Lakner - Topeka Capital Markets Inc., Research Division: I just wondered if you could give a little bit more color on vendor consolidation, maybe quantify a little bit how much do you think is possible. And then looking at the various systems initiatives you've got going, just a little bit of a time line. I understand we're talking about 2014 for seeing the real benefits, but just in terms of implementation? Jane T. Elfers: Sure. On the vendor consolidation part, I think we have a significant opportunity to decrease the total number of vendors we do business with. Probably, up to about 1/3, we could decrease vendors. The other thing on the vendor side is how much more important we're going to become to our top 10 vendors, and how much more opportunity we have to really develop those strategic partnerships with those top 10 players and to become much more important to each other and to get a little bit further out in our long-range planning.

And from a systems perspective overall ERP, we put in the financial systems at the end of this year, and our expectation around the core merchandising portion of SAP will go in within the next 12 months. Planning and allocation, we're starting to do certain things as we speak, and we hope to have the full benefit of that as we begin to roll out into 2014. And then obviously, as Jane mentioned, Canada is up and running on our new -- our new platform from an e-commerce prospective. And we expect to have the U.S. up and aboard within the next couple of months. So we expect to see benefit from e-commerce this side of the year.

We'll take our last question from Rick Patel [ph] with Stephens.

Can you give us the changes in operating margin for the U.S. versus Canada in the fourth quarter? And then as a follow-up, are the merchandising changes in Canada gaining traction yet? And how should we think about the next year in terms of how that region should perform, both from a comp and margin perspective? Jane T. Elfers: Yes, on the merchandising initiatives, we were able to have a positive comp in Canada in Q4, which we were really proud of. So I think that notwithstanding the current situation we have in weather, I think we're doing a better job up there. As we mentioned on the call, we just hired a VP of Merchandising up there who has significant Canadian experience. So we anticipate as we go through '13 into '14, we'll be able to further refine those assortments in Canada.

And just from a Canadian and U.S. perspective in terms of operating margins, both saw nice increases in terms of operating margin, basically just approximating the same increase year-on-year in the fourth quarter for both geographical locations.

No further questions. I would just like to turn the program back over to Ms. Jane Singer.

Thank you for your interest in The Children's Place. If you have further questions, please call me at (201) 453-6955.

And this does conclude today's conference. You may now disconnect, and have a wonderful day.