Eric Artz - Chief Financial Officer Glen T. Senk - Chief Executive Officer, Interim Global President of the Urban Outfitters Brand and Director Calvin Hollinger -

Paul Lejuez - Nomura Securities Co. Ltd., Research Division Stacy W. Pak - Barclays Capital, Research Division Roxanne Meyer - UBS Investment Bank, Research Division Anna A. Andreeva - JP Morgan Chase & Co, Research Division Jeff Black - Citigroup Inc, Research Division Eric Artz - Urban Outfitters Inc. Dana Telsey - Telsey Advisory Group Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division Brian X Tunick - JP Morgan Chase & Co, Research Division Pamela Nagler Quintiliano - Oppenheimer & Co. Inc., Research Division Alex J. Fuhrman - Piper Jaffray Companies, Research Division Michelle Tan - Goldman Sachs Group Inc., Research Division Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division Omar Saad - ISI Group Inc., Research Division Adrienne Tennant - Janney Montgomery Scott LLC, Research Division Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division Marni Shapiro - The Retail Tracker Kimberly C. Greenberger - Morgan Stanley, Research Division Christine Chen - Needham & Company, LLC, Research Division Janet Kloppenburg - JJK Research

Good day, ladies and gentlemen, and welcome to the Urban Outfitters Inc. Third Quarter Fiscal 2012 Earnings Call. [Operator Instructions] And as a reminder, this conference call is being recorded. 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. Glen T. Senk: Thank you. 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 select members of our executive team. Earlier this afternoon, the company issued a press release outlining the financial and operating results for the 3- and 9-month periods ending October 31, 2011. 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 that 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 third quarter fiscal 2012 performance versus the comparable quarter of last year. Net sales increased 6% to $610 million. Income from operations decreased 30% to $73 million or an operating margin of 12%. Net income was $51 million or $0.33 per diluted share. Comparable retail segment sales, which include our direct-to-consumer channel, decreased 3%, including an increase of 14% at Free People, flat comparable sales at Urban Outfitters and a decrease of 7% at Anthropologie. Total company comparable store net sales decreased 7%. Direct-to-consumer comparable net sales rose 15% with direct-to-consumer penetration increasing to 20%. Wholesale net sales increased 13% to $39 million. Gross profit decreased 8% to $216 million, while gross profit margins decreased 571 basis points to 35.4%. Selling, general and administrative expense expressed as a percentage of net sales increased 53 basis points to 23.4%. Total inventories increased $78 million to $367 million or a 27% increase over the prior year period. Finally, during the quarter, the company repurchased and retired 13.3 million common shares for $322 million, thus completing the 10 million shares authorized for repurchase by our Board of Directors on August 25, 2011. Turning to our key business metrics. I'll begin by providing detail on sales for the quarter. New and noncomparable store sales contributed $62 million to the consolidated net sales increase. The company opened 16 new stores in the quarter: 4 Anthropologie stores, 4 Free People stores, 7 Urban Outfitters stores and 1 BHLDN store. Within the quarter, total company comparable store sales were strongest in September followed by August, then October. Within North America, sales in Anthropologie and Urban Outfitters were strongest in the South and weakest in Canada, while sales at Free People were strongest in the West and weakest in the Northeast. In Europe, sales at Urban Outfitters were strongest in Continental Europe and weakest in Ireland. By store type, sales at Anthropologie were strongest in freestanding locations and weakest in malls, while Urban Outfitters were strongest in malls and weakest in street locations. Sales at Free People were strongest in lifestyle centers and weakest in street locations. The comparable store net sales decline was driven by a 1.3% decrease in average unit selling prices, a 1.5% decrease in the average number of units per transaction and a 4.5% decrease in total transactions. Direct-to-consumer revenue increased 17% to $123 million, including a 15% increase in comparable sales. The penetration of direct-to-consumer net sales to total company net sales increased 180 basis points to 20% with results largely driven by a 31% increase in website traffic to over 37 million visits. For retail segment sales, home was strongest at Anthropologie, men's accessories and intimates were strongest at Urban Outfitters and intimates were strongest at Free People. Wholesale segment sales for the quarter increased 13% to $39 million, driven by an 18% increase at Free People, offset by the reduction in lease starter sales as a result of the decision to exit the channel in May of this year. I'd now like to turn your attention to gross margin, operating expense and income. Gross profit in the quarter decreased 8% to $216 million, and the gross margin rate decreased 571 basis points to 35.4%. This decline was primarily due to increased markdowns to clear slow-moving women's apparel inventory at Anthropologie and Urban Outfitters, as well as occupancy deleverage caused by negative comparable store sales. Total selling, general and administrative expenses for the quarter as a percentage of sales increased by 53 basis points to 23.4% due primarily to deleverage in direct selling and supervisory costs driven by negative comparable sales. Our effective tax rate for the third quarter decreased to 32.8% from our year-to-date rate primarily due to favorable revisions to federal and state tax estimates resulting from our tax return filings in the quarter. Total inventories increased $78 million to $367 million or a 27% increase over the prior year period. Comparable retail segment inventories at cost, which include our direct-to-consumer channel, were 18% higher at quarter's end, while comparable store inventories increased 12%. The balance of the increase was due to the acquisition of inventory to stock new retail stores. As we look forward to the fourth quarter, it may be helpful for you to consider the following. First, we plan to open 21 new stores in the fourth quarter, bringing our annual new store total to 57 this year, including 14 Anthropologie stores in North America, 1 Anthropologie store in Europe, 20 Free People stores in the United States, 14 Urban Outfitters stores in North America, 7 Urban Outfitters stores in Europe and 1 BHLDN store. Second, given our inter-quarter sales trend during the third quarter, we ended the quarter with higher-than-desired inventory levels. As a result, fourth quarter gross margins could be lower than what we experienced in the third quarter on an absolute basis. We are committed to managing our year-end inventory to a more appropriate level. Third, we continue to focus on effectively managing our selling, general and administrative expenses. Our estimated leverage point for expenses in the fourth quarter is an approximate 2% comparable store sales increase. Fourth, we are planning for fiscal 2012 capital expenditures of $180 million to $190 million. Finally, our annual effective tax rate is estimated to be 36%, resulting in an estimated fourth quarter tax rate of 38%. As we look forward to fiscal 2013, we are planning for low double-digit square footage growth and are targeting 55 to 60 new stores. As a reminder, the foregoing does not constitute a forecast but is simply a reflection of our current views. So with that as a financial backdrop, I'll turn the call back over to Glen who will proceed with his closing commentary Glen T. Senk: Thank you, Eric. Let me begin my prepared remarks by stating that the organization and I were dissatisfied with our third quarter financial performance. While the absolute results compare favorably with many of our industry peers, the relative performance falls significantly short of our historical accomplishments and goals. The course ahead is as clear to us as the challenges encountered. We have 4 key priorities. First, and most importantly, improve the women's apparel offering at both Anthropologie and Urban Outfitters; second, manage the inventories aggressively to achieve an optimal inventory position as we enter the spring season; third, continue to finance growth opportunities, including distorted investment in our direct-to-consumer channel and continued brick-and-mortar expansion where our new store productivity continues to exceed that of the average fleet; and finally, ensure a smooth transition with the recent organizational changes, including a thorough onboarding of our new senior executives. Despite our disappointment in the quarter, there are several highlights I'd like to note. At Anthropologie North America, direct-to-consumer comparable sales improved sequentially versus the second quarter. And across all channels, bottoms, dresses, shoes and the home business were positive and strengthened through the quarter. The tops category, which represents more than half of the apparel business during this time frame, is where the challenge lay. This is a fashion issue, plain and simple. We need more compelling product, and the team is hard at work mining the selling attribute information and challenging the supply chain to adjust and move as quickly as possible to improve the offering. At Urban Outfitters North America, direct-to-consumer comparable sales also improved sequentially versus the second quarter, including a strong overall advance in women's apparel. Across all channels, women's bottoms, dresses, accessories and intimate apparel, along with men's and home, continue to build momentum during the quarter. We believe the assortment in stores are much improved and the holiday prototype results were encouraging, although it is too soon to predict success across the chain as the full assortment has yet to reach all stores. Free People delivered another strong quarter with solid results across retail, direct-to-consumer and wholesale channels, and they remain on track to open 20 new stores this year, more than double the number of stores they opened last year, which is a testament to the strong top and bottom line results the team continues to deliver. Our European businesses also displayed meaningful progress during the quarter in what has certainly been a difficult and volatile macro environment. Comparable store sales improved sequentially through the quarter for both Urban Outfitters and Anthropologie, and both brands posted strong direct-to-consumer sales. As a merchant at heart, I realize that I am an eternal optimist. So I ask that you not misconstrue my enthusiasm as an indication of our performance. This is a cyclical business, and I cannot tell you when our trend will improve. If history is any indication, I believe we will come out of this cycle stronger, that we have the operating model, core structure, brands and, most importantly, talent to achieve our goals. I also believe you will know when we are on the upward trajectory. You will see it in our product, the stores and our websites. We have a clear, long-term vision for our company and our prospects for growth. We are a multi-brand multichannel, multi-national retailer with tremendous opportunity within our core brands in North America and abroad with seeds for additional growth in our new concepts. Before opening the call to questions, I would like to thank the entire URBN organization for their hard work and dedication and our shareholders for their continued support. At this time, I will invite questions, limiting each caller to one question. Thank you.

[Operator Instructions] Our first question comes from Christine Chen of Needham Incorporated. Christine Chen - Needham & Company, LLC, Research Division: Glen, maybe you could share with us. You mentioned the direct-to-consumer you saw improvement sequentially. I'm just wondering, is that consumer buying different product? Are they adapting to new trends faster? And maybe you could talk about that by concept? Glen T. Senk: Yes, Christine, I think that we've seen this before. When we've had challenges making the tops relate to the bottoms perfectly, or making the prints, colors or textures work. If in our retail organization we're able to move quickly in our direct-to-consumer business. We're able to adjust the website much more quickly. So what we're seeing is true across all of our brands. The direct-to-consumer business is leading the way. And of course, we use that information to go back and guide our retail assortments as well. Christine Chen - Needham & Company, LLC, Research Division: And then I guess as a follow-up to that, are you now completely on single SKU? And does that enable you to manage your inventory behind the scenes better as you work through some of the inventory? Glen T. Senk: Yes, that was actually a major win for the quarter. So Calvin Hollinger is sitting next to me, and I'll have Calvin just to talk a little bit about that.

This is Calvin. So yes, we have single SKU across retail and direct. And what that enables us, as you mentioned, is to have a better view of inventory. For example, if you go to our stores, you'll find out that we have a mobile point-of-sale device in all of the stores now. And with that, if we do not have your size or your color, we can search the inventory and fulfill that automatically from that point-of sale-device from our direct channel. So it gives us tremendous customer service and inventory flexibility on the back end. Glen T. Senk: The one other thing I would add is that as of last Thursday, we went live with the new piece from the Free People website. If you type in your ZIP code, you can find out -- you can access the store inventory ownership on any item that's on the website. So that's another fantastic advantage and a benefit that results from the single of inventory.

Our next question comes from Adrienne Tennant of Janney Capital. Adrienne Tennant - Janney Montgomery Scott LLC, Research Division: Glen, can you talk about -- for the inventory management, I know you're a little bit high at the end of the third quarter. I know that you guys look at it in terms of weeks of supply. I'm just trying to figure out how we should look at the balance sheet inventory, which is sort of an input? And it seems to me that the weeks of supply would be sort of an output metric. So I'm just trying to figure out how we can understand when the, that gap between inventory and sales should start to compress and maybe get more in line with the sales. Glen T. Senk: Yes, I'm not quite sure. I'll start to answer the question then maybe Eric understands the input versus the output part of it. But let me say this. We were not pleased with where we ended the inventory at the end of Q3. And as we've said in our prepared remarks, we have every intent to manage that inventory so that we enter the spring season as cleanly as we'd like to. I think that we -- the sales came in, in Q3 a little bit softer than we thought they would. But I think we planned the inventory correctly. We just didn't get the sales. So we ended with more inventory than we'd like. With regard to the input-output, Eric, do you understand what Adrienne is asking or... Adrienne Tennant - Janney Montgomery Scott LLC, Research Division: Well, I guess that I -- and so when you look at weeks of supply, you would only know that weeks of supply is going up after the fact? So maybe I'm not understanding how you guys look at it internally. Glen T. Senk: Well, we -- when we look at weeks of supply, we -- first of all, weeks of supply is a unit calculation. It's not a dollar calculation. And we have a pretty advanced way of looking at the units that we want have, the minimum units in a store, how we want to turn in each category of product. And that's how we develop our plans. And that historically is how we have run our business. Also, units is a point in time. And if you're -- -- if the product or the category performs the way you expect it to, then it comes in across plan. If it doesn't perform the way you expect it to, then you have to either take markdowns to achieve that unit or you have to chase inventory. I think historically, when our business has been tougher than we'd like, we've ended up having to take markdowns. We've had more inventory than we'd like. And historically, of course, if business is good, we end up chasing inventory. I mean, I don't think there's any disagreement sitting around the table here with this earnings call or the senior executive group in my company that chasing inventory is a good thing. We want to get to the point where we are liquid, and we are -- and we have -- open to buy, to chase what's working. So that's our commitment. Eric wants...

All set.

[Operator Instructions] Our next question comes from Pamela Quintiliano of Oppenheimer. Pamela Nagler Quintiliano - Oppenheimer & Co. Inc., Research Division: Last quarter, you had indicated at Anthropologie, I believe, that 7 of the 9 major product classifications were outperforming and that 2 had severely underperformed. And when you went through that list today, I was hoping that perhaps you could give more granularity just on -- of those 9 major product classifications, how you feel beyond the bottoms, accessories, shoes and home? Glen T. Senk: Yes. So Pamela, what we've said in our prepared comments was that we have a tops problem. But quite frankly, the rest of the category in the apparel business are doing just fine. The problem really is knits and sweaters. As I've said in my prepared comments, during the third quarter, traditionally, those 2 categories are in excess of half of the business -- of the women's business. So when they're off, there goes the women's business. And that's our focus. And really, what happened in Q3 was no different than what I talked about on the last earnings call. Pamela Nagler Quintiliano - Oppenheimer & Co. Inc., Research Division: And then just as a follow-up to that, the lead times on the knits and sweaters when you talk about the inventory management? Glen T. Senk: Yes. And what I've said, and I think I've said this at a couple of the conferences that we've been to, the sweater business, the lead times, I wouldn't say they're long, but they're significantly longer than knits. So occasionally, we'll buy arns in Europe. We'll ship them to Asia. So that's probably best case scenario. If you own on the yarn on a sweater by days and weeks, then it could be significantly longer than that. Knits probably, on average, have the lead time of sweaters. So the good news is that we have the flexibility in SKUs in this category, and I hope -- we're not seeing the signs that I'd like to see yet, but I hope that we'll be able to move as quickly as we possibly can in that category.

Our next question comes from Kimberly Greenberger of Morgan Stanley. Kimberly C. Greenberger - Morgan Stanley, Research Division: Glen, when I'm wondering if you could talk to us about the management changes that you announced last week and the thinking behind the reorganization at Anthropologie. Just anything you can share with us on the new additions would be helpful. Glen T. Senk: Yes, I'm happy to. I've spent a long, long time speaking with a lot of people in the industry, and I really couldn't be more delighted with both of our recent hires, David and Chad. David comes to us with deep category experience, channel experience, vertical market experience his international experience. He's led a business in 1 form and another for nearly 2 decades. Chad, as most of you know, I think was one of the really pivotal forces behind Abercrombie, and I just couldn't be more thrilled to have both of them. I think the way we've organized Anthropologie, we've organized it around 3 major functions: the product function, the experience function and the operations function. I think the 3 people who are reporting to David in North America who run that business combined have 39 years’ experience within the brand. I think they're absolute best of class. I think what we've done with Wendy Wurtzburger is Wendy, as I've said over the years, is one of the finest merchants I've ever worked with. I think we have given her structure and responsibility where she can leverage everything that she's fantastic at and everything that she loves to do. And of course, we've supported her with Johanna, with Judy Collinson and a very, very talented team of merchants. Kristin Norris is actually the most tenured employee in the Anthropologie brand. She's the only person who's been in Anthropologie longer than me. Kristin is, I think, quite frankly, I -- she's just amazing. She has an amazing sense of store design, visual merchandising. She knows how to make a catalog sing, she knows -- she is current with web technology. As you all know, I have tremendous admiration for what she and the team did at BHLDN, and I think she'll take that kind of magic and bring it back to Anthropologie. And again, she has a very tenured team underneath her, a team that's focused on merchandising and styling, a team that's merchandised on catalog execution, on web execution, on store design and on general art. And then Denise is the newest team member. Denise has been with us for a little over 6 years, just a powerful, powerful operator. She has a terrific relationship deep into the organization. And what we've really asked Denise to do is to focus on all store operations, direct-to-consumer operations, buying operations to be the assistant liaison between the systems group and the brand and, of course, to continue to manage planning and allocation with Gary Khrane [ph] and Chris who have been with us collectively between the 2 of them, I think, 18 years. So I think this is the A team. I love the way this is organized, and I'm just excited to turn them and David loose. I also just want to give props to Gisela [ph] who's been running Anthropologie Europe now for I think the last 4 or 5 months, and she and the team there have really found their sea legs, and David [ph], I know, will be excited to work with Gisela [ph] as well.

[Operator Instructions] Our next question is from Dana Telsey with Telsey Advisory Group. Dana Telsey - Telsey Advisory Group: Can you give a little bit more color on the gross margin, URBN versus Anthro? How you're feeling about balance of inventory versus pricing? And just how you think of the components especially going forward? Glen T. Senk: Eric is going to answer this.

Sure. So from an inventory perspective, as Glen mentioned, we did end the third quarter higher than what we would have liked to have ended. So we will be focused on bringing that inventory level down and trying to position ourselves as best we can as we enter the spring season and finish up the year. I think it's safe to assume, based upon what we've seen in the business, that the Anthropologie gross margin and inventory challenge is a bit greater than the URBN business. So that's where our focus will be. And I want to say that it's a fundamental change in our strategy, meaning as we move through this inventory through the fourth quarter, we will be aggressive, as we always have, with slow-moving inventory. But we'll do it in our brand-right way. And the overall strategy of our promotional cadence won't be that different than what we've seen in other periods from what we know today in that. Glen T. Senk: I mean, the only other thing I would add is when you look at the 571-basis-point decline in gross margin, the vast majority of that is markdown related. I think it's really important for people to understand that there is nothing structurally that has changed with the business model other than the markdown. And I believe that when we figure out our tops business, that we will get much closer to our historic markdown rates.

Our next question comes from Michelle Tan of Goldman Sachs. Michelle Tan - Goldman Sachs Group Inc., Research Division: I was wondering, just following up on the inventory question. I think in the past you've really talked about the content focused around inventory as opposed to the level. It sounds like you are a little more focused on controlling the levels now, as well, going forward in addition to that. So just wondering, Eric, maybe this is a question for you. If we put aside the carryover inventory that you have because of this quarter sales, how are you thinking about -- what level of sales or comp are you thinking about buying inventory to for fourth quarter and for first quarter? And I guess how is that changing versus what you've done in the past?

Michelle, we -- what I would say is that we're definitely changing our posture, as Glen mentioned, to try and get on the backside of the business, if you know what I mean, in the sense that we're trying to chase the business, get behind the sales and try and close the gap between our sales growth versus our inventory growth. In all reality, we don't know what comps are going to be for the fourth quarter, so we're not going to be able to get into a prediction here of where our inventory is and what we're planning to. But I think it's safe to assume that because of the deceleration that we saw in the third quarter, we are going to act more aggressively than we perhaps did in other quarters and perhaps leading to gross margins on an absolute basis being less than the third quarter. So we do understand we'll be in a promotional environment through the holiday period here, and we'll see where it leads. Michelle Tan - Goldman Sachs Group Inc., Research Division: Right. And then I guess any kind of color on whether you're treating the spring the same way as you're kind of thinking about getting through the holiday or... Glen T. Senk: Michelle, I think if you look at our inventory performance over the last 5 years, we've done a very good job of managing the inventory relative to the sales. And, I mean, there were years where we had continual improvement in our inventory in our weeks of supply. So that's our goal. I think we did a reasonably good job managing inventory. As I said a moment ago, our third quarter sales came in less than we expected. And what Eric said, it's not a sea change. It's just a slightly heightened emphasis. We want to chase the business a little more than we have been. But that's an adjustment. Historically, I think the group's done a good job with inventory, and I expect we'll continue to do a good job with inventory.

Our next question comes from Janet Kloppenburg of JJK Research. Janet Kloppenburg - JJK Research: Glen, I just wanted to get back to what you just said about there not being a structural change in the business. And I know you've identified the tops classifications as an issue, but I also look at the promotional environment, and I wonder if that could be a factor. And it's a new world out there now, and the promotional activity is significantly higher than it was 2 years ago and I can't see them abating. And I'm just wondering if you have given some thoughts or how this might affect your pricing strategy and your operating margin goals longer term? Glen T. Senk: Janet, I wish I had a crystal ball. That's a fantastic question and, certainly, we're in a new environment. All I can tell you is, I started talking about this thing called newness elasticity, I don't know, 1.5 years ago. And all I can tell you is that if the product is right, we have tremendous sell-throughs irrespective of price. Now, of course, the item has to be of value. But, I mean, there was a blouse last week that was in one of our brands. It was the top-selling blouse, and it was a $200 blouse. So top-selling in terms of sell-through performance. So clearly, the customer valued that blouse. And I said on the last call that I think of any other brands, the one that has kind of the most competitive situation is probably the URBN brand. But I don't think that we have to change the operating structure or the profit structure to compete. I just think we need to be smart about going after key items that send the right kind of value message, and then we have to surround it with great fashion. And so that's the best I can tell you right now. I may have more information in 3 months or 6 months from now, but I'm certainly not giving up on our long-term profit goals.

Our next question comes from Stacy Pak of Barclays Capital. Stacy W. Pak - Barclays Capital, Research Division: So one follow-up. I'm confused. I thought -- I know I read in your commentary that October was weakest. But then I thought you said URBN comp improved as the quarter wore on. So could you answer that? And then I guess, Glen, kind of a 3-parter for you. Why do you think it's taken so long to turn the Anthropologie business? How far along or off are you from figuring out tops? And then is -- Eric, is the goal to finish Q4 with inventories about in line with sales on a comp store basis, square footage or something like that so you really are starting 2012 clean? Eric Artz - Urban Outfitters Inc.: So let me take the clarification first for you, Stacy. There were 2 comments in the prepared commentary. One was about comparable store sales. And for comparable store sales, they were strongest in September, followed by August then October. In Glen's comments about both the Anthropologie and the URBN business, he talked about sequential improvement in their direct business. So one was a store comment, one was a direct comment. Glen T. Senk: Okay. And also, I did say that there was improvement in the quarter in Europe. Okay? And then, Stacy, why so long in Anthropologie? I don't want to -- you know me well as most of the people listening. The last thing I want to do is sound defensive. But I will point out that we had the second-best year in the company's history last year, and Anthropologie was an important part of that. Anthropologie has had superb performance for decades. This is -- as I said in the prepared comments, this is a cyclical business. We made some mistakes. I think we made some structural mistakes, some people mistakes, some fashion mistakes. I think we have the right people in place. I think we have the right structure. And I see improvement in the business. I know you do because I've had conversations with you. It's not about the finances but about the way the store looks. And I can't tell you when, but I believe that it will turn in the future. With regard to the inventory in Q4, I think we addressed that already. I don't think we're going to tell you exactly where it's going to end. I just think what we're going to say philosophically we're -- we intend to end very clean and -- both from an absolute basis and from a content basis.

Our next question is from David Wiener of Deutsche Bank. Again, David, your line is open. You may need to double-check the Mute button on your phone. And we will move on. And I guess our next question is from Marni Shapiro of the Retail Tracker. Marni Shapiro - The Retail Tracker: I'm going to start with the positive comments before asking the negative. I think the lead of Urban Outfitters looks really good right now. And I know it's a small part of the assortment, but it looks fantastic. So I hope that's more of what's to come. But can we talk about Free People? You guys really haven't touched on it in Q&A yet, and it looks like the sales on a sequential basis seems to have slowed a little bit. Still fantastic but slowed a little bit. In the department stores, it felt like the inventory at Free People was a little bit heavy, a few more markdowns remains -- we're seeing out of the Free People brand. So I was curious if you can give a little bit more color about what's going on at Free People. Were you having a tops issue there as well, but the rest of it was strong enough to offset that? And what we should think about for the fourth quarter for Free People. Glen T. Senk: Well, I think, I mean, the numbers are the numbers. I think Free People had a terrific quarter. I haven't been into -- I don't know which department store you were referring to, but our department store business is good. It's actually very good. So I think that Meg and her team have done a fantastic job. I think the product continues to look very differentiated. I think she and the team have identified a lot of the fashion early. I think they've done a -- been very, very smart with how they architected the assortment, just special props to them. If you haven't seen it, they were in the New York Times Style section on Sunday with a terrific mention about a group of party dresses they did, which is exciting. And I just think that they continue to build upon their strengths. Also, I want to reiterate they're opening 20 stores this year. That's double the number that they opened last year. And we're very, very bullish about Free People. With regard to Urban, by the way, as I've said in my prepared comments, we were pleased with the fall -- the holiday setup, which we did in King of Prussia. And that product, Marni, is hitting the stores now. I think we have another week to 10 days before it's in the stores fully. But the King of Prussia reaction is not necessarily indicative of what's going to happen throughout the country. But the King Prussia reaction is very positive.

Marni, I would just add that just be mindful of the comparisons there for Free People as well. They are up against some phenomenal numbers from last year.

The next question in queue comes from Brian Tunick of JP Morgan. Brian X Tunick - JP Morgan Chase & Co, Research Division: All right, hopefully, you've set the bar low enough on the gross margin side for the fourth quarter. But my questions are really on the capital side, really on the square footage, trying to understand a little more about next year to some degree regarding the international versus domestic view. Obviously, there's some jitters out there about the international side. And then finally, what kind of cash cushion that you guys feel comfortable running the business with, particularly given how much stock you just put back this quarter?

So on the international front, Brian, and how we think about next year, our -- we've been pleased with our European business and, specifically, as Glen called out, in the third quarter. URBN Europe, as an example, outperformed the U.S. on a retail segment comp basis. So we're very pleased with how that team is executing both in their stores from a product perspective and on the web. As Glen mentioned earlier as well, Anthropologie improved their comps during the quarter and turned positive as well. So that was an important step as the new team and a broader effort has been put on that business. So when we think about European expansion next year, I think you can think about it in similar terms with what we've done this year. It will expand beyond a U.K. focus to be somewhat German focused on the URBN side. And there was a final piece to your question, I believe, about cash and the buyback. We're clearly pleased with the progress that we made. As you know, we purchased a significant amount in the third quarter. It brings us to a year-to-date total of about 20.5 million shares or $540 million repurchased. So capital allocation will be a topic with our Board tomorrow. We do feel like the cash balance that we have is -- it's kind of the minimum balance that we would want to see. But that is a topic that we will continue to discuss with our Board.

And our next question is from Jeff Black of Citigroup. Jeff Black - Citigroup Inc, Research Division: So Glen, I understand the tops at Anthropologie. But on the timing, can you just go over and help us understand at each division what the team kind of inherited for 3Q? How much were they able to alter for holiday in 4Q, and really when we get kind of full ownership of the assortment by the merchant teams that you've put back in place these last couple of quarters? [:p id="330715" name="Glen Senk" type="E"/> Yes. Well, I mean, generally speaking, we're -- I would say we're 50% liquid in the following quarter. So if we're having a call today and we're looking at the first quarter, I would say generally speaking, we're 50% liquid. In the second quarter, we're virtually 100% liquid. In a category like knits, we're more liquid. In a category like sweaters, we're less liquid. So what I would say for all of the businesses is that the sweater business is said and done through the end of the year. There are things that the group can do for Q1 and Q2, but I would say the next 10, 12 weeks is more or less, that’s done. The knits business is a much faster business. I think when we made -- remember, Terence has been with us now, the head of Women's Apparel at Urban Outfitters, since the end of May. So Terence would have been virtually 100% liquid for third quarter at that point. And with the Annette Hickey [ph] now running the men's business with Anthropologie, when we made those structural changes, I'm going to guess they were 50% open in Q4. So that's the good news with knits, is that we can move more quickly. I'm not sure -- I -- hopefully, this is answering your question. I'm not sure what else you're looking for. Jeff Black - Citigroup Inc, Research Division: 50% liquid in 1Q and 100% by 2Q. Where were we in 3Q just now? Glen T. Senk: Well, now we would be spent. You -- wait, I'm not sure. I mean, we're in the fourth quarter now, but we're -- pardon? I don't understand the question. Jeff Black - Citigroup Inc, Research Division: I'm just trying to figure out the trajectory of when we think we get to full liquid position. And with 3Q we were 0 liquidity, 4Q we're 25%, 1Q we're 50%, what's the... Glen T. Senk: Well, we're, I mean, we're in the fourth -- we're 2 weeks into the fourth quarter right now, right? So if -- the third quarter is a thing of the past. I haven't -- I don't remember the number, but if we're 10% or 15% liquid in the fourth quarter at this point, that's probably the right number because you just leave a little bit of January, the top open. Now having said that, the knits business might be 25% open, the sweater business might be 100% committed. So it really depends on a category-by-category basis. But generally speaking, I would say 12 weeks out, we're 50% committed. That's probably a fair number for you. 24 weeks out, we're not committed. So this is something we've talked about on earlier calls. The group has done a great job with flexibility. But let me just also remind everyone, just because you're flexible doesn't mean you're going to buy everything that sells and nothing that doesn't sell. It's an iterative the process, and it's going to take people time to get the assortment exactly the way it should be. Jeff Black - Citigroup Inc, Research Division: Got it. That's helpful.

The next question comes from Anna Andreeva of FBR. Anna A. Andreeva - JP Morgan Chase & Co, Research Division: First, I was hoping to follow up on gross margins. Eric, are you guys saying that as a rate, fourth quarter margin could be worse than third quarter 35.4% or just the basis point decline could be worse than 570 basis points? Glen T. Senk: The rate. So less than 35.4% probably, yes. Anna A. Andreeva - JP Morgan Chase & Co, Research Division: Okay. Okay, got it. And Glen, I was hoping you could focus a little more in the Urban Outfitters division. Going back to the second quarter, there were obviously some encouraging trends in the business. So what do you think caused the slowdown that we saw in the month of October? Is it maybe some of the bets that the merchants were making you feel were wrong? Or is this deceleration reflective of not enough risk? Obviously, you mentioned the reads on holiday products were very strong. So just hoping to understand what's driving that? Glen T. Senk: Yes, I have to say October surprised me a bit because within the brand -- I mean, I'm not going to give details, but within the brand, the biggest deceleration in October was in the Urban brand. And it surprised me because I think the store looked good. The holiday product that I spoke about was in King of Prussia. So within one store. It's only been the last couple of weeks, maybe last 3 weeks that it's begun to roll out and it'll be fully in-store across the chain before Thanksgiving. So all I can tell you is it's -- November, it's too early to call the fourth quarter. We'll have a Q, I guess, on, in 4 weeks. And -- but at the URBN brand, November is beginning to feel more like the quarter in general instead of October. But, I mean, October surprised me, so we'll have more information when the Q comes out.

Our next question is from Erika Maschmeyer of Robert W. Baird. Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division: I guess a follow-up on URBN. I know the stores look better and it sounds like you've made progress. Could you speculate a little bit more around why you think you haven't seen more progress? Is it that the environment for that concept is more competitive? Anything else that you can think of? Glen T. Senk: Erika, the wonderful thing about being a merchant is that you hindsight every day. So I can look back and think of 100 things we could have done better. But I want to be clear. I'm really -- I'm happy with the team. I think we've made great progress. Have we distorted exactly the way, in retrospect, I think, we should have? No. But I think we're much more distorted than what we were 6 months ago. I think the -- I think they've managed the architecture, the assortment well. So by and large, I think they're executing well. There is absolutely a lot of learning, so I'm not going to say that we can't hindsight and recognize what we could have done better. I -- honestly, as I've said a moment ago, I don't understand why October softened, and I'm hoping that November and the fourth quarter will look more like the third quarter in total or, quite frankly, more like September did. As I've said a moment ago, the King of Prussia prototype did very well. I just don't want to use that as a proxy for the total chain. But God willing, it will be. We'll be on the next call and be happy if that happens. So I just don't know. But I think the store looks good.

Next question comes from Paul Lejuez of Nomura. Paul Lejuez - Nomura Securities Co. Ltd., Research Division: Can you guys maybe give little bit more color on the profitability of the European business relative to last year? And then also, just wondering about the infrastructure investments necessary in Europe. As you think about how you spend capital next year, has that -- does that need to step up over the next 12 months? Or is there an opportunity to not spend as much capital in Europe as you grow out the store pace there? Glen T. Senk: I'll ask Eric to take that one.

So Paul, on the URBN business, if you look at their four-wall profitability, they've done a good job over, say, the last 3 years with their new store additions. So as you know, we had some legacy stores, example being Ireland, with low levels of profitability. So as we've expanded and the team's done a great job of selecting new sites and opening those doors, we've seen the overall levels of our four-wall profitability through. On a consolidated basis, this year is not a significant step because of the Russian investment. So the -- that is the investment in the new DC [ph] which we talk about. So if you look at their business on a stand-alone basis, their change year-on-year is not dramatic, but it's because we're making that long-term investment in our distribution facility, which will give us the capacity as well as over time give us improvement in our operating costs and transportation costs as well. Glen T. Senk: The only thing I would add is just -- and I know I've spoken about this in a couple conferences. We had a wonderful store opening in Frankfurt, which is our second store in the German market. And I think that you Lew [ph] and his team have done a great job with localization. Those of you who follow international apparel businesses know that Germany is not an easy nut to crack. And right now, we couldn't be more pleased with their performance at Frankfurt. And we're excited to open Berlin, which is our next store in Germany. As Eric said, outside the U.K., Germany for URBN will be the key focus for the next kind of 12 to 24 months. I think Paul's other question was additional infrastructure. Really, Russia was -- you're breaking up. Now you'll continue to see that capitalized. But in terms of absolute spending, that was a big one.

Next question in queue comes from Roxanne Meyer with UBS. Roxanne Meyer - UBS Investment Bank, Research Division: My question is on Free People. Obviously, it's been a standout for you, and I'm just wondering if you can elaborate on your long-term strategy. To what extent are you going to leverage DTC globally? So you already -- are you going into the markets, which really seems like a layup opportunity and you -- at some point in time to open stores globally for Free People? Glen T. Senk: That's something, Roxanne, that we're spending a lot of time talking about. As you know, we -- the company ships to 112 countries at this point. We've been strategically very focused on Canada and Australia. We've begun shipping to Asia. They've had a terrific response in China. They meaning Free People. I'm optimistic about the opportunity for Free People internationally. I think that the group has so much opportunity in North America. That's kind of where their mindset has been. But we're beginning to think about international going forward and, you're correct, absolutely, using direct-to-consumer as a pathway to that.

Our next question is from Alex Fuhrman of Piper Jaffray. Alex J. Fuhrman - Piper Jaffray Companies, Research Division: So we have seen over the course of the year, I know you've guys have talked a little bit about testing wireless checkout capabilities at all 3 brands. I'm curious if we're going to see a full rollout here ahead of Black Friday, especially given that it seems like the last few years there really have been quite long checkout lines around that period for Urban Outfitters. Glen T. Senk: So I'll ask Calvin to answer that.

This is Calvin. So yes, as I mentioned, all stores have moved kind of a sales to all sort of wireless checkout capabilities. At a minimum, each store has 2 devices. We are now deploying additional 200 devices in some select stores by this Friday. So everyone will -- each store will have it. Some will have multiple devices. Glen T. Senk: And the URBN folks have -- and by the way, this is domestically. And the URBN folks have been terrific at using these devices. It's -- in fact, if -- one of the things we didn't talk about was this wonderful marketing thing the URBN brand did, called Store on Tour, where we went around with a tractor trailer and did business in a variety of communities during the quarter, and all the sales were transacted mobilely. And any kind of special event that we've been doing has been transacted mobilely. Also, in BHLDN, virtually probably, Calvin, 85% of the sales are mobile.

Okay. Glen T. Senk: So it -- this is something we're very committed to. And as the stores get the mobile experience, we'll begin -- we'll keep continuing to feed them devices. I want to reiterate, because I'm not sure people understand the magnitude of this. You can now walk into any of our stores, and with one mobile device, you can buy something from the store and buy something online or from another store in one transaction on a mobile device. It's pretty sensational. I think we are one of the earliest people with this technology. So congratulations to Calvin and the team.

Our next question is from Lorraine Hutchinson with Bank of America Merrill Lynch. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: I just wanted to follow up on a comment that you made during the prepared remarks about the new store productivity being very high. Are there any numbers you could put around your recent store openings, how they've trended versus expectations? And then maybe the difference between the European openings versus U.S.? Glen T. Senk: Yes, I'll take a stab at this and then Eric will make sure I'm being honest. I think that we have done a tremendous amount of work with regard to site selection, store design, construction and operations over the last several years, and it's really paid off. We are very, very proud of the fact that every new store group over the last several years is basically performing at the fleet number. That's in North America. In Europe, our new stores are performing above the fleet number. As Eric said, I think that we've gotten a little smarter with experience in terms of site selection, rightsizing the stores, construction and so on. So I'm asked, Lorraine, or we’re all asked consistently, if direct-to-consumer business is more profitable than brick-and-mortar and growing faster, why wouldn't we slow down our brick-and-mortar expansion? And I've got to remind people that we have a return on dollar invested with brick-and-mortar. I think, Eric, it's a 60% number? So much better than we're getting with the cash that we have forked. Also, there's a high level of synergy between our direct-to-consumer business and our brick-and-mortar business. Those customers who shop all 3 channels, catalog, brick-and-mortar and online, spend on average between 3 to 5x as much as any customer who shops in a single channel. So objectively, there's all of the reason in the world to continue with brick-and-mortar expansion, in addition to doing everything we can to accelerate our direct-to-consumer sales.

Our next question comes from Omar Saad of ISI group. Omar Saad - ISI Group Inc., Research Division: Glen, hoping you could -- given everything that's going on in Anthropologie division, maybe you could kind of refresh us on who the target Anthropologie consumer is, some of your research? What she's been doing lately? How she's been spending her money, her time? And how that forms some of the processes and steps going forward? You're very helpful. Glen T. Senk: Yes, so the core Anthropologie customer is 28 to 45 years old, upper middle class, either married or in a committed relationship. Roughly 50% of them have kids. It is a customer who would prefer not to shop in a chain store environment because the customer who really sees herself as a boutique customer but loves the value, the convenience, the reliability, the consistency of shopping in Anthropologie. This is -- the vast majority of these women are college educated. The last time I looked, I think 60% of them travel overseas on holiday once a year. This is a customer who is well read. It is not a customer who is driven to be first with fashion, but it's a customer who wants to look appropriate. The difference between the URBN customer -- the URBN customer is really dressing to attract a mate. The Anthropologie customer is addressing for respectability in her community, with her friends and family. We love this customer, obviously. We say that this is the customer you want to have at the dinner table. She's an optimist. She's aware of what's going on in the world, but she chooses to focus on the positive, not the negative. She wants to look beautiful. I think that, quite frankly, anytime we miss with the fashion, we have to remind ourselves more often than not it's because we're selling product maybe intellectually on trend, but it doesn't flatter her. And it's amazing. I was at a meeting with Wendy a few weeks ago, and I said, "Oh my God, you look at every good seller. Every good seller makes a customer look beautiful. She wants to look and feel great." So hopefully, that helps. Where else does she shop? I mean, she shops at J. Crew. She shops at Nordstrom. She shops at boutiques. And after that, in the apparel area, it falls off pretty dramatically. We don't really share a lot of share of wallet with the other department stores or chains. I mean, she's absolutely not -- she may go to Banana Republic for basic pants, but she's not buying her wardrobe there. She's not shopping at Ann Taylor. She's certainly not shopping at Chico's and so on. So hopefully, that helps you.

And our final question for today's call comes from Margaret Whitfield with Sterne Agee. Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division: Just on intimate apparel, it was mentioned as the led category or the -- one of the stronger categories at URBN and also at Free People. I wonder what level of penetration you're up to now at URBN, Free People and also at Anthro, if there are any other categories you might want to distort such as accessories. Glen T. Senk: Yes, Margaret, thanks. This has been -- in the last couple of calls, I spoke about this is an opportunity. The Free People has consistently done an amazing job with intimate apparel for the last several years, and they definitely taught the rest of the company about the opportunities there. Anthropologie always had a reasonably good intimate apparel business, but I think there's plenty of opportunity there. The URBN intimate business was non-existent, and they did a terrific job with the opening assortment. Quite frankly, a lot of it came in and sold out, so they're chasing now. I think that intimate, long term -- and this is just a thought, so don't hold me to it. Long term, it could be 10% of our business, possibly even more. I think it's a real opportunity for us. I'm still excited about the accessory opportunity. And of course, there are other opportunities as well that I'm not going to share for competitive purposes. All right, everyone, thank you so much. Love your interest, love your enthusiasm, love your support. And I always appreciate your honest and constructive comments as well. Thanks so much, and I look forward to seeing all of you.

Ladies and gentlemen, thank you for joining today's conference. This does conclude the program, and you may now disconnect.