Oona McCullough - Director of Investor Relations Francis J. Conforti - Chief Financial Officer, Chief Accounting Officer and Controller Freeman Zausner - Chief Operating Officer Richard A. Hayne - Co-Founder, Chairman of The Board of Directors, Chief Executive Officer and President David W. McCreight - Chief Executive Officer of Anthropologie Group Tedford G. Marlow - Chief Executive Officer of Urban Outfitters Group Margaret Hayne - President of Free People Brand Calvin Hollinger

Kimberly C. Greenberger - Morgan Stanley, Research Division Brian J. Tunick - JP Morgan Chase & Co, Research Division Adrienne Tennant - Janney Montgomery Scott LLC, Research Division Janet Kloppenburg Neely J.N. Tamminga - Piper Jaffray Companies, Research Division Paul Lejuez - Nomura Securities Co. Ltd., Research Division Roxanne Meyer - UBS Investment Bank, Research Division Marni Shapiro Betty Y. Chen - Wedbush Securities Inc., Research Division Evren Dogan Kopelman - Wells Fargo Securities, LLC, Research Division Dana Lauren Telsey - Telsey Advisory Group LLC Sharon Zackfia - William Blair & Company L.L.C., Research Division Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division Anna A. Andreeva - FBR Capital Markets & Co., Research Division Jacob Zitter - Robert W. Baird & Co. Incorporated, Research Division Christian Buss - Crédit Suisse AG, Research Division Jennifer Black Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division David Weiner - Deutsche Bank AG, Research Division Laura A. Champine - Canaccord Genuity, Research Division Elizabeth O. Pierce - Roth Capital Partners, LLC, Research Division

Good day, ladies and gentlemen, and welcome to the Urban Outfitters Inc. First Quarter Fiscal 2013 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to introduce Oona McCullough, Director of Investor Relations. McCullough, you may begin.

Good afternoon, and welcome to the URBN First Quarter Fiscal 2013 Earnings Conference Call. Earlier this afternoon, the company issued a press release outlining the financial and operating results for the 3-month period ending April 30, 2012. 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. We will begin today's call with Frank Conforti, our Chief Financial Officer, who will provide financial highlights for the first quarter. Freeman Zausner, Chief Operating Officer, will provide a brief update on our Shared Services initiatives. As discussed on the previous conference call, each quarter, you will hear from one of our brand leaders discussing their businesses and related initiatives or our Chief Operating Officer. Richard Hayne, our Chief Executive Officer, will then comment on our broader strategic initiatives. Following that, we will be pleased to address your questions. 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 Frank. Francis J. Conforti: Thank you, Oona. Good afternoon, everyone. First, I wanted to say it has been a pleasure to work with this incredible company over the past 5 years, and I'm honored to have received this opportunity to further help the URBN leadership team execute on its goals. I will start my prepared commentary discussing our first quarter fiscal 2013 performance versus the prior year comparable quarter, then I will share our thoughts concerning the remainder of the year. Total company net sales for the quarter increased by 9% to a first quarter record of $569 million. This increase was driven by a $34 million increase in noncomparable net store sales, which includes 14 new stores opened during the quarter. Total company comparable Retail segment net sales, which includes sales from our Direct-to-consumer channel, increased by 2%. This includes increases of 2% and 6% at Free People and Urban Outfitters, respectfully, and a decrease of 2% at Anthropologie. Total company comparable store net sales declined by 1%, driven by a 1% decrease in transactions and a 2% decrease in average number of units per transaction, partially offset by a 2% increase in the average unit selling price. Direct-to-consumer comparable net sales increased by 15% to $115 million, with the penetration to total net sales accelerating 110 basis points to 21%. These results were largely driven by a 35% increase in website traffic to over 42 million customer visits. Wholesale net sales increased 2% to $31 million. This increase was driven by a 19% increase in Free People Wholesale, offset by the transition of Leifsdottir to the Anthropologie brand. Gross profit for the quarter increased 5% to $202 million. Gross profit rate declined 131 basis points to 35.6%. The decrease in gross profit rate was primarily due to store-occupancy deleverage related to an increased number of store openings versus the prior year's comparable quarter as well as an increased number of new and noncomparable European stores. Also contributing to the rate decline were slightly higher merchandise markdowns on a few Women's apparel categories across all brands. Total selling, general and administrative expenses for the quarter increased by 11% to $150 million. Total selling, general and administrative expenses for the quarter expressed as a percentage of net sales increased by 62 basis points to 26.3%. The increase in rate was primarily due to deleveraging of direct store controllable expenses, driven by negative comparable store net sales. Operating income for the quarter was $52.9 million with an operating profit margin of 9.3%. Net income was $34 million or $0.23 per diluted share. Turning to the balance sheet. Total inventories at quarter end increased by $36 million to $300 million, a 13% increase versus the prior comparable quarter. The growth in total inventories is primarily due to an increase in comparable Retail segment inventories of 11% at cost and 5% units, with comparable store inventories increasing 8% at cost. The remainder of our inventory increase is related to the acquisition of inventory to stock new and noncomparable stores and the growth in our Wholesale business. Lastly, we ended the quarter with $339 million in cash and marketable securities. As we look forward to the remainder of fiscal 2013, it may be helpful for you to consider the following: sales during the quarter exceeded our conservative plans, but we believe we benefited from the favorable weather conditions in the Eastern half of the United States during March. We believe the early, unusually warm weather in the first quarter may steal some sales from the second quarter. Therefore, we have not changed our plans for the overall year. We are still planning to open 55 to 60 new stores, with approximately 14 new stores expected to open in the second quarter. By brand, we are planning approximately 21 new Urban Outfitters stores globally, 16 new Free People stores, 16 new Anthropologie stores and 1 new store each for Terrain and BHLDN. We anticipate second quarter gross profit margin rate will be similar to what we produced in the first quarter. We are planning margin rate improvement in the second half of the year as comparisons become easier versus the prior year. Our margin rate plans will depend upon the improvement in our product content and, ultimately, lower markdown rates. We continue to focus on effectively managing our selling, general and administrative expenses but remain committed to investing in our Direct-to-consumer channel to drive long-term growth. This means additional spending in fiscal year 2013 to open a new West Coast fulfillment center, to ramp up our marketing and customer acquisition efforts and to make further investments in technology systems and people. In total, we are planning to increase selling, general and administrative expenses in the high teens for the remainder of the year. Capital expenditures for fiscal 2013 are planned at $190 million to $210 million, driven primarily by new stores, the expansion of our home office and the completion of our new fulfillment center. Finally, our fiscal 2013 annual effective tax rate is planned to be approximately 36.5%. As a reminder, the foregoing does not constitute a forecast but is simply a reflection of our current views. The company disclaims any obligation to update forward-looking statements. I will now turn the call over to Freeman.

Thank you, Frank. I appreciate the opportunity to speak to you about a few of our important initiatives currently being worked on by our shared service teams. First, I will touch on technology. Right now, we have a special focus on supporting the brand's e-commerce and international growth initiatives. Last year, we rolled our mobile point-of-sale devices to all of our stores to improve our customers' in-store experience. We have continued to expand the number of devices used by the stores as well as our mobile point-of-sale functionality. These devices currently allow us to seamlessly fulfill store out of stock directly from our Direct-to-consumer distribution center. This year, the capability will be expanded to include the ability to fulfill store or online out of stock from any store within the country based on careful business rules. This will provide the customer a stronger multichannel experience as well as provide us with greater order fulfillment flexibility. Later this year, we will launch an iPad point-of-sale device and advanced wireless connectivity for our customers. Next, I would like to touch on fulfillment. We expect our West Coast fulfillment center to be open for business during the third quarter of fiscal year 2013. This facility will substantially reduce delivery times to our West Coast customers and will help us reach our goal of servicing all of our North American customers in 2 days or less. We recently shortened our shipping times in Europe with the opening of our European distribution centers last year. Lastly, I will briefly touch on talent. Our talent efforts are dedicated to providing the brands with customer-facing, creative talent and fueling the e-commerce talent pipeline. We continue to improve the scope of our digital recruiting, to develop better merchant development programs and to enhance our capabilities and focus on organizational design. I will now turn the call over to Dick for closing comments. Richard A. Hayne: Thank you, Freeman, and good afternoon, everyone. As Frank pointed out, our first quarter sales came in above plan and set a company record. Now we had some help from Mother Nature, but unusually warm weather was not the only factor driving sales. Our brand successfully capitalized on new fashion trend that have emerged. These trends contributed to increased demand in many of our product categories, and I believe our merchants have a very good read on these new trends. Overall, we are pleased with the progress the brand teams made in the quarter. They produced the following highlights: the Urban brand delivered positive comps across all product categories. And Anthropologie showed positive regular price comparable sales in Women's Apparel and the Anthropologie catalog showed significant aesthetic improvement throughout the quarter. All brands posted healthy Direct-to-consumer sales with total Direct-to-consumer sales up by 15%. Free People Wholesale sales jumped by almost 20%. This includes a 30% increase in sales to specialty store accounts. Free People successfully opened their largest store to date, the Rockefeller Center store. This store dedicates one full floor to the brand's intimate apparel business, called Intimately Free. Plans are to extend the Intimately Free product line to more Free People stores and to several wholesale accounts this fall. On the international front, all of the U.K. stores experienced a challenging environment, but the Urban stores in Germany that opened over the past year continued to track above their sales plan. Additionally, the Urban and Anthropologie Direct-to-consumer businesses in Europe are producing sales gains in excess of 30%. Finally, the Terrain brand, our garden center concept, had an excellent spring season, thanks in large part to the milder weather. In addition, 2 weeks ago, the brand successfully opened its second store on Post Road in Westport, Connecticut. Now let me turn to our strategic vision. My goals for the business when I returned to the position of CEO 4 months ago were threefold. The first was to fill all top management positions with the right talent. Second was to develop a clear and concise strategy to reignite our top line growth. And third was to ensure the brand leaders had the tools, the talent and the capital to execute that strategy. My first goal was met quickly. We currently have a solid team of experienced merchants leading the brands and a talented corporate team to provide the necessary services to them. Our teams then addressed the second goal. Together, we fashioned a strategy that emphasized revenue growth. This strategy consists of 4 initiatives: the first is to increase productivity in existing channels. This will be accomplished by creating more compelling product through expanded in-house design capabilities, by employing more effective marketing techniques and by using new technologies. The second is to acquire more customers by expanding our distribution channels. This means continuing to open additional stores, expanding both e-commerce and mobile commerce and opening additional wholesale accounts. One way to accomplish this goal is by enlarging the geographic reach of each brand beyond North America to include a more robust presence in Europe and Asia, where the brands are significantly underpenetrated. The third is to expand our product offerings. This can be accomplished by adding sizes and colors to existing products, adding new categories, such as Free People intimates, as well as offering additional products like web-exclusive items. The fourth and final initiative is to launch or acquire new concepts that complement our current portfolio of brands. And while we have no current acquisition plans, we continue to investigate opportunities as they arise. All brand leaders and their teams and all the shared service teams are fully engaged with our growth initiatives. They are energized by the push for faster top line growth. And given the positive momentum created in the first quarter, I am confident they will succeed. I thank all of our employees for their dedication and hard work and our shareholders for their continued support. At this time, I open the call to your questions.

[Operator Instructions] Our first question comes from Kimberly Greenberger of Morgan Stanley. Kimberly C. Greenberger - Morgan Stanley, Research Division: My question is for Freeman. But before I get there, if I could just ask a clarifying question to Frank about the second quarter gross margin. Frank, did you mean second quarter gross margin consistent with first quarter, are you talking about the rate, the 35.6%, or the 131-basis-point year-over-year decline? Francis J. Conforti: Consistent with the rate of the first quarter. Kimberly C. Greenberger - Morgan Stanley, Research Division: Okay, 35.6%. Great. Freeman, I was hoping that you could just expand a little bit more on the timing and the functionality that you're looking for in the -- in cross -- I guess, cross-store inventory fulfillment functionality. It sounds like it will be available for out of stocks in stores, also available for out of stocks online. And how do you envision this helping you to maximize sales and margins over time?

Kimberly, Calvin and his team anticipate that it will be functioning by the end of the second quarter. And we believe that it will, first, satisfy customer demand, reduce out of stocks, and we believe that the business rules in place will optimize the decision making on how that's achieved. Does that answer your question? Kimberly C. Greenberger - Morgan Stanley, Research Division: Yes. So do you mean if, for example, there's a store in Seattle with a bunch of extra pairs of shorts, for example, there -- something in the system would actually suggest that either online orders or out of the stocks in other stores get fulfilled out of that Seattle store based on the inventory in that one store?

Kimberly, within certain rules that would not disrupt that store, yes, we will look at demand where it is weakest, all things being considered, as well as transportation costs, proximity to the customer, time to the customer. And with the cascade of, we think, very reasonable business rules have decision-making like you're suggesting. Kimberly C. Greenberger - Morgan Stanley, Research Division: Automated. That sounds very interesting. We look forward to seeing that. Richard A. Hayne: Kimberly, if I could just expand on that. One of the things we're experiencing since we have a greater penetration of web-exclusive items is that some of those items are being returned to stores, and then the store has only 1 or 2 items of that nature. And in this -- with this new technology, we'll be able to ship out of the store that gets the return and thus save freight back into the fulfillment center and save the potential for a fairly significant markdown.

Our next question comes from Brian Tunick of JPMorgan. Brian J. Tunick - JP Morgan Chase & Co, Research Division: I guess maybe, Dick, if you could talk about some of the small wins at the Anthropologie business in the quarter. I know I think you and David have talked about looking at the price points or having more of a casual offering, increasing accessories, bringing back talent. Maybe just give us sort of in your perspective sort of what would the early wins here and sort of what do you think the right time frame for us to look for comp improvement as you move through the year? Richard A. Hayne: Okay, Brian. I will take the first stab at that, but then I'm going to turn it over to David, because he's much more intimately involved than I. But I think you have to go no further than taking a look at the last 3 or 4 Anthropologie catalogs to see the improvement. There was a sequential and substantial improvement in the aesthetic content and the product content of those catalogs. And I believe that they are currently much more Anthropologie customer-focused than -centric, and I think that they are a much better branding tool. And so that's just one item. And I won't say small item, because I think it's a big deal. But I think it's happening across the board at the Anthropologie brand as they say, get their sea legs back under them. But, Dave, did you want to expand on that? David W. McCreight: Certainly. Brian, as Dick pointed out, we're focused in many different areas to sort of regaining our sea legs for Anthropologie, the merchandising and design teams and marketing teams, on really making the product and brands sing again with the customer. We're seeing progress there. We have new teams in design and merchandising. And we expect to make big strides each quarter. But it still will be a while before we hit full rhythm as the Anthropologie unit of years ago. But we're very encouraged by our conversations with the customer. She remains very engaged with the brand, and we're seeing progress in all channels of the business, both domestically and internationally. And we've been very pleased with the execution in the infield.

Our next question comes from Adrienne Tennant of Janney Capital Markets. Adrienne Tennant - Janney Montgomery Scott LLC, Research Division: Dick, my questions for you are Urban Outfitters and Free People. At Urban division, it definitely seems like these trends are sort of right kind of down the fairway of the strengths of Urban. I was wondering if when you made the comment that it can pull forward from the second quarter, was there -- is there something that you're seeing, either at Urban or any of the other division or just globally, that makes you think that, that is the case thus far in early May? I know the weather hasn't been perfect. And then very -- secondly, for Frank. Can you talk about the inventory units for the back half? It seems like your -- the difference between the up 11 and the up 5 in units in Q1, is that cost inflation? If you can clarify, that would be great. Richard A. Hayne: Okay. Frank, why don't you go first? Francis J. Conforti: Sure. So the mix issue that we talked about in the commentary is not cost inflation. What it is, is it's a category mix shift. So I don't want to give too many examples here, because it's relatively competitive information. But I believe everyone knows that we're in a bit of a bottoms trend right now, and bottoms typically can have a cost of 1x to 2x -- or 1.5 to 2x higher than, say, that of a knits top. And as bottoms now have a higher penetration to our overall inventory balance, that will increase our costs greater than units, which is why we intentionally included the units increase in addition to the costs increase in the management commentary. Richard A. Hayne: And I would say that whenever you have a fashion shift in our business, the result is usually an increase in demand. And the reason for that is pretty simple. Women build up certain items in their closet. And then when a shift comes along, they don't have the items in the closet, and they go out and buy it. And I shouldn't limit it to just women, either, because same thing happens with men. And so when a shift does come along, it is a good sign for us as long as our merchants are on top of that shift. And I think, as I said in my prepared remarks, I think our merchants are very well attuned to the shift that is going on.

Our next question comes from Janet Kloppenburg of JJK Research.

Dick, I'm a little bit confused about some of your comments as they compare to your guidance on top line. So it sounds like you're encouraged that the merchants have found some pretty good trends out there, and they have, it appears, built inventory into that -- into those trends. So it's confusing to me as to why you would be forecasting maybe some sales shifting out of Q2 into Q1, given that I think you didn't have all of these trends captured in the first -- when the first quarter began. And secondly, I would think if the inventory is well positioned, with these trends invested in correctly and appropriately, that your gross -- you would have an opportunity for further gross margin progress in the second quarter. Richard A. Hayne: Sure. Let me try to answer that. Firstly, it was Frank who said that there might be some shifting from the first and second quarter. And that's really in response, Janet, to what was very, very unusual and warm weather in early spring. And it's been my experience over 40-some years in this business that when women go out and buy things early, sometimes they forego a purchase later in the season. So I think we want to be very cautious not to get overly exuberant with the effects of this fashion change. But I will tell you that it is a change, it is a shift, then usually that signals some positive momentum. And we do feel that. As you know, we never made forecasts and we did not make a forecast, other than to say it may be possible some of that early spring -- those early spring sales might -- may take away from second quarter sales. So we remain optimistic. We do believe our inventory is well positioned. And that does not mean that we haven't made any mistakes. Like usual, we do make mistakes, and we will have to take markdowns. But as the year progresses, we have an expectation that we will have to take fewer markdowns than we did the prior year. And we're hoping that the expectation comes true. Next question?

Our next question comes from Neely Tamminga of Piper Jaffray. Neely J.N. Tamminga - Piper Jaffray Companies, Research Division: Related to the questioning here, I mean, if we go really big picture and look at some past apparel cycles, could you maybe frame up what you're seeing in some of these early trends, as particularly, as Frank pointed out, we've got some bottoms here relative to where you guys have been in past fashion cycles. It just seems to me when we go back and just simply look at the numbers, the front end of past fashion cycles that had been bottoms-driven, you guys typically accelerate into the fall. And so I'm just wondering how you would frame up your current experience, what you're seeing in the tea leaves relative to past cycles. Richard A. Hayne: Yes, I don't -- we don't have exact analogous situation. But I do believe, as I said before, whenever we've had these kinds of shifts in the past, whether it's from tops to bottoms or bottoms to tops or whatever, it's traditionally been something that women feel that they want to go out and invest in new wardrobe items. And traditionally, that has driven our sales. And so I think that this is a very positive development. I cannot predict how long that trend will last. But typically, my experience from past trends like this are correct. We think that it will last for some time. So again, I think it's positive. We'd welcome it. And we are working very, very hard to capture as much of it as we can. As to the momentum that it builds in our business, as you know, I really can't comment on that and won't. So I will just leave it at that.

Our next question comes from Paul Lejuez of Nomura. Paul Lejuez - Nomura Securities Co. Ltd., Research Division: Can you maybe talk about inventory levels by brand and specifically what carryover levels look like in terms of markdowns versus last year, just how much that's factoring into the greater gross margin decline that you're now guiding to for 2Q? Richard A. Hayne: I think we said on the first -- at the end of the year, I believe that was in February, that our inventories were relatively clean. And indeed, our 90-day apparel are -- is very clean, and so that augers well. Having said that, as what I've said before is that all buyers from all times, including me for many, many, many years ago, make plenty of mistakes. And we have markdowns to take, and we are in the process of taking those. We do not give inventory by brand, and so I can't help you there. Overall, when I look at the inventories, I think that they are reasonably clean. As I said, our 90-day ownership is better than the prior year. Having said that, we think we are going to make incremental progress as we go through the year on reducing the number of markdowns.

Our next question comes from Roxanne Meyer of UBS. Roxanne Meyer - UBS Investment Bank, Research Division: Just first, a follow-up to that question. I guess when you mentioned that there were some categories across all of the Women's Apparel by brand that were hurt, are you assuming those categories continue to be hurt? Or are you into the pinning [ph] that you're taking markdowns on different categories? And then just second, just big picture. Knowing that a key learning on Anthropologie in the U.K. is that you need to have brands that are relevant to local market, I'm just wondering if you could comment about how you think about that and the scalability of Anthropologie. Richard A. Hayne: Let me take -- why don't you go ahead, David, and take the second question first? Although I would ask everyone to keep the number of questions to one so that more people get an opportunity to speak. David W. McCreight: Roxanne, as we look at scaling Anthropologie, it's going to come down to simply how we do it in the United States as well, which is providing a great experience and product that moves the customer. To some degree, to make it market specific, we will develop and find and source product that's specific to that marketplace. And the brand -- some of it has to do with brand and some of it has to do with specific styling. So we are seeing success with local London designers as well as, candidly, New York market designers being interpreted -- edited differently for the U.K. market. So we still feel a high degree of confidence in the scalability of the brand. Richard A. Hayne: As to the categories, as you can imagine, if we're going into a bottoms cycle, it would imply that tops are less desirable, or at least some tops are less desirable. And that's what we've seen in our experience, which is not to say that tops aren't selling, some of them are and some of them are selling very well. But there is going to be some additional markdowns to be taken in some tops categories that are selling less robustly than they did last year.

Our next question comes from Marni Shapiro of The Retail Tracker.

If you could talk a little bit about -- you mentioned that you're happy of the improvement of the Anthropologie catalog. Can you talk a little bit, just touch on Free People and Urban? And then talk kind of broad picture about how you feel about the websites and any plans there. Richard A. Hayne: Well, we are always in the process of making improvements to the websites. And I know that all of the brands are working diligently right now to put in increased functionality into the websites. And I also know that Anthropologie is really working on a full overhaul of the website. I think we all are in agreement that the Anthropologie website has gotten a little stale. And just like the catalog wasn't resonating with the customer 6 months ago, I think you'll see substantial improvement in the Anthropologie website in the next 3 to 6 months as they complete their redo. As to the other websites, I'll let both Ted and Meg talk about them. I -- we're very excited about the progress that the web businesses are making. Ted, you want to talk about Urban? Tedford G. Marlow: Sure. Regarding work on the Urban site, as you may or may not know, we have made a change in the creative leadership in the business overall, feeling that the look and feel of the brand needs to align a bit more with the cultural reference point, with our customer, and you may have seen some of this work coming through here over the last -- just few weeks. We look to evolve that further as we go into the back-to-school selling period, feeling that our approach to our visual on the website can be improved. That is not to say that the web business is not currently treating us -- treating us very well. We will probably do a bit more referencing cross-channel. This past weekend with the break and weather that we had, we did communicate with our customer, particularly here on the East Coast, regarding summer assortments in the store and online and produced a very productive weekend overall. So I think it's going to evolve as we go forward through the balance of the year with the look feeling a bit different than you've known us here over the last few months.

Regarding the Free People, we're very happy with the way that, that is looking and performing right now. We want to focus on extending product categories. And Dick mentioned Intimately, we've built that out and added several different components to that site. We also built that site differently than when you shop the collection. So we're pleased with how Intimately is expanding. We also are expanding some of our other categories and happy with how they are being merchandised, and they're more based off of different occasions or different reasons to buy. And then we are continuing to work on the social media aspect of our site, our blog. We expanded and put it into a new format, and we're getting lots of new readership and excitement happening around that. And we continue to be happy with the look books that we publish every month to give the customer new ideas on how to merchandise product in addition to our catalog. Richard A. Hayne: So the Free People and Urban brands are in the process of designing and launching their loyalty programs. And Anthropologie is in the process of reestablishing their loyalty programs and extending it. And all 3 brands are in the process of more fully integrating social media into their web activities. And we're seeing nice traffic lifts at all the brands from those efforts.

Our next question comes from Betty Chen of Wedbush Securities. Betty Y. Chen - Wedbush Securities Inc., Research Division: I was wondering if you can talk a little bit about Europe. I know you mentioned that, at least for the Urban Outfitters stores, we were seeing very good trends in Germany, for example. Can you give us a little bit more color around what you're seeing elsewhere? And then also for Anthropologie, how is that doing in the U.K.? And then just to follow up on that international vein, any updates in terms of timing for rollout in Asia? Tedford G. Marlow: Betty, this is Ted. Dick has given me the call related to the European for the Urban business. Through the first quarter, we saw a great deal of strength in Direct-to-consumer in the European market. We had the business planned aggressively. And we saw those plans realized in -- throughout the quarter. In the retail store component, the businesses on the continent performed stronger than the U.K. The U.K., we don't like to go there but experienced, I think, a real issue with weather through the better part of the quarter. Cold, wet, we saw all of our categories that we were deemphasizing in regard to cold weather product, be that outerwear, sweaters or any type of accessories related to colder weather, overpenetrating in the business and anything related to the change of season for spring and summer having some challenges. Our strongest businesses are Men's Apparel and Accessory, our Home business, our Renewal business, and our more challenged business is Women's Apparel. That is not to say that the Women's Apparel business has not been performing in the -- on the continent or through Direct-to-consumer. It's performed very well on those markets but had some challenges in the U.K. itself. Richard A. Hayne: And we believe that both brands -- all 3 brands have significant opportunity to increase the penetration in Europe and in Asia. And to that end, Free People intends to, in the next 12 months, launch its Wholesale division into U.K. and over the next 18 months, launch its Wholesale and Direct-to-consumer business into Asia. And we believe that the Urban business over the next 18 months will launch some kind of presence in Asia as well. All 3 brands will continue to expand their current operations.

Our next question comes from Evren Kopelman of Wells Fargo. Evren Dogan Kopelman - Wells Fargo Securities, LLC, Research Division: A follow-up on the second quarter gross margin guidance. The year-over-year decline basis points is higher than the first quarter. Is that driven by your expectation for higher occupancy deleverage in the second quarter relative to first? And is that related to your expectations for sales that you made? Or is it also higher markdowns year-over-year as well relative to Q1? Richard A. Hayne: I'll ask Frank to handle that. Francis J. Conforti: Sure. So we don't give guidance. The comment was that we were planning for margins to be similar -- margin rates to be similar in the second quarter as it was to the first quarter. There is occupancy deleverage planned for in the second quarter. Through the first half of this year, we are opening 8 new stores, 8 more additional stores than we opened last year. As you guys know, there's preoccupancy rent expense related to new store openings, as well as we have a higher penetration of noncomparable European stores versus last year. There's 7 more noncomparable European stores, which also drives into occupancy deleverage for the first half of the year. As Dick alluded to earlier, there are still markdowns anticipated in certain Women's categories into the second quarter of this year. But overall, we have not changed our plan for margin improvement for the year. We are still planning for 200 to 250 basis points of annual improvement in our gross profit margin rate. Richard A. Hayne: And just so we're clear, we're planning on markdowns in all categories. We're planning on increased markdowns in a couple of them.

Our next question comes from Dana Telsey of Telsey Advisory Group. Dana Lauren Telsey - Telsey Advisory Group LLC: Can you talk a little bit about inventory levels, how are you buying units, how are lead times changing and just any update on the performance of BHLDN and the plans there? Richard A. Hayne: Like Frank said, Dana, the change in mix is causing some increase in AUR. And to some degree, the warmer weather in early March increased the amount of inventory that we had, because we, as we've always said, buy on a 10-week cycle. So we are planning our inventories 10 to 12 weeks out, and that warmer weather gave us probably what was a bit of a false read. We see as the weather has become more normalized here, we will get back to our -- the desired inventory levels. They'll still be slightly elevated because of the mix change. But we believe that by the end of the second quarter, we will be in very good shape.

Our next question comes from Sharon Zackfia of William Blair. Sharon Zackfia - William Blair & Company L.L.C., Research Division: I was hoping you could touch on new-store productivity in the U.S. for both Urban and Anthro. And as it relates to Anthro, with the Home business kind of taking up more square footage in the stores over the past few quarters, is there any thought process on maybe rightsizing the box for new stores going forward? Richard A. Hayne: I will ask David to talk about the Anthropologie stores. David W. McCreight: Sharon, we continue to look at each market and try to right size the box, as you said, for each marketing community based on where our brand can play. We've not seen a significant change in the amount of square footage applied to Home within the retail space. As Dave mentioned earlier, we are aggressively pursuing opportunities across all divisions and all product categories, those existing and those few that are online and the direct channel. But there's not been a major change as it relates to the allocation of Home within the retail footprint in the U.S. Richard A. Hayne: And to your question about new stores. New stores are -- that we have opened in the first quarter are performing at or above plan.

Our next question comes from Richard Jaffe of Stifel, Nicolaus. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: I'll try not to beat a dead horse on gross margin and the second quarter. But looking ahead into the second half with the inventory opportunities and the better control of markdowns, you mentioned 250 or a possibility of 250 basis points improvement just from better management of your business. Is it possible to think that with better product, there could be upside to those numbers, that there's still opportunity out there to get the product moving more in the right direction by third and fourth quarter given that 10- to 12-week cycle? Richard A. Hayne: Richard, you've been in this business as long as I have. You know there's opportunity. There's always opportunity no matter how good the business is. So the answer to your question, as always, is yes, there is upside opportunity. Do we plan for it? Not necessarily. And you know we can't talk about it, even if we were planning for it. So the answer to your question is, yes, there is upside opportunity. No, we do not anticipate any. We are not currently planning for that upside opportunity. But certainly, if it comes, we will welcome it. Do you have anything to add to that, Frank? Francis J. Conforti: Just being the conservative-natured finance guy that I am, I will say that there's always risk in the business as well.

Our next question comes from Anna Andreeva of FBR. Anna A. Andreeva - FBR Capital Markets & Co., Research Division: I was hoping you could maybe break down the gross margin decline in the first quarter. How much was occupancy deleverage versus markdowns? And what kind of a comp do you need to get occupancy leverage in the second quarter and in the back half? Richard A. Hayne: Frank, would you like to take that? Francis J. Conforti: Sure. So I won't give the specifics as to the -- what the exact basis points were, but we did mention that occupancy was the most significant driver of our gross profit margin decline in the quarter. I did describe that, that occupancy deleverage was due to 4 more new stores in the first quarter as well as 4 more new stores planned for the second quarter versus last year as well as a higher base of noncomparable European stores. Occupancy was the second largest -- or excuse me, markdowns was the second-largest driving factor of the margin decline for the second quarter. And again, that was on certain Women's Apparel categories, not across the entire category. As it relates to the year, we are still planning for the year to be 200 to 250 basis points of improvement for the back half of the year, with the second quarter to be fairly consistent with the first quarter. Richard A. Hayne: And I think just to make sure that you understood that, a lot of the deleveraging is coming from an increased percentage of openings from Europe. And I think, as all the people on the call know, the operating profitability of the European stores are less than the operating profit in the United States. So as the mix shifts, our overall operating profitability will be somewhat lower.

[Operator Instructions] Our next question comes from Erika Maschmeyer of Robert W. Baird. Jacob Zitter - Robert W. Baird & Co. Incorporated, Research Division: This is Jacob Zitter, in for Erika. We're wondering if all brands and categories are on the new assortment planning and allocation system now and what benefits and timing of benefits are you expecting from that? Richard A. Hayne: Okay. I'll answer this first, and then Calvin may want to step in, Dave. Everybody now is up on this assortment planning tool. And as you know, it does both store planning and then there's a visual representation of the assortment. As you would expect, it's a change in learning. It takes time. And we, of course, reiterate through our provider in terms of enhancements to this new product. But overall, we're quite pleased with the product and what it will deliver to the merchants and, therefore, to the customers. Calvin, anything else?

Everything is correct. We just had one enhancement, brands, requested, it was delivered this weekend. So with that, we believe we can finish the rollout very shortly, all categories, all brands.

Our next question comes from Christian Buss of Credit Suisse. Christian Buss - Crédit Suisse AG, Research Division: Just wondering if you could provide some color into the progress you're making on the pricing strategy at Anthropologie. Are you comfortable with where the entry price points are now? David W. McCreight: Christian, this is David. We continue to work towards making sure we got the right product mix and the right pricing balance. We think we're going to see market improvement for Q3 and then continue to see it in Q4. That being said, that's always just part of the art and science within the merchandising business. It's trying to extract and gain as much premium as possible. That's going to be combined and balanced with our effort this year to focus on driving full price, regular price comps, as opposed to necessarily comping all the markdowns from last year.

Our next question comes from Jennifer Black of Jennifer Black and Associates.

I wondered if -- and I apologize if you already talked about this, but was there a geographic difference across the country? And then I wondered, too, how malls did versus street locations at each brand? Richard A. Hayne: Sure, Jennifer, great question. As you might imagine, given the better weather here on the East Coast and the unusually warm weather on the East Coast, the East Coast, followed by the Midwest and the South, had the best overall sales increases in the U.S. And so there was almost a direct correlation, as Ted already pointed out, some of the European stores had quite the opposite, where I think all the warm weather we got stole some of the temperature from them, and they've had cold and rainy for the last 2 months. So we see pretty direct correlation with weather. As to the type of stores that are doing better, it's the malls and it's the major malls that are -- tend to do the best. Does that answer your question?

Our next question comes from Lorraine Hutchinson of Merrill Lynch. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: Just looking at the European business. I guess, first of all, how comfortable are you with inventory level there? And then secondly, is there a potential to maybe slow down that growth until the macroeconomic environment improves, or at least becomes more certain? Richard A. Hayne: I'll take the question in regard to the inventory, we did run a spring season sale in the European market to keep the -- not totally across the market, more specifically focused in the U.K. to keep inventories in line on a weeks-of-supply basis, which is our governor on inventory levels. And just in regard to the overall approach to growth in the market, we remain very bullish on opportunity in the market, reemphasizing the importance of Direct-to-consumer in that strategy. And as well on the retail store side, I wouldn't say necessarily a conservative view, but a view that takes into consideration the time needed for the business to properly ramp to its pro forma level. You would know that the volumes that can be done in the European market are very meaningful. There's very dense shopping areas. However, ramping to that, the initial year, when the brand is new in a market, is a bit too optimistic. So we were trying to take a bit more measured approach in that regard to the way we execute our real estate strategy. David W. McCreight: And the only comments I would add that are different from Ted's as it relates to the Anthro brand is it's a relatively young business, a team that's been building and maturing. We're learning a lot quarter by quarter. We do have opportunities to tighten our inventories there, but these are big learnings in terms of relations between the home penetration and the apparel penetration and also as we continue to write the direction of the apparel business. So we do believe we have opportunities to sharpen the turn in Europe. Richard A. Hayne: I think one of the things that Anthropologie is experiencing, and it's not a surprise, because Urban went through the same phase, is that they -- it needed an increasing amount of localized product in order to satisfy that customer. And that's going to require an Anthropologie European merchant group to be hired and again establish themselves. And we've started along that process. We will continue on that process. But we think that there's an enormous opportunity in Europe for Anthropologie, for Urban and for Free People. And I think Urban has demonstrated that.

Our next question comes from David Weiner of Deutsche Bank. David Weiner - Deutsche Bank AG, Research Division: Dick, last quarter, you gave an update on the kind of long-term plans for the direct business. And if I remember right, you said something like the mix shift would be as high as 40% or 50% of the business over the next 4 to 5 years. I guess could you talk a little bit about if that's still the plan? And if it is, kind of how that's going to happen? I mean, I guess a big part of that is going to be from the international business front running the penetration there with the websites. But I guess within the U.S., is there a way or is there -- is it your plan to kind of meaningfully accelerate the mix shift more than you're already doing? Richard A. Hayne: The answer is yes. We are investing, as we've said a number of times, in the Direct-to-consumer business. We think that there's extraordinary opportunity in, as we call it, DTC. And we are making those investments. And if it's going to happen in 4 or 5 years, I can't promise that, but it will happen in a relatively brief period of time. And you will recall, or if you look back, you will discover, that we've really only been in this business for about 10 to 12 years now, and it has already captured over 20% of our sales. And given a lot of the changes that are happening out there, be they the social media changes or a lot of the technological changes, we see no reason to expect that to -- the rate of change to diminish. I would expect it only to continue to grow, if not accelerate. So you can do the math. I think that we reached 40% or so relatively quickly. Given the investments that we plan to make and the technology that's available and that we can utilize, I would anticipate that rate going up.

Our next question comes from Laura Champine of Canaccord. Laura A. Champine - Canaccord Genuity, Research Division: My question is another color question on Anthropologie. You commented that you like the trends you're seeing in the catalog and so do customers. But just looking at the numbers, for Anthropologie to comp down on top of down despite the good weather with the weakness in Women's Apparel -- and I believe you commented that April sales trends got worse. I can't see what happened in May, but if you can give me more insight into what leads you to believe that women are responding well to the newest fashion that you see on Anthropologie. Richard A. Hayne: Okay. Well, that sounds like a loaded question. We're very excited with what's happening in Anthropologie. We're long on it, and I'll ask David to respond. David W. McCreight: As we look at Anthropologie's response to trends, as Dick, Ted, and Meg have all spoken about, we're seeing real -- some nice signs in the business. We're seeing -- we're participating in the bottoms trend that you'd heard called out earlier, and we're working on closing the gaps in some other areas where we were not necessarily participating in those trends. As Dick said, we're going to be taking markdowns where necessary, but we're seeing growth and full price performance in a broad range across a broad amount of divisions. But we still have work to go, and we're expecting to improve each quarter as we get there. So we see very good signs. Fundamental sign in the business are very strong.

Our next question comes from Liz Pierce of Roth Capital Partners. Elizabeth O. Pierce - Roth Capital Partners, LLC, Research Division: At this point, I just have a quick question for Frank on the tax rate. Frank, if you can just update us on what we should be using. Francis J. Conforti: Sure. So we're still planning for our annual effective tax rate to be at 36.5%. Richard A. Hayne: That concludes all the questions. I thank you very much for participating, and I look forward to speaking with you soon. Thank you.

Ladies and gentlemen, that does conclude your program. You may disconnect your lines at this time. Have a great day.