Andrea Shaw Resnick - Senior Vice President of Investor Relations & Corporate Communications Lew Frankfort - Chairman and Chief Executive Officer Michael D. Tucci - President of Retail Division - North America Jane Nielsen - Chief Financial Officer, Chief Accounting Officer and Executive Vice President Victor Luis - President of Coach Retail International Jerry Stritzke - President and Chief Operating Officer

Robert S. Drbul - Barclays Capital, Research Division David A. Schick - Stifel, Nicolaus & Co., Inc., Research Division Neely J.N. Tamminga - Piper Jaffray Companies, Research Division Omar Saad - ISI Group Inc., Research Division Barbara Wyckoff - Credit Agricole Securities (USA) Inc., Research Division Brian J. Tunick - JP Morgan Chase & Co, Research Division Jeff Black - Citigroup Inc, Research Division Randal J. Konik - Jefferies & Company, Inc., Research Division Lizabeth Dunn - Macquarie Research Dana Lauren Telsey - Telsey Advisory Group LLC

Good day, and welcome to the Coach Conference Call. Today's call is being recorded. At this time, for opening remarks and introductions, I would like to turn the call over to Senior Vice President of Investor Relations and Corporate Communications at Coach, Ms. Andrea Shaw Resnick. You may begin.

Thanks, Wendy. Good morning, and thank you for joining us today. With me to discuss our quarterly results are Lew Frankfort, Coach's Chairman and CEO; and Jane Nielsen, Coach's CFO. Mike Tucci, North American Group President is also joining us to discuss our retail initiatives, including Men's and digital and new product introductions. Before we begin, we must point out that this conference call will involve certain forward-looking statements, including projections for our business in the current or future quarters or fiscal years. These statements are based upon a number of continuing assumptions. Future results may differ materially from our current expectations based upon risks and uncertainties, such as expected economic trends or our ability to anticipate consumer preferences. Please refer to our latest annual report on Form 10-K and our quarterly report on Form 10-Q for the quarterly period ended December 31, 2011, for a complete list of these risk factors. Also, please note that historical growth trends may not be indicative of future growth. Now let me outline the speakers and topics for this conference call. Lew Frankfort will provide an overall summary of our third fiscal quarter 2012 results and will also discuss our strategies going forward. Mike Tucci will review some new initiatives in North American retail, product and merchandising strategy and Men's. Jane Nielsen will conclude with details on financial and operational results of the quarter. Following that, we will hold the Q&A session where we will be joined by Jerry Stritzke, our President and Chief Operating Officer; and Victor Luis, our International Group President. This Q&A session will end shortly before 9:30 a.m. Lew will then conclude with some brief summary comments. I'd now like to introduce Lew Frankfort, Coach's Chairman and CEO.

Thanks, Andrea, and welcome, everyone. As noted in our release this morning, we're very pleased with our third quarter results, including strong sales and earnings growth, as well as operating margin expansion. Our performance clearly demonstrates the vibrancy of the Coach brand, our innovative and relevant product offering and our multichannel international distribution model. Further, the announcement today of the increased dividend reflects our financial strength and our confidence in Coach's future. While I will get into more detail about the outlook for the category and our business shortly, I did want to take the time to review our quarter first. Some key highlights of our third fiscal quarter were: first, earnings per share rose 24% to $0.77 compared with $0.62 in the prior year; second, quarterly net sales totaled $1.11 billion versus $951 million a year ago, an increase of 17%; third, direct-to-consumer sales, which represent over 85% of total sales, and now include domestic retail businesses in Singapore and Taiwan, rose 18% to $984 million from $837 million in the prior year on a comparable basis; fourth, North American same-store sales for the quarter rose 6.7% from prior year while total North American direct-to-consumer sales rose 13%; fifth, we continued to generate very strong sales growth of nearly 60% and double-digit comps in China, where we remain on course to generate at least $300 million in sales this year; and finally, sales in Japan rose 10% versus prior year in constant currency and rose 14% in dollars. In North America during the quarter, we opened one retail store, closed another, while opening 5 factory stores, including 2 Men's factory stores. Thus, at the end of the period, there were 350 full-priced and 162 factory stores in operation in North America. Moving to China. We added 5 new locations, all on the Mainland, bringing us to 85 Coach locations at quarter end, including 12 in Hong Kong, 3 in Macau and 70 locations on the Mainland in 32 cities. And in Japan, 3 locations were opened, all Men's, while 3 were closed. At quarter end, there were 184 total locations in Japan. Finally, I thought I would briefly mention our 2 other direct businesses in Asia acquired this fiscal year. First, in Singapore, we now operate 6 locations. Five were acquired last July, and we've opened one additional store since. And second, Taiwan, where we transitioned 26 locations to our direct control in January. Indirect sales rose 10% from prior year to $125 million from $114 million on an -- on a comparable basis. Sales for the quarter at retail and international wholesale locations increased while sales at POS in U.S. department stores were modestly below last year's third quarter. We estimate that the addressable women's U.S. handbag and accessory category grew about 10% in the March quarter, consistent with the increases it experienced over the last year. Similarly, Coach's total North American women's bag and accessory business grew at the same rate as the category over the period. Separately, it's worth noting that we once again saw continued modest improvement in our customers' outlook for the economy, with about 66% of those surveyed now believing that the U.S. economy is stable or getting better, up from 60% last quarter and 58% a year ago. Our intention to purchase Coach over the next year continues to be strong, with more than 2/3 of consumers surveyed noting they probably or definitely would purchase a Coach product in the next 12 months. In North America, our total revenues rose 12%, with our directly operated businesses up 13% driven by a 7% comp as we managed the business to balance productivity gains and margin improvement. All direct channels benefited from our innovative digital media strategy, spanning our own websites, mobile platform and social media, which enabled customers to purchase wherever they preferred to engage with our brand. The primary driver of our retail comp gain was an increase in the overall number of transactions while an increase in average transaction size contributed as well. Overall retail traffic rose as traffic on the Internet continued to gain momentum, with in-store trends consistent with prior quarters. Turning to our store channels. Both performed similarly, fueled by average transaction size gains while conversion also rose in retail stores. As we've discussed many times outside of North America, China is our largest geographic opportunity given the size of the market and the rate of growth. During the quarter, our sales again rose sharply, up nearly 60% from prior year, fueled by distribution and double-digit same-store sales growth. This overall growth rate was similar to our last quarter with a change in composition of the drivers, as distribution was the larger contributor to growth. Clearly, the Chinese consumer has embraced Coach as evidenced by the extremely high repurchase intent of over 90% among existing customers. While Jane will get into more detail on our financials and I will discuss our outlook in some detail, I did want to give you this recap. Before I turn the call over to Mike, I would like to take this opportunity to discuss some organizational changes, which we put into place over the quarter, to more closely align the leadership of Coach with the needs of our business, both in North America and in our rapidly expanding international markets. These changes will help us leverage our many business opportunities around the world and prepare us to operate efficiently at the scale we envision during our planning horizon. First, Mike Tucci has assumed the new role of North American Group President responsible for North American retail, global, digital media and customer engagement and North American wholesale. This will ensure an even more cohesive approach to our brand, merchandising and retail experience wherever our customers choose to shop with us in North America. And second, on the international side, Victor Luis has assumed a new role of International Group President responsible for our directly operated retail businesses in Coach Japan, Coach China and Coach Asia and for our wholesale business within Coach international. This will facilitate an even smoother transition of businesses we plan to manage directly in the future, such as Malaysia and Korea. It will create significant synergies as we look to optimize our brand experience in our own directly managed stores, in our distributorships in Coach Europe and in a growing global travel retail market. Now I'll turn it over to Mike Tucci to discuss our North American retail business and our global product initiative. Mike? Michael D. Tucci: Thanks, Lew, and good morning. Today, I'd like to review a number of retail strategies that were implemented in North America during the quarter, as well as providing an update on our global product initiatives and our Men's business. As noted in our press release, we leveraged the underlying strength in our North American business and implemented a significant shift in our pricing strategy in factory stores during the quarter, as we eliminated in-store couponing across our network. Our new "no math" pricing structure provides us with greater marketing flexibility and a more targeted value proposition while enabling us to drive excellent margins. Additionally, our store associates can now devote more time and energy to engagement, sharing product knowledge and building the sale. Complementing these in-store strategies, we expanded our e-commerce factory programs. As you know, earlier this fiscal year, we introduced an invitation-only flash-sale site targeted towards our most loyal, factory-exclusive consumers. This provides them with the convenience of shopping online, enjoying the same product and value as found in our stores for a limited time period. We also began working with a number of small -- of third-party flash sites, targeting their unique databases of value-conscious consumers with the intention of introducing them to Coach factory, which also contributed to our overall comp this quarter. Our early results indicate further opportunity for highly profitable customer acquisition in this value channel. Moving on to product. During the third quarter, we launched an updated Poppy collection with a fresh point of view and several new silhouettes, including the hippie, hobo and, most importantly, the Willis, which harkens back to the classic Willis bag of the '90s. We also introduced a fresh spring palette in Madison. In late February, we focused on Kristin with 4 new styles across multiple fabrication and a beautiful new woven leather concept in soft, feminine colors. At the end of the quarter, we launched Hamptons Weekend, primarily a tote and shoulder bag group, which was also informed by a collection from our archives. One of the most exciting product successes we're enjoying is the excellent consumer response to both Willis and Hamptons Weekend on a global level. Both of these groups rooted in classic Coach are precursors to and will be components of a major collection launch this summer called Legacy. Also inspired by our heritage, grounded in leather and featuring iconic Coach elements, the dual-gender Legacy lifestyle collection will encompass the complete world of Coach and will be our largest product launch in many years. Early pilots are currently underway and results underscore our confidence in this major initiative. The Legacy launch will also drive new merchandising strategies across all retail stores, including presenting a bolder lifestyle story for our brand, incorporating categories such as outerwear, jewelry, small accessories, watches and scarves, presenting men's and women's together in a powerful store environment and driving major color stories in handbags and accessories to highlight key items. We're also very excited about the results we're continuing to achieve in our Men's business, which is on track to double again this year to over $400 million globally. We experienced success in Men's across all concepts and store types, including dedicated stores, shop-in-shops, dual-gender locations and expanded assortments in existing stores and across all geographies and channels. In North America, we see Men's as both a way to drive productivity in existing stores and a substantial new distribution opportunity. Given this success, we're now accelerating the rollout of Men's within existing retail stores. By the end of this fiscal year, we expect to have a broader expression of Men's in nearly 100 Coach retail stores in North America, up from 42 at the end of the third quarter. Outside the U.S. where Men participate in the category at a higher rate, new dual gender and dedicated Men's shops will remain the primary distribution growth vehicles. In summary, we're pleased with the continued progress we've made in improving productivity and our Men's initiative. We're feeling great about the balance of the spring season, given the current sales trends in our retail businesses and the Legacy launch in the seasons ahead. With that, I'll turn it back to Lew for a discussion of our strategies and other opportunities for growth. Lew?

Thanks, Mike. As most of you know, we have 4 overarching growth strategies: first, building our women's business in the North American market; second, leveraging the global opportunity; third, tapping into the large and growing men's accessory category; and fourth, harnessing the growing power of the digital world. As our distribution plans for the current year haven't changed since our last earnings call in January, I will briefly recap. We expect that our square footage globally and across all channels will increase about 13% this year compared to 9% in FY '11. Starting in North America, we're on course to open about 40 new stores this year, including the 27 opened during the first 9 months. These openings will include about 15 full-priced and 25 factory outlets, with about half being dedicated Men's locations. In total, we expect North American square footage growth of about 10% this year, driven by Men's. Turning to China. As you know, this year, we're accelerating new store openings with about 30 locations planned or an additional 10 for the balance of fiscal year, bringing the total to about 95 at the end of FY '12. All of these openings will be dual-gender stores due to the size of the Men's opportunity. In Japan, we now expect to open about 10 net new locations with an additional 2 net new stores expected during the fourth quarter. In total, we anticipate that net square footage growth in Japan will increase by about 5% this year compared to 3% last year. Consistent with our strategy of directly operating select Asian markets at the beginning of the quarter, we transitioned our domestic retail business in Taiwan, which has about 25 locations and generates about $50 million of annual sales at retail to Coach's direct control. This follows our acquisition of Singapore last summer and will be followed by the acquisition of our Malaysian domestic retail operations in July, as we have previously announced. In addition, as noted in our press release, we are very pleased to announce that we have signed an agreement to take control of our Korean domestic retail business from our current distributor, Shinsegae International, effective in early FY '13. Over the last several years, we have enjoyed an excellent partnership with Shinsegae. They have been instrumental in the development of the Coach brand in Korea, including the opening of several important locations in key department stores in Seoul and in other major cities throughout the country. For perspective, our current annual sales in Korea are about $120 million, including global travel retail, or about 5% of the $2.4 billion premium bag and accessory market. The domestic retail business generates about $60 million across 47 locations. In addition, there are 14 Korean travel retail locations, which will continue to be managed by third-party, duty-free operators and are not part of this agreement. It's important to note that these acquisitions allow us to leverage the investment we have already made in the region utilizing the infrastructure created over the last few years, including our Asia shared services center and the Asia distribution center. In addition, we find these stores experience a significant improvement in productivity when they become directly managed, as we control the total brand experience. Outside of our directly operated markets, we continue to have thriving distributor-run businesses in other locations. This year, we expect to open about 35 net new international wholesale locations expanding to new markets, including Brazil, Vietnam and Kuwait. In fact, our first location in Brazil opened earlier this month in Morumbi Shoppings mall to an excellent consumer response. We believe this bodes well for our expansion into other South American countries later this calendar year. Touching on Europe, where we're beginning to build a foundation for long-term growth. First, in the U.K., we have started our multichannel model. This week, we will open a shop-in-shop in Liberty department store and a flagship store on Regent Street. We are continuing to gain traction in this market as the U.K. consumer is embracing Coach and the majority of our business is domestic. Second, in France, where we have partnered with Printemps, our key Boulevard Haussmann women's and men's shop-in-shops are performing well with the global tourists, as we build Men's -- as we build brand awareness with the Parisian shopper. In total, we expect to open 11 locations in Europe in FY '12, bringing our total locations to 25 by year end. In closing, we're energized by the continued pace of change in growth at Coach. We're confident that our 4 overarching growth strategies will continue to drive our momentum and enable us to realize the many opportunities in front of us. At this time, I would like to turn it over to Jane Nielsen, our CFO, for further detail on our financials. Jane?

Thanks, Lew. Lew and Mike have just taken you through the highlights and strategies. Let me now take you through some of the important financials of our third quarter results. As we mentioned, our quarterly revenues rose 17%. Our direct-to-consumer segment, which represents over 85% of our business, was up 18%, and our indirect business rose 10%. As a reminder, the year-ago revenues for both segments were adjusted for the transition of Singapore and Taiwan. Earnings per share for the quarter increased 24% to $0.77 as compared to $0.62 in the year-ago period, as net income rose to $225 million from $186 million. For the third quarter, our operating income totaled $337 million, up 21% from the -- from $280 million reported on a non-GAAP basis in the same period last year. Operating margin in the quarter expanded 100 basis points to 30.4% compared to 29.4% in the year-ago period. In the third quarter, gross profit rose 18% to $818 million from $692 million a year ago, and gross margin rate expanded 100 basis points to 73.8% compared to 72.8% the prior year, driven by both manufacturing cost benefits and new pricing strategies implemented in the quarter. Moving to expenses. We were pleased that we were able to hold our expense rate in the third quarter, given the previously discussed impact of the Taiwan transition. Specifically, SG&A expenses as a percent of sales was 43.3% versus 43.4% on a non-GAAP basis. As noted in our press release, during the year-ago quarter, we recorded certain items including a favorable tax settlement. As a result, we made charitable contribution which precisely offset the benefit of the tax settlement to net income and earnings per share. Therefore, on a GAAP basis, operating income for the prior year's third quarter was $254 million with a 26.7% margin and the SG&A expense ratio was 46.1%. Moving on to the balance sheet. Inventories at the end of the quarter were $475 million, up 21% from Q3 last year. This inventory level allows us to support 34 net new North American stores, 10 net new locations in Coach Japan and 30 additional Coach China stores from the year-ago period, as well as the acquired stores in Singapore and Taiwan and our Men's initiatives. Further, it will support strong underlying business trends, enabling us to meet demand this season. Cash and short-term investments stood at $930 million as compared with $886 million a year ago after the repurchase of over $900 million worth of Coach common stock in the interim 12 months. During the third quarter, we repurchased and retired 2.3 million shares of our common stock at an average cost of $73.92, spending a total of $172 million, taking our fiscal year date -- year-to-date total to about $530 million. At the end of the quarter, about $430 million remained in our current repurchase authorization. Net cash from operating activities in the third quarter was $103 million compared with $227 million last year during Q3. Free cash flow from -- in the third quarter was an inflow of $61 million versus $186 million in the same period last year, primarily reflecting the changes in accrued income taxes and charitable donations. Our CapEx spending was $41 million versus $42 million in the same quarter a year ago. Consistent with our previous expectations and reflective of our global growth initiatives, CapEx for this year will be in the area of $200 million, driven primarily by the opening of new stores across all geographies and investments in technology necessary to enable our expansion. We were very pleased to once again report these strong financial results. And as Lew and Mike said, we're well positioned for the remainder of the fiscal year. To elaborate on our fourth quarter assumptions, first, we expect to achieve double-digit sales and earnings per share growth ahead of the top line. This plan includes North America comp sales at least as high as what we generated in the third quarter, as we continue to balance productivity gains with margin improvement. Second, we continue to expect gross margin to expand from prior year levels in the fourth quarter, driven by our sourcing initiatives and pricing strategies. Therefore, we anticipate the gross margin for FY '12 will be similar to prior year level. Third, on SG&A, we expect our developed businesses to continue to deliver leverage while we will also continue to invest in global growth for the future. Given that we've been accelerating the transition of distributor-operated wholesale businesses to our direct control, we would expect expenses to slightly outpace top line growth in the fourth quarter. For the full year, however, our SG&A expense rate should be similar to FY '11. Fourth, and based on the metrics I've just described, we believe that we'll continue to deliver operating leverage in the fourth quarter of 2012 with a full year operating margin slightly ahead of last year's rate of 32%. And fifth, our tax rate is still likely to be in the area of 33%. Before we open it up to Q&A, I want to echo Lew's earlier words. This was an excellent quarter for Coach. Clearly, our spring results bode well for the future, and we're confident we can continue to deliver very strong sales and earnings growth over the balance of the fiscal year and beyond. Thank you all for participating in our conference call today. And now Lew, Mike, Andrea and I, joined by Jerry Stritzke and Victor Luis, will take some questions, which will be followed by a brief comment from Lew.

[Operator Instructions] Our first question today is from Bob Drbul from Barclays Capital. Robert S. Drbul - Barclays Capital, Research Division: The first question that I have, Lew, is can you talk a little bit about how you plan to continue to drive comp store sales and differentiate from the competition going forward, given the competitive set of the category currently?

Sure. Well, let me first say, the category continues to grow worldwide. And here in the U.S., it's growing on at about a 10% level on the women's side. And on the men's side, of course, at a faster level. We are a dual-gender brand. And while our growth on the women's side are equaled to the category, during the last quarter, our overall growth exceeded the over -- the dual-gender growth in premium bags and accessories. So there's a lot of opportunity. First, with regard to Men's, as Mike indicated, our business is on-track to double to over $400 million this year globally, which represents about 8% of our sales. We believe next year, it will be well in excess of 10% of our business. And we are accelerating the introduction of Men's into a much broader range of our full-priced stores and shop-in-shops worldwide. So we're looking to capitalize on the growing category and the strength of the product offering and, of course, our growing brand loyalty in this category. Secondly, and more broadly on the product front, as Mike indicated and we've talked about many times, Bob, the launching of Legacy, which is a global lifestyle brand of concept, which is a dual gender, and we are using that to re-platform our full-priced stores. And we have enormous optimism for what that group is going to do. Mike mentioned our pilots are doing really well, so a combination of Men's and the re-platforming on the women's side to really focus on Legacy. And of course, internationally, we have an enormous opportunity with the much larger role that Men's plays in markets such as China to truly establish ourselves as a dual-gender brand. The digital side should also be referenced, Bob. We're so excited about the progress we've made in this last year to harness its power and to really give consumers an opportunity to shop wherever they choose to shop. And with our very robust 15 million database in North America, it gives us great, great opportunities.

Our next question is from David Schick with Stifel, Nicolaus. David A. Schick - Stifel, Nicolaus & Co., Inc., Research Division: The question is really around the sourcing work and the pricing strategy that you're putting into place now and I guess have been. What does that mean to the long-term gross margin profile of the business? Would prior gross margin peaks like 78% be achievable over a longer-term planning horizon?

David, I think that, right now, we're comfortable with our guidance, which says that we'll continue to see margin expansion in the fourth quarter and that we'll be about similar levels to FY '11. And as is our custom, we'll come back in the fourth quarter and give you our best outlook for FY '13. As always, we continue to look for initiatives, such as counter sourcing, designing into cost, putting our manufacturing base, diversifying it outside of China. Those are ongoing initiatives that we continue to focus on to drive gross margin, and we're very happy with the results that we've seen in our results in the factory initiative. Michael D. Tucci: Just to elaborate a little bit on the pricing piece of the margin equation here, we spent a lot of time on the sourcing and supply side to really work through our scale, our unit advantages, the tremendous work that Jerry and his team have done to building costing opportunity. And what we saw with the all-store discounting is sort of a blanket effect on promotional stance in factory stores. And with the underlying strength in the business coming out of Q2, we really made the determination that we could get away from that and leverage cost savings by being more targeted in the way that we market to our consumer and offer value to the consumer in the factory channel. We still had very strong productivity gains there, strong comps, and we were able to build in margin advantage, taking advantage of the costing opportunities that existed. So we believe that it is long term. We're working it every day. We continue to probe and test for ideas around how we can play. We realize the factory is a value channel, and we'll continue to be aggressive there. But the early gains for us around margin and maintaining strong productivity are very attractive, and we want to push hard as we move into the fall season to really take advantage of that.

Our next question is from Neely Tamminga with Piper Jaffray. Neely J.N. Tamminga - Piper Jaffray Companies, Research Division: Mike, I've got to ask some questions about the guys, about the Men's product. So I'm speaking about the 100-plus stores or so that you guys have launched in terms of getting a little bit of a capsule collection within your full-priced stores, and we've started to see that in our market in the beginning of April. How many more of those do you think you could roll out by the time you have Legacy? And I just have a follow-up question to that. Michael D. Tucci: Yes, good question. Actually, part of your question is really where the answer is. We went back in with the Legacy launch, which is targeted for late July, and we put together a plan in our stores. Lew used the phrase re-platforming to create a real strong visual presence in our stores around marketing and product presentation, using the launch of Legacy as the catalyst. And we identified actually, to be precise, 108 stores that will get what I would call a more supercharged effort around presentation and physical enhancement. Coincidental with that, we also looked at our Men's proposition at 42 stores with shops or more expanded Men's presence and quickly made the leap and said, "Can we get Men's advanced and expanded in those 100 stores to take advantage of the duality between Legacy, the strength of the women's proposition and putting Men's in at the same time?" That is all happening as we speak and will be front and center for the Legacy launch. We are, at the same time, looking at the balance of our 250 stores for further opportunity. We are working hard on lease expirations and opportunities for expansion in our primary mall locations. So this will be an ongoing effort. And my sense is that every quarter or every season, we'll have an opportunity to layer in more Men's shops as we get deeper into the fleet and as we get more empirical experience on the improved productivity that Men's gives us by adding it to an existing women's store. My goal would be to get a stronger Men's presence in all stores very quickly. For competitive reasons, I'm not going to elaborate further, but we are doing things to bring Men's products closer to our consumers in all stores through technology and other marketing advantages that we have that we'll continue to probe on in piloting. You'll see us doing more with that in the marketplace very soon as well. Neely J.N. Tamminga - Piper Jaffray Companies, Research Division: Mike, if I could just squeeze in one quick follow-up related to that. Given that this is such a unique opportunity for -- like a first-ever, dual-gender launch of a line in fall, does it make sense to implement more of a celebrity approach, particularly around the Men's? You guys do that when you go into international markets on the women's side. I'm just wondering at what point we might see that strategy deployed on the Men's side? Michael D. Tucci: I think what you'll see with regard to Legacy and Men's is a very holistic and complete approach to our marketing strategy.

[Operator Instructions] Our next question is from Omar Saad with ISI Group. Omar Saad - ISI Group Inc., Research Division: I wanted to ask about the South Korea buyback but -- with that and Taiwan and Singapore, Malaysia. How do you -- what kind of resources are needed to take these businesses in-house? And when you buy them, what kind of pricing do you get for the deal? And then do you get with that a lot of the infrastructure that comes with it, or do you have to rebuild from scratch? Can you kind of walk us through the process how we should think about these deals financially and then operationally from an investment perspective?

Victor?

Sure. In essence, when we're buying these businesses back, we are creating the teams in-market from scratch. In certain cases, of course, inheriting team members from our distributors and then hiring new, specifically, general management into place as well. At the same time, we are leveraging the infrastructure that we have invested in Shanghai to support these businesses across the region, specifically, as we've mentioned in past calls, our Asia distribution center, which supports across the region, as well as shared services across IS logistics and then transactional accounting, payroll and the like, which allow us to get some leverage from the infrastructure that we have going in. Saying that, there is a buildup that happens domestically in the markets, and usually, there is a 6-month challenge. We have to purchase back inventory, which has an impact, of course, as well as getting the store performance up. Usually, we're having to make a substantial investment in store staff to get what we refer to as the traffic per -- our TPLH numbers in line with our international standards. Traffic per labor hour is the measure that we use for those who are not familiar with TPLH.

And, Omar, if you look at these on a financial basis, they are very value-creating transactions over time. We -- as we've discussed before, there's some first-year dislocations as we buyback the inventory at wholesale cost, and we assume all of the SG&A of the entity that we purchased. But over time, they are very value creating. We're very happy with the deals that we've announced.

Our next question is from Barbara Wyckoff with CLSA. Barbara Wyckoff - Credit Agricole Securities (USA) Inc., Research Division: Can you comment on the margins on China and Japan? Do you expect -- anticipate accelerating margins with the emphasis on Men's versus the original model of women's only? And how should we be thinking about margin projection -- projected margins in Singapore and Taiwan?

Well, as you know, the margins in our China business, our Japan business are very attractive. Overall, we're very happy with the gross margins that we have internationally. Over time, our international growth is a margin enhancer for total Coach, so we're very encouraged by that. We expect that our acquired businesses will also be margin enhancing for Coach after we get through that initial transition period, where we're working through the inventory that was bought back at wholesale level.

Our next question is from Brian Tunick with JPMC. Brian J. Tunick - JP Morgan Chase & Co, Research Division: I guess first for you, Lew. I mean, you talked about the 4 overarching growth strategies, and obviously, you have a great balance sheet. What is your view on the trade-offs of acquisitions? And then for Mike, it sounds like your core customer is feeling better. The product innovation continues to be super strong. What do you think it would take to turn traffic trends positive in the full-priced stores? Michael D. Tucci: Well, first, with regard to acquisitions and, Brian, we've talked about this many times, we have enormous run rate organically with the Coach business and we don't see acquisitions as a imperative to driving double-digit top line and bottom line growth. So it's not a strategy that we have been pursuing. Mike? Michael D. Tucci: Sure. I'm actually very pleased with where we are from a traffic standpoint. And, Brian, we look at things in the aggregate. Traffic was up in full price and factory. In-store traffic, as we said, was similar to prior levels. Where we see opportunity is this idea that we can drive excitement into our stores with further introduction of the Men's concept and the launch of Legacy. And our optimism there is significant. It's an opportunity for us to show significant excitement and product advancements to the consumer, and that's where we see the opportunity.

Our next question is from Jeff Black with Citigroup. Jeff Black - Citigroup Inc, Research Division: On China, you mentioned double-digit comps. Any real change in trend there in the quarter? And when we look at the distribution model, what are you learning as you expand into the Mainland? What works best in terms of both demographics and/or format? And does that really alter the thinking as it relates to the mix of flagships, retail, shop-in-shops, et cetera?

Victor?

Sure. First, I would just reiterate that we're extremely pleased, as Lew mentioned, with our terrific growth in the quarter, which at 60% is similar to the growth that we experienced last quarter, and we remain very much on-target to achieve our target of $300 million, which we announced last October. As Lew also mentioned, there was a shift in the drivers of growth this quarter with more of the sales increase coming from new doors which are performing ahead of our plans. Specifically, what we're seeing in terms of comp within China is increased travel and purchases internationally, especially from the Tier 1 consumers, which would be these consumers from Shanghai, Beijing going more overseas. While the Tier 2 and Tier 3 consumers, these consumers in second and third tier cities, shopping closer to home, driving our non-comp sale. I would remind us that we're now at 32 cities across China, still a very small portion of the 120-or-so cities that have a population of 1 million or more. And indeed, of the 18 locations that we've opened year-to-date in China, 14 have been in Tier 2 and Tier 3 cities. And all but one of the locations that we will open this quarter are also in Tier 2 and Tier 3 cities. And these are cities that will benefit disproportionately from the growth of the middle class and Chinese government investments in infrastructure. And longer term, as we think about as well the fact that GDP consumption, as a percentage of GDP in China, is at 35% compared with the 70% here in the U.S., of course, these vast majority of Tier 2 and Tier 3 cities will also be drivers within the longer-term opportunity for us. Specifically, in terms of the models in new stores to the second part of your question, we have the same multichannel strategy in China that we leverage globally, opening up flagship stores, retail stores in shopping malls, locations in department stores and factory outlets. And of course, each of these channels are at different levels within different cities. And the opportunity for us is always, first and foremost, to focus on providing the brand with a very good position in each of the markets and then expanding from there. We tend to first open within luxury malls, first and foremost, expanding then to department stores and more bridge or fashion malls as they develop. And the opportunity there is quite massive, as most of these second- and third-tier cities still do not have these locations as they're only on the drawing boards today, and then eventually, of course, into factory outlet malls, which will undoubtedly be a massive opportunity long term within the China market. And they are only now beginning to gain a little bit of traction.

Our next question is from Randy Konik with Jefferies. Randal J. Konik - Jefferies & Company, Inc., Research Division: Just a question first for Mike, with the change in the couponing strategy in the outlet channel, which is great long-term strategy. How do you think that impacts -- I think you said traffic was up during the quarter in outlet. Do you think that impacts traffic negatively in a big way going forward? Do you see differences in conversion, so forth? And then, I guess, just for Jane. On Japan, can you just remind us how the tsunami impacted the fundamentals of the financials of Japan last year? And of the 4 buckets of gross margin you've talked about being easier compares from Japan move to manufacturing out of China, channel mix and China sales growth, what would be the most important of those 4 buckets to take the gross margins higher in the back half and beyond?

Yes. Why don't I start with the tsunami impact in Japan? If you -- overall, in the third quarter, the impact of the tsunami was about 9% in the third quarter last year. So our growth of 10% shows that we're back in this quarter to pre-tsunami levels. In the fourth quarter, we were down about 7% in local currency. That excludes the 53rd week, and that was all due to the impact of the tsunami. In terms of gross margins, we really view it as multiple initiatives. So obviously, our sourcing initiative is very important to counterbalance labor inflation. Counter sourcing is very important for us on the material side. And gross margin expansion is also very linked to our attractive mix of countries as we grow international. There are really a multiple of levers that we're all working at the same time. Some are producing more sometimes, some are producing a little less, and they're growing over time.

Mike? Michael D. Tucci: Sure. On the pricing and marketing within factory, we do see it as long -- as a long-term strategy. There will always be puts and takes in terms of metrics, but the initial results are very, very strong and encouraging. Again, we're doing this from a position of underlying strength, leveraging the product offer, the pricing opportunity in our factory stores, the robust trends in traffic, conversion, ADT within the channel and also leveraging this idea of dual channel in factory around the digital opportunity to a targeted and discrete audience. The overall driver of comp is that transactions are up, and that's what we want to focus on. We want to focus on productivity and enhancing as best we can across the metrics for the long term.

Our next question is from Liz Dunn with Macquarie. Lizabeth Dunn - Macquarie Research: So as I'm listening to sort of all the puts and takes on comp, it seems as though you really have the levers to kind of control the factory comp to the extent that you want to, to sort of gain the optimal margin and sales mix. And so as we look at this quarter's comp, in part it sounds like you maybe held back the factory a little bit in favor of better gross margins. And as we move forward, you continue to have that ability, plus with this re-platforming of the brand that we're expecting with the August floor set, perhaps we'll see even greater conversion and traffic. Is that the right way to think about it?

You said it better than we've said it. The reality is that we could have driven higher comps if we wanted to, but we are -- we have a very strong long-term view, and what we're doing is in the interest of the brand. And as Jane indicated, we expect comps this quarter to be at least as high as they were last quarter. And we urge you to understand that we have a robust international diversified business model. We have great opportunities, and we feel very pleased with where we are and where we came out and what the future bodes for us.

Our next question is from Dana Telsey with Telsey Advisory Group. Dana Lauren Telsey - Telsey Advisory Group LLC: Can you talk a little bit about the runway for the gross margin improvement coming from manufacturing and the new pricing strategy? Is there more to go on that? And then just maybe what the pricing is on an average handbag now, and what percent over $400? And then just one last thing, Victor and Mike, congratulations, new functions and the new roles.

Lots of questions embedded in your question. Let me ask Jerry, if he would, to talk a bit more about runway on gross margin, and you may even want to talk to -- what Mike referenced earlier about our pricing latitude on the factory side to give us improved margins over time.

Yes. We -- as you know, we've been working on -- working in the sourcing base to offset margin pressures. A lot of those margin pressures, again, as you've seen in the press you guys have covered, has really been pressure on raw materials, pressure on increased labor. We're 2 years into really a 4-year plan to diversify our sourcing base to offset those, and we're going to continue that over the next couple of years. We see that as, again, offsetting pressures that exist in the market. So it's really more of trying to maintain our margin rate. The other thing that has really presented itself as an opportunity in support of Victor's business is they become more sophisticated in operating in Asia. We're looking at the idea of how do we manufacture in a country to allow -- to take advantage of duty benefits. So as we become a more international global organization, we're finding that the significant opportunity is for us to locate our manufacturing in a place where we can obtain trade benefits, whether it be from Vietnam to Japan, et cetera. So those are things we're looking for as we move to the future, to continue to give us margin upside and advantages. And the idea that is it just one thing or is it another, it's really the work that Mike's doing in his channel really complements the work that we're doing on the manufacturing side. So it's really both. And the idea of keeping our margin strong, and we have the strongest margin in the industry. The -- I'll let the over $400 performance -- Mike? Michael D. Tucci: Yes. We really had very, very strong balance in handbags. Average unit retail in total were up slightly, over 400 penetrations were even. And very, very important here, remember that we introduced Willis in the quarter, and it was a key driver for us. And that's a handbag retail at around $300. So we feel like we hit a very strong balance tone in the quarter around handbag. I think the last question was around roles, and why don't I just add a couple of thoughts on that? One is I'm very excited about the opportunity within North America, really, to take a 360 view of our customer across all channels. We have a very strong position in department stores, tremendous relationships with our key partners there, premium positioning within the handbag world in department stores and an opportunity for us to really expand and grow our business in a very important channel to us from a consumer standpoint. And I'm excited about getting involved with that, particularly on the eve of the Legacy launch.

Victor?

Sure. So my responsibilities have increased to include all of our indirect businesses outside of North America, so all of our wholesale operations, including, of course, our global duty-free businesses. And as Mike, I'm very excited about that opportunity where we can, of course, leverage the learnings from our consumers who are increasingly global consumers, and in doing so, also partner with Mike, of course, in capturing that opportunity here in the U.S., so truly looking to scale the teams that we have in place and to drive our businesses as a truly global operation.

And this does conclude the question-and-answer session. I would now like to turn the call over to Andrea for closing comments.

Thank you, all, for joining us on our conference call today. As Jane noted, I'd now like to turn it back to Lew for a few closing words. Lew?

I think pretty much everything has been said. We continue extremely optimistic about what the future bodes for us. We do continue to believe we have unlimited opportunities. If you were to visit us here at our 516 building, you would see a level of excitement among staff at all levels that hasn't been here for many years. The growth in Men's and the opportunities there, along with the dual-gender Legacy, has led us to look at the business in a very bold and aggressive way. So as we've said before, stay tuned. There's a lot to come. Thank you.

Thank you. This does conclude the Coach Earnings Conference. We thank you for your participation.