Eric Artz - Chief Financial Officer Barbara Rozsas - Glen Senk - Chief Executive Officer and Director

Dana Telsey - Telsey Advisory Group Jeff Black - Citigroup Inc Randal Konik - Jefferies & Company, Inc. Christine Chen - Needham & Company, LLC Eric Beder - Brean Murray, Carret & Co., LLC Betty Chen - Wedbush Securities Inc. Paul Lejuez - Credit Suisse Adrienne Tennant - Janney Montgomery Scott LLC Michelle Tan - UBS Brian Tunick - JP Morgan Chase & Co Stacy W. Pak Howard Tubin - RBC Capital Markets, LLC Marni Shapiro - The Retail Tracker Roxanne Meyer - UBS Investment Bank Erika Maschmeyer - Robert W. Baird & Co. Incorporated Robin Murchison - SunTrust Robinson Humphrey, Inc. Kimberly Greenberger - Morgan Stanley Janet Kloppenburg - JJK Research Lorraine Hutchinson - BofA Merrill Lynch

Good day, ladies and gentlemen, and welcome to the Urban Outfitters Inc. Fourth Quarter Fiscal 2011 Earnings Call. [Operator Instructions] The following discussions may include forward-looking statements. Please note that actual results may differ materially from those statements. Additional information concerning factors that could cause actual results to differ materially from projected results is contained in the company's filings with the Securities and Exchange Commission. I would now like to introduce your host for today's conference, Mr. Glen Senk, CEO. Sir, you may begin.

Good afternoon, and welcome to the URBN Quarterly Conference Call. With me today is Eric Artz, Chief Financial Officer; Oona McCullough, Director of Investor Relations, and the majority of our executive management team. Earlier this afternoon, the company issued a press release outlining the financial and operating results for the three- and 12-month periods ending January 31, 2011. We were pleased to report record sales and operating earnings for the quarter, as well as the company's second highest operating margin for both the fourth quarter and full year, 18% and 18.2%, respectively. Eric will begin today's call by providing details on our performance. I will continue the prepared commentary with closing remarks, then the group and I will be pleased to answer any questions you may have. As usual, the text of today's conference call, along with detailed management commentary, will be posted to our corporate website at www.urbanoutfittersinc.com. I'll now turn the call over to Eric.

Thank you, Glen. The following summarizes our fourth quarter fiscal 2011 performance versus the comparable quarter last year. Net sales increased 14% to $668 million. Income from operations grew 1% to $120 million, resulting in an operating margin of 18%. Net income decreased 3% to $75 million or $0.45 per diluted share. Comparable Retail segment sales, which include our Direct-to-consumer channel, rose 4%, with increases of 1%, 28%, and 5% in Anthropologie, Free People and Urban Outfitters, respectively. Total company comparable store net sales decreased 2%. Direct-to-consumer comparable sales rose 28%, with all three brands posting double-digit increases. Wholesale revenue increased 31% to $31 million. Gross profit grew 8% to $265 million, while gross profit margins decreased 208 basis points to 39.7%. Selling, general and administrative expense, expressed as a percentage of sales, increased seven basis points to 21.7%. Comparable Retail segment inventories, which include our Direct-to-consumer channel, were 10% higher at quarters end, while comparable store inventories increased 4%. Finally, cash, cash equivalents and marketable securities grew by $63 million on a year-over-year basis to $808 million. Turning to our key business metrics, I'll begin by providing detail on sales for the quarter. New and noncomparable store sales contributed $63 million to the consolidated net sales increase. The company opened 17 new stores in the quarter, three Anthropologie stores, four Free People stores, and 10 Urban Outfitters stores, including three in Europe, bringing the global store count to 372. Within the quarter, total company comparable store sales were strongest in November, followed by December, then January. Within North America, sales at Anthropologie and Free People were strongest in the West and weakest in the Northeast. And sales at Urban Outfitters were strongest in the Southeast and weakest in the West and Northeast. In Europe, sales at Urban Outfitters were strongest in Continental Europe and weakest in Ireland and our non-London locations in the United Kingdom. By store type, sales at Anthropologie and Urban Outfitters were strongest in malls and lifestyle centers and weakest in street locations, and sales at Free People were strong cross all venues. For stores, the average number of units per transaction increased 2%, while average unit selling prices and transaction counts decreased 3% and 1%, respectively. Direct-to-consumer revenue increased 29% to $145 million. The penetration of Direct-to-consumer net sales to total company net sales increased 270 basis points to 21.7%, with results largely driven by a 34% increase in website traffic to over 35 million visits. For Retail segment sales, footwear and accessories and home were strongest at Urban Outfitters, home was strongest at Anthropologie and while all categories were strong at Free People, accessories led the trend. Wholesale segment sales for the quarter increased 31% to $31 million, driven by a 32% increase at Free People and an 18% increase at Leifsdottir. I'd now like to turn your attention to gross margin, operating expense and income. Gross profit in the quarter grew 8% to $265 million, but the gross margin rate decreased 208 basis points to 39.7%. This decline was due to increased markdowns to clear seasonal product associated with changing women's apparel fashion trends, along with higher shipping costs related to an increased penetration of International Direct-to-consumer business. Total company inventories increased 23%, due in part to a record 17 new stores opened in the quarter and robust growth in our Direct-to-consumer channel. Comparable Retail segment inventories, which include our Direct-to-consumer channel, were 10% higher at quarter's end while comparable store inventories increased 4%. Inventory at Anthropologie and Free People were well controlled throughout the quarter, but at Urban Outfitters, slower than expected January sales and early spring receipts contributed to a higher than planned quarter's end inventory level. It is worth noting, however, that on a two-year basis, comparable total company Retail segment inventories increased 10% versus a Retail segment sales increase of 12%. Total selling, general and administrative expenses for the quarter as a percentage of sales increased by just seven basis points, despite the company falling short of its revenue plan for the period. Disciplined expense control helped offset deleverage resulting from investments in systems, international expansion and our start-up expenses for the BHLDN launch, which occurred on February 14. The company's effective tax rate was 38% for the quarter, versus 34.9% for the prior comparable period. The increase in the effective tax rate was due to a change in the final composition of our domestic and international earnings, as well as unfavorable revisions to state tax estimates resulting from tax returns filed during the quarter. Our final effective tax rate improved to 34.6% from 36.2% last year. The company generated an impressive 18% operating margin, earning a fourth quarter record of $120 million in income from operations. I'd like to move on with a quick summary of our full year results. Total company revenue increased 17% to a record $2.3 billion, driven by a 12% increase in square footage and a 9% increase in comparable Retail segment net sales. The Direct-to-consumer channel grew 34%, with the sales penetration increasing 240 basis points to 19.1% on a full year basis. Operating income increased 22% to a record $414 million, delivering the company's long-term objective of growing profits faster than sales. The company repurchased and retired 6.3 million shares, spending a total of $205 million, and announced in November a new authorization to repurchase an additional 10 million shares. As we look forward to fiscal 2012, I ask that you keep the following in mind: We plan to open 50 to 55 new stores, resulting in low double-digit square footage growth. As has been our historical practice, we have planned for low single-digit comparable store sales on a full year basis, and have continued the plan for robust growth in our Direct-to-consumer channel. We may experience a continued increase in markdown levels until we successfully navigate the fashion shift. And with the challenging comparisons we face from the superb first half performance last year, the margin pressure could be higher than what we experienced in the fourth quarter. For the first half of the year, the transition costs associated with our new distribution centers in Europe, as well as ongoing investments in technology, international expansion and new concepts puts our estimated leverage point for selling, general and administrative expense at an approximate 4% comparable store sales increase. We intend to accelerate investment into our Direct-to-consumer channel, including adding a second domestic fulfillment center and expanding our home office in the Navy yard. These projects are expected to be completed in fiscal 2013, but will require capital expenditure in fiscal 2012. Thus, we anticipate our fiscal 2012 capital expenditures to fall in the $175 million to $195 million range. Finally, we are planning our annual effective tax rate at 36.5%. The planned increased over fiscal 2011 is due primarily to credits that do not anniversary, as well as anticipated increases in certain state income taxes. With that as a financial backdrop, I'll turn the call back over to Glen, who will proceed with his closing commentary.

Thank you, Eric. Once again, I take great pride in the organization's performance. We reported record sales, record operating profits, a record number of quarterly store openings, continued strength in our Direct-to-consumer channel, and our second highest operating margin in the fourth quarter. I want to assure you, though, that the organization and I are focused on the opportunities within the quarter as well, so I'd like to take a moment to review the key learnings. First, given the fashion shift we've been discussing for the last several quarters, we believe the company would have benefited from a greater distortion into non-apparel categories. Since we know that customers often pullback on apparel spending during a period of fashion transition, in retrospect, we could've been more aggressive in leveraging URBN's flexible assortment architecture to maximize the business and up-trending classifications such as footwear, jewelry, loungewear, foundations, and several home categories, including beauty. Second, I believe Anthropologie and Urban Outfitters could have positioned their women's apparel content more effectively. Both brands are clear as to where to take the product based on insights from our Direct-to-consumer business, along with information garnered from a strength of the offering of Free People. The challenge is that there are a myriad of moving parts including fabric, silhouette, print, color, the relationship of tops to bottoms, and apparel to accessories, and the coordination of these elements is complex. Of course, I'd like better, faster results, but it's important for me to remember and to share with you that this is a highly iterative process. And despite the information at hand and the nimbleness of their supply chain, it's appropriate for the merchants to manage the process in a pragmatic, methodical manner. You've asked, and I know you will continue to ask, for me to share my views on when the Apparel business will gain positive momentum. It could take another three months, six months or perhaps even longer. What I know with certainty is that fashion cycles are good for our business and that our merchants are best of class with a proven ability to recognize a mind change before the market at large and that they are managing through the transition with precision and financial discipline. I know there's another topic that will be of interest to you, the fourth quarter inter-period trend. January appears to have been an outlier. Our February sales results improved over January and are more similar to the fourth quarter results with the exception of Europe, where the majority of our revenue currently comes from the U.K., and the consumer appears to be responding negatively to the newly implemented VAT increase and other austerity measures. Eric has already covered several metrics for the fiscal year 2011, but I'd like to take a moment to reflect on some additional highlights. The company's 10-year CAGRs are amongst the best in class, 23% for sales and 37% for operating profit. And while our three-year CAGRs have moderated to 15% for sales and 23% for profit, given the context of the economy, they are still amongst the best in class. Total company comparable store net sales increased 4% for the year, but averaged 7% for the last 10 years. And impressively, stores opened three years and more had a comparable store performance equal to the average of the chain. Urban Outfitters and Anthropologie each, for the first time, surpassed $1 billion in revenue for the year. The company opened 46 stores in the year, including five in Europe, with the class of 2010 amongst our best ever groups underscoring the positive impact of our strategies around site selection, store design and development. Our growth in the Direct-to-consumer channel continues to outpace every other channel in the company, currently trending to double in size in less than three years. The shared service teams including IT, logistics, finance, development, production and talent, executed superbly throughout the year. We implemented a variety of key enterprise systems, including a supply chain management tool, a new order management system that will ultimately enable us to have a single inventory across all channels, a consumer insight database and a robust assortment management tool. We also continue to support the Direct-to-consumer teams with a myriad of site enhancements, analytic tools and our first German and French language sites. Finally, the company had a banner year with talent. Remarkably, we had more than 100,000 people apply to work in our home office. We interviewed some 15,000 people and hired roughly 500 of some of the most talented, dynamic people I've ever met. Ultimately, our company is our people. And we have been relentless to ensure that we hire, develop and retain the best talent in the industry. Before I finish with our prepared remarks, I'd like to remind you of our four key growth initiatives: Driving brick-and-mortar productivity, increasing our e-commerce penetration, accelerating international expansion and adding new brands to the URBN portfolio. Since we've spent a considerable amount of time talking about the detail behind each initiative, I'll just review key areas of focus for 2011. As always, our first priority is product. Compelling, differentiated product is what drives our business. The product needs to stop the customer in her tracks. It needs to illicit an emotional reaction. She needs to love it. Every part of our business is important, but the product offering is most important, so that's our key focus. Whether it's online or in-store, localization is an increasingly important component to success, so we'll be implementing a new allocation system that will enhance our ability to micro allocate to each of our locations. We have begun to test mobile technology in our stores. We know that our best customers shop across channels and that there's tremendous synergy between the stores, catalogs and websites. Our goal is to provide an outstanding, seamless multichannel experience wherever, whenever our customer wants to shop. For example, we believe it will be just a few short years before customers walk into the store, scan a product to learn about it or locate a size or color, perhaps share the product with a friend or read a review, then walk out of the store with a product in hand, automatically charged to the account that links with their mobile device. Since the midyear completion of our consumer insight database, we've collected information on nearly 7.5 million customers across the Direct-to-consumer and brick-and-mortar channels, with the number growing every day. Our priority is to add capability around analytics, segmentation, and ultimately personalization, which is where we believe we'll see truly meaningful benefits. Given the pace of growth in our Direct-to-consumer channel, we'll continue to invest in assortment, site functionality, marketing including the database, social media, mobile and fulfillment capability. Our goal is to stay ahead of the consumer, ahead of what we believe is a paradigm shift in the way people are shopping. We'll continue to invest aggressively in our international expansion, including opening more European stores than ever before, shipping more internationally through our Direct-to-consumer channel than ever before, and opening our own fulfillment and distribution centers in the U.K. Additionally, our first Asia Pacific employee began with the company a few months ago, and is busily at work preparing for the company's plans planned 2013 brick-and-mortar launch into the region. Finally, we will continue to invest in and shape our new brands. And to that end, the company launched BHLDN this past Valentine's Day. We'll provide detail on the next earnings call, but let me say that BHLDN has been the company's most successful launch in history and has exceeded our most optimistic expectations. The brand will expand its web offering and site content over the next several months and will open its first store in Houston in early fall and second store in Chicago just after the holiday season. In closing, we believe that URBN remains one of the true growth stories in retail, with an opportunity to double the North American store count with our existing brands, a best-of-class rapidly expanding Direct-to-consumer business, a significant opportunity for international growth, a growing portfolio of new concepts to fuel future expansion and a highly strategic, systematic and controlled approach, which we believe will enable us to continue to grow profits faster than sales. As always, I'd like to offer my heartfelt thanks to the URBN team for their outstanding commitment and to our shareholders for their continued support. I will now open the call to questions. And as is our custom, we will limit the queries to one per caller. Thank you.

[Operator Instructions] Our first question comes from Kimberly Greenberger with Morgan Stanley. Kimberly Greenberger - Morgan Stanley: I wanted to ask about the gross margin here in the fourth quarter. And I know in the past, occasionally when you've had a sales slow down or there has been trend changes, you have taken a look at your inventory at the end of the quarter and your inventory on order, and taken some anticipated markdowns into the preceding quarter. So you would've look at the end of fourth quarter inventory and perhaps your Q1 delivery and reserved a bit against for markdowns on some of those goods. Did you have an opportunity to do that here at the end of the fourth quarter? Or are you more confident with the deliveries that you are seeing come through here in Q1 that you won't really need to take that level of markdowns?

Kimberly, I'll ask Eric to talk about the obsolescence and then I'll finish the question.

Yes, Kimberly, we did not make any unusual adjustments relative to anticipated markdowns or end of year reserves that were out of norm.

And Kimberly, what I can tell you and the rest of the group is that we relentlessly look at the cleanliness of our inventory. So from a FIFO perspective, we are fresher and cleaner than ever. To the extent that we have, we don't knowingly ever buy anything that we don't love, to the extent that we have bought things that we're going to end up not loving, we'll continue to take markdowns at an accelerated rate. But we're certainly, the merchant teams in both of the core businesses, are working as fast as they can to, of course, correct the assortments.

Our next question comes from Christine Chen with Needham & Company. Christine Chen - Needham & Company, LLC: I know you don't like to comment specifically on fashion, but I was wondering if you could maybe shed a little color on the rate of adoption of the newer trends versus the older trends? I think last time there was a shift on line-adopted faster Europe and the Coast. I'm wondering if you are seeing similar trends or any light you might be able to shed on that?

Christina, you've been following us for a long time and thanks to Dick, we've been talking about this fashion bull's eye probably for at least a decade. And I think three people clearly hit the bull's-eye in the fourth quarter: Anthropologie and Urban Outfitters were on the target, but they weren't in the bull's-eye. I don't think, as in calendar 2005, fiscal 2006, when the customer was slow to adopt big over little, I don't think that's what we're dealing with. As I said repeatedly over the last couple of quarters, I think where we're headed with fashion is something that is very friendly to our customers. It's just a question of getting all the ducks in a row. I know when we were at ICR, it's hard for people who are not on the frontline of the business to understand why the merchants can't move the assortment more quickly, but there are so many moving pieces. When you look at each of the brands, Urban Outfitters and Anthropologie alone probably have 150 to 175 people who touch the product in one way or another. They are top spires, bottom spires, they are merchandisers, they are people who manage communications. And as they get information, they use that information to make better decisions going forward, but it is a process that you can't rush. I think I'm very, very confident in the way that the group is approaching the business. We have fantastic sell throughs in both of our brands in virtually every class. And it's just a question of getting the inventory more correct and landing back in the bull's-eye or maybe one rung out versus three rungs out.

Our next question comes from Michelle Tan with Goldman Sachs. Michelle Tan - UBS: I was wondering if you guys could give us a little more clarity on the comment that January was an outlier? What are you seeing in February? Have you seen a pick up versus fourth quarter as a whole? Or is it more just that you've picked up relative to January, but you're still trending kind of similar to 4Q or weaker?

Yes, Michelle, November and December were relatively close for us and then quite frankly, January surprised us. And we have never talked about weather on this call. We have 70% of our portfolio is in either open air or street locations. And I have to believe that we were more affected by the weather in January than some of our peer group. The only -- there's a chance the inventory may be, that we cleared through sale a little bit too quickly to Anthropologie. The only other kind of external factor that I can point to is what happened in Europe, both from a weather point of view, but also between the VAT increases and the other austerity measures. Other than that, quite frankly we were surprised, but the good news is that February is back in line, as we said in our prepared comments, with the fourth quarter performance. If we look at North America, it's very similar. If we add Europe in, it's a little bit worse because of the VAT and the austerity measures.

Our next question comes from Adrienne Tennant with Janney Capital Markets. Adrienne Tennant - Janney Montgomery Scott LLC: Glen, can you talk about sort of your feelings about the trends? Are you any less confident about the timing of those sort of happening, that transitioning happening in spring? And exactly, which brands do the trends benefit the most? It's sort of all in the same vein. Any reception to the spring catalog that can help us understand sort of the notion of whether it's a three-month shift or a nine-month shift?

Adrienne, you also have been covering us for a long time and it's great to speak to people who have been covering us for a long time because you know us well. I've been with the company now, and I'm about to celebrate my 17th anniversary. And we've had, other than the kind of economic challenges of 2008, 2009, we've had two periods in my 17-year tenure where we've missed the fashion. And I think it's fair to say, each time it took us roughly nine to 15 months to really get the business back to where we wanted it. I think if you look at our trends over the last year or so, it's fair to say that we are about six months into this. So as I said in the prepared comments, I think I could see it turning as soon as three months from now, I could see it taking another six, possibly, nine months. And the reality is, if I knew I would tell you, I just don't know. In terms of confidence levels, we have fantastic information from the business every week. We have better information from our Direct-to-consumer channel than we've ever had. One of the advantages of being a portfolio business is that we happen to have one of our three brands that is firing on all cylinders right now. And it's not that the Urban brand or the Anthropologie brand will look like Free People, but they will take learnings from People and bring it back to their business through their brand DNA. So I have tremendous confidence in the team. The sourcing group has done just a knockout job in terms of giving us flexibility in the supply chain. We have less than 50% of our Q2 on order committed at this point. So it's really just a question of letting the merchants and the design team, the individual people kind of cook and get to the realization. And I wish I could be more specific, but I can't.

Our next question comes from Lorraine Hutchinson with Bank of America. Lorraine Hutchinson - BofA Merrill Lynch: I was just hoping that you could elaborate on the comment that you made that merchandise margins may continue to decline as you work through some of this inventory. How long should we expect that to last? Do you feel like you're back on track for second quarter? I know you said that Urban was a bit high coming out of the year and I guess, just timing of that margin weakness.

Yes, Lorraine. I'll start this and then I'll ask Eric to finish up. I want to reiterate. The inventory coming out of the quarter was very, very clean. But to the extent that we anticipate any gross margin challenges in the first quarter or beyond, it's more a question of our -- not being in the bull's-eye, and us questioning when we are going to be in the bull's-eye. We did not carry inventory over. We never have and we won't. On a two-year basis for the stores, the inventory is up 1% against the sales increase of up 2%. We've had negative comp inventories for nine of the last 11 quarters. So the inventories, could Urban have done a slightly better job with inventory towards the end of the quarter? Absolutely. But I'm talking degrees here, it was not a miss. So it's really a question of getting the productivity out of the current inventory. It's not a question of cleaning up holdover. So with that, I'll pass it over to Eric.

The only thing I would add is just to keep in mind that the first quarter and the second quarter of this past fiscal year were really record years for us, record quarters in terms of gross margin performance. So in my prepared commentary, when I talk about gross margins, our markdown levels still being relatively higher than we would like or more similar to Q4, or possibly greater, the possibly greater is just in reference the fact that we have positive store comps. I think they were low double-digits in the first quarter and high-single digits in the second quarter. So there's an occupancy issue there that adds to the gross margin comparisons for those two periods.

Our next question comes from Janet Kloppenburg with JJK Research. Janet Kloppenburg - JJK Research: I'm a little confused about the gross margin guidance. If Anthropologie is in pretty good shape and Free People obviously is, and Urban is just a little high, and February business is better, I'm confused why the gross margin has to be down more in the first quarter and the second quarter than it was in the fourth quarter? So maybe that's precautionary by your team. I'm just a little bit confused if you feel like -- I think you said you had very good selling in many classifications and you feel good about the direction of the assortments. It just doesn't seem to come together for me.

Janet, this is Eric. I would say let's just kind of recap were we were when we started Q4 and how we've maneuvered through there. So we started Q4 with a similar situation. Our comp store inventory is coming in, we're up 1% and they were very clean. The fourth quarter, as Glen mentioned, was a bit more about Anthropologie cleaning their assortment and ending up in a very positive place at the end of the fourth quarter. As we now move into the first quarter, we are entering with slightly higher inventories but again, well within a range that we feel comfortable with. But now we're talking more about the Urban brand and maneuvering through that inventory as well, as they continue to maneuver. So I think it's a difference because of the brands. And like I said earlier on Lorraine's question, relative to the occupancy benefits that we had in the prior year, affect the comparisons as well.

And Janet, I think guidance is probably too strong a word. I wouldn't say we're giving guidance, we just want to realistically tell you what could possibly happen. I think if the assortment starts, if we get to a more productive place with the assortment, the gross margins will be higher. If we're at a place in terms of productivity where we were in the fourth quarter, they could be where they were on a relative basis or slightly lower. So it's really not that we have inventory to clean, it's that given our experience in the fourth quarter, we don't expect the kind of productivity that we had a year ago until, quite frankly, we see it happening.

Our next question comes from Roxanne Meyer with UBS. Roxanne Meyer - UBS Investment Bank: I just wanted to appreciate the shipping cost increase that you saw in the quarter. How much impact was there? And does this imply that your Direct-to-consumer business for international is currently less profitable versus the stores, just the fact that you're seeing a drag from the shipping cost? And how should we think about that impact that you continue to rollout stores more aggressively in Europe?

Roxanne, I think the decrement or the impact of the gross margin was not insignificant, but it certainly wasn't the majority. I think that it's a positive thing for the company. Our International Direct-to-consumer business is growing very quickly. We see it as a real opportunity as we have the right size, I mean we ship to, I believe, 130 countries. Although the bulk of what we ship is roughly to 10 countries, as we have the right kind of business size in each country, I think we'll find a more efficient way to ship. But right now, the business is accretive from a total company ROS point of view. It's still highly profitable and it's the right thing to do for the business and the customer. As the business gets larger, I think we'll come back and figure out a way to reduce some of those expenses, but we have no regrets on this whatsoever.

Our next question comes from Brian Tunick with JPMorgan. Brian Tunick - JP Morgan Chase & Co: I guess our question is Glen, you talk about the fashion shift being off the bull's-eye, yet DTC up almost 30% in the quarter. Just trying to understand what do you think is happening there. You would think that if the customer wasn't responding that DTC wouldn't be up as greatly. Are you shipping into more countries? Just try to help us explain that delta.

Yes, Brian. I think you if you, and I know you do look at the general trends out there, everybody's Direct-to-consumer is growing more quickly than their brick-and-mortar business. So I mean that is a paradigm change. Having said that, when you look at our business over the last several years, any time we have not been on the bull's-eye, we've been a rung or two or three rungs out, it's been easier for us to react quickly with our Direct-to-consumer business than it is our brick-and-mortar business. With Direct-to-consumer, you can manipulate the visuals and distort into what's working. With brick-and-mortar, if I deliver $100 worth of inventory and half of that inventory I find out the following week half of it's great and half of it's not great, I can't make that, the 50% that's not great, go away right away. It may take me two, four, six weeks to liquidate. I don't have that kind of issue in Direct-to-consumer. I can also message more consistently, just quite frankly, it's easier to maneuver. And I think that's what you're seeing. On top of that, I mean, we have so many other things working in Direct-to-consumer. We have the international growth, we have social media, we have new forms of marketing and so on.

Our next question comes from Paul Lejuez with Nomura Securities. Paul Lejuez - Credit Suisse: I may have missed this, so apologies if I did, but I don't think you mentioned anything about cost pressure. So I'm just wondering what you expect to see as we move throughout the year from a cost perspective. And does the uncertainty of when you expect to get the fashion right impact what you would otherwise do from pricing perspective to deal with potential cost pressure?

That's a great question, especially the second half of it. We didn't talk about cost pressures because we feel like we've beaten the subject to death over the last couple of earnings calls and at ICR and so on. What we have said and what we continue to say is it's not going to be easy, but we believe it's surmountable. We are in a good place, I think, relative to our peer group in terms of the leverage that we have to manipulate. The fabric is a smaller part of our FOB than it is with many people in our peer group. We are already in higher wage factories, so we don't have the kind of wage pressure that people have. Freight as a percent to total for us is a much smaller percentage. Historically, we've air freighted a lot more than we've shipped, so we have some opportunities to manipulate things there. So I wouldn't say it's easy but it's manageable. In terms of our retail price architecture, we'll continue to do what we always do and that is look at supply and look at demand. We do have, I think, less price sensitivity than many people in our peer group. Our business is not about a $20 jean or a $12 t-shirt. Free People, for example, had sensational success with higher price points because quite frankly, they got the product right and there was not a lot of what they were selling out in the market. So as I said in my prepared remarks, we need to make the product fantastic. If the product is fantastic, I have no concerns about product cost. If the product is some version of last year's bestseller, or the product is not compelling, then yes, product costs are going to be an issue, but that would be an issue despite any supply environment.

Our next question comes from Randy Konik with Jefferies. Randal Konik - Jefferies & Company, Inc.: Just any -- I guess just to clarify, Glen, do you think the fashion shifts we're seeing now, are you saying they're just less pronounced than the big over little, yet they'll take the same amount of time to course correct? And then just maybe for Eric, is there any way you can give us some clarity on how you're planning second half inventories on a unit versus dollar basis?

So Randy, back to the fashion. I think, and you all spend a lot more time listening to other people's calls than I do, but one of the advantages of being partially a wholesale business is that I get to spend a lot of time with other accounts. I'm not aware of anybody in the Contemporary Apparel business who is enjoying good business right now. I think if you peel the layers back on people's fourth quarter results, at least the people that I follow, you'll see that there is strengths that came from shoes, jewelry, intimate apparel, beauty, loungewear, comfort wear, it did not come from the Contemporary Apparel business. Contemporary apparel is a cyclical business. It's been that way since I've been in the industry for 30 years and I'm sure it's going to continue to be that way. So I think that's one comment that I'd like to say. Secondly, big over little was a challenging look for the customer to adopt. Where we believe we are headed is not challenging, it's actually friendly for the customer. So I think that's not an issue. As I said in the prepared remarks in retrospect, I think we could have distorted more into the non-apparel categories and we would've gotten more productivity out of our inventory. We'll continue and as we've said in our prepared remarks, accessories led the pack at both Urban and Free People. We'll continue to work the store investment into those non-apparel categories while we're working to find sparks of light in our Apparel business, which we are seeing. With regard to planning inventory, I'll just take that for Eric. We do not plan inventory comps. We plan inventory based on weeks of supply. Over the long term, our goal is to have gradual improvements of weeks of supply. And I'm talking about 1/10 of a week, 2/10 of a week, season in, season out. And that with nine out of our last 11 quarters down with inventory, we've been delivering that objective.

Our next question comes from Betty Chen with Wedbush Securities. Betty Chen - Wedbush Securities Inc.: My question is around SG&A. Eric, I believe you mentioned earlier that due to some investments in BHLDN International and also the DC in Europe, SG&A will lever around a 4% comp. I was wondering if there might be some other areas that you can pull from the core business in case that top line trend should soften? And then also just a clarification, when you guided to low single-digit comps for this year, is that including the Direct business?

I'll take the latter first. Back to Glen's earlier comment, we were just talking about how we've historically planned comps in the past, not necessarily providing guidance for the future. When it comes to the SG&A question, we mentioned the 4% positive comp required to leverage SG&A. I think if you look back over history, we've been able to manage the business, SG&A growing at the approximate same rate as sales, slightly better on some occasions. So I think that's a fair way to look at it. And should there be comps that do not live up to the 4% range, so something less than 4%, I think we displayed in the fourth quarter, and we'll try and do our best to offset those costs. But I think whether you look at the leverage point or you look at the SG&A growing at about the same rate as sales, I think they're both fair comparisons to how we think about planning the business.

Our next question comes from Erika Maschmeyer with Robert W. Baird. Erika Maschmeyer - Robert W. Baird & Co. Incorporated: Could you talk about, in terms of your plans for the back of the year, roughly how much of your production and fabric you have locked in to date?

Erika, that's a good question, but then I don't know the answer. So I think we'll have to get back to you. It's not something, I mean we have been -- Barbara Rozsas is standing to my left. Barbara has been with the company more than a decade. Barbara has been traveling to Asia-Pacific for more than two decades. We have deep, deep relationships with their suppliers. There are contracts and then there are handshakes. And I'm sure Barbara has -- anything that she needs to commit is committed to, but at the same time, our vendor base understands that the more nimble they can leave us, the better it is for them and for us. So Barbara, do you want to add anything?

I think that we will continue with our strategy as a multiple challengers, it works very well in the company. It's a very layered approach. And yes, we do book production space and fabric commitment if applicable. But our goal as a sourcing team, it's pretty clear. We're going to stay focused on compelling product and we're going to stay focused on providing flexibility for the merchants through our layer calendar approach.

Our next question comes from Howard Tubin with RBC Capital Markets. Howard Tubin - RBC Capital Markets, LLC: Glen, over the course of maybe the next nine months or so, would you expect to see any shift in the Urban Outfitters chain either away or towards private label, giving what you are seeing in fashion develop?

Yes, Howard, I think we do not -- we use private label or as we call, we don't like to call it private label, and I talked about that on the last several earnings calls, we call it our own brand because we try to put as much, if not more design into our own product as the market does. We use that product strategically to fill voids that exist in the market. We do not use it to drive margin. We really use it to give our customer that which we can't find for him or her in the market. I would guess that the penetration in both Urban Outfitters and Anthropologie will remain relatively constant to where it is now. We are in a good place, which is about 50%.

Our next question comes from Marni Shapiro with The Retail Tracker. Marni Shapiro - The Retail Tracker: I'm curious about your Direct business, and if you see any difference between the brands and how the consumers at the different brands shop or do they all shop pretty similarly? And if they are different, are you infusing this information into the strategy if the Urban customer shops stores and online different than the answer customer? And I'm curious about things like at Amazon Prime, does something like that make sense? You talked about your shipping cost. Does something like that make sense to your company where it's already at a premium to some other retailers, price is not an issue if the product's right. Would it help to make your loyal customers even more loyal and buy even more?

Yes, Marni. Great question. There are consistencies across the three brands. And now, Leifsdottir and BHLDN also have fairly meaningful direct businesses and there are differences. And the great thing about our company is we do not drive strategy from the corporation. We allow the strategy to bubble up from each of the brands. Each of the brands celebrate the fact that they're part of a portfolio company, so they share successes and failures with each other. I think all of our brands are making improvements to their sites. They are all playing with video, they all are using social media, they learn from each other with regard to marketing, category distortion and so on. Every manager of Direct business for each of our brands is always off testing something, including free shipping or subsidized shipping. It's something that we constantly look at. And the great thing about the Direct business is you can manage the ROI -- or measure the ROI literally to the penny. And the great thing about our database, with 7.5 million customers now, is we have real clarity on cause, effect, return on investment, lifetime value and so on. So I think you'll just see us continue to get better and better at it.

Our next question comes from Eric Beder with Brean Murray. Eric Beder - Brean Murray, Carret & Co., LLC: Eric Beder, Brean Murray. Could you talk a little about the incremental costs from the 11 stores you're putting in more than last year? And when should we kind of plan on that hitting in the area? Where are those stores -- where should we look at the mix of stores this year obviously in the concept.

The increase in store count is coming in two places, one is in Free People. We are very pleased with the performance of that brand overall, and we are accelerating our store expansion there. And also an increase in the international European expansion of both urban and Anthropologie. So that's where the increase is coming from. In terms of flowing through the year, we'll likely see a waiting to the front part of the year more in the 20% to 25% range versus where we had been historically or at least this past year where we were much more back-end loaded. So we still have a fairly heavy load in Q3, Q4, but not to the degree of this year.

Our next question comes from Dana Telsey with Telsey Advisory Group. Dana Telsey - Telsey Advisory Group: I missed part of the call. I'm on the call now. Can you please talk, Glen, a little about inventory levels as you plan the back half of 2010, given obviously, the issues with the first half of '11? How are you thinking about the back half of '11?

Yes, Dana, since you missed the call, I'll be happy to speak to you after the call or Eric or Oona. But in terms of inventory, as I've said repeatedly, we plan weeks of supply. We don't plan comp inventory. We'll plan, we'll continue to plan for a modest improvement in weeks of supply, meaning 1/10 or 2/10 discount off of our run rate on a season-after-season basis. We've been negative inventory for nine out of the last 11 quarters. So we've done that and we'll continue to do that.

Our next question comes from Robin Murchison with SunTrust Robinson. Robin Murchison - SunTrust Robinson Humphrey, Inc.: Just wondered if you could tell us what your assessment is of the catalogs that have been launched this year? How would you rank them?

I think that they are good. We talked at the ICR -- I'll take Anthropologie, go at it alphabetically. The Anthropologie February catalog we were not thrilled with. I think the March catalog, the photography is beautiful. I think in the spirit of being creative, we might have gotten a bit too creative with the typography and the way the product was priced, but the product itself, the shots are beautiful. I think the Urban book, we made a lot of progress in the way that we are merchandising the book. I think the message is loud and clear, and I think they've done a great job. The Free People books and videos have been quite frankly sensational. If you haven't had a chance to go to YouTube and look at the Free People Paris video, I encourage you all to do that. I think we're between YouTube and what's the other website, we're up over 100,000 views and it's continuing to grow.

Our next question comes from Stacy Pak with Barclays Capital. Stacy W. Pak: Glen, I am still struggling with the whole fashion thing and I'm hoping you can help me, because when I look at the trends out there, I mean I don't think it's that Earth shattering. I mean, okay, so we're doing wide leg or flair and to the floor and plats and stripes and florals, et cetera. So I don't see this major shift, and I know you said you have 50% open to buy for Q2. So I'm wondering why you're not more confident that you'll be able to address the correct trends more quickly. Is it that you think your customer takes longer to respond to trends? And I'm also noting the weakness in the West and Northeast. So what is it exactly? Is it the wrong trend for your customer? Is it they take longer? And I just don't understand why your fabulous merchants and designers wouldn't get it quicker. So help me there.

Yes. Stacy, first of all I would say that generally speaking, our customers are early adopters. I think that -- and you've been covering us for a long time too, we tend to feel these things earlier than many people in our peer groups. So that's the first thing I would say. The second thing is at the ICR, I said that getting the product right is like putting a meal on the table for 100 people. It is a difficult thing. There are a lot of moving pieces. I mean we buy in multiple countries. We have sweaters, knits, soft wovens, structured wovens, denims, accessories, shoes and it is a complex thing to move, especially when you don't want to move it too quickly, when you want to be as physically responsible as this group is. I mean we earned 18% in the fourth quarter. I don't know that there are too many other companies that earned that kind of ROS rate. So the group, I've been got a lot of pressure on the group to move the assortments, but to also be fiscally responsible. So that's kind of one answer to your question. The second answer to your question, Stacy, is I agree with you, there's a lot of fashion out there and there a lot of trends out there. But I go back to what I said a few moments ago, I don't think there are too many people, other than the people who are highly promotional, which we were not in the fourth quarter, whose Apparel business is particularly good. It is just not a place where our customer is spending a lot of money right now. She's spending money, but she's not spending as much money as she has historically. I firmly believe that people have either consciously or unconsciously a set amount of money that they're spending every week or every month. And let's say it's $1,000 a month, I think people are spending more on shoes and jewelry and some other non-apparel categories right now. And our apparel team has to find a way, and I know they will, to make the apparel so compelling that they'll get their percentage of share back. So they're not doing poorly. I would still would guess that they're doing better than most other retailers, when you peel back the onion. Where I think we missed it was we didn't distort enough into non-apparel.

We'll take our last question from Jeff Black with Citigroup. Jeff Black - Citigroup Inc: Maybe just a closer on the Wholesale business and what kind of environment we're seeing there from a margin perspective, and what kind of pressure there we're seeing as we head into this year versus last year? And do you have any breathing room to push any cost increases there?

Yes, Jeff, and again, I have to give credit to the Free People group this past quarter. The product is so sensational, I think if not the best performing vendor, one of the best performing vendors at most department stores and specialty accounts have right now. Quite frankly, they're happy to have the product. So we're not -- we're able to be as profitable or quite frankly a little bit more profitable than historically. Leifsdottir, you can see by the results, I mean, still a relatively small business, but we have positive traction again, which we're very pleased about. So we feel good about our Wholesale business. We love it. We love our partners, and it's definitely headed in the right direction.

Thank you. This concludes the Q&A portion. And I will now turn the call back over to Glen Senk.

Malena, thanks so much. And I thank all of you for your support and questions. And I know Eric and Oona have several appointments scheduled with you. And of course, we welcome any and all dialogues. Thank you.