Oona McCullough - Director of Investor Relations Francis J. Conforti - Chief Financial Officer, Chief Accounting Officer and Controller Tedford G. Marlow - Chief Executive Officer of Urban Outfitters Group 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 David Hayne

Adrienne Tennant - Janney Montgomery Scott LLC, Research Division Brian J. Tunick - JP Morgan Chase & Co, Research Division Kimberly C. Greenberger - Morgan Stanley, Research Division Neely J.N. Tamminga - Piper Jaffray Companies, Research Division Janet Kloppenburg Marni Shapiro - The Retail Tracker Dana Lauren Telsey - Telsey Advisory Group LLC Anna A. Andreeva - FBR Capital Markets & Co., Research Division John D. Morris - BMO Capital Markets Canada Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division Paul Lejuez - Nomura Securities Co. Ltd., Research Division Barbara Wyckoff - Credit Agricole Securities (USA) Inc., Research Division Roxanne Meyer - UBS Investment Bank, Research Division Betty Y. Chen - Wedbush Securities Inc., Research Division Elizabeth O. Pierce - Roth Capital Partners, LLC, Research Division Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division Darla Shay Robin S. Murchison - SunTrust Robinson Humphrey, Inc., Research Division Laura A. Champine - Canaccord Genuity, Research Division

Good day, ladies and gentlemen, and welcome to the Urban Outfitters Incorporated Second 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. Ms. McCullough, you may begin.

Good afternoon, and welcome to the URBN second quarter fiscal 2013 conference call. Earlier this afternoon, the company issued a press release outlining the financial and operating results for the 3-month period ending July 31, 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 second quarter; Ted Marlow, Chief Executive Officer, Urban brand group, will provide an update on the Urban Outfitters brand; and Richard Hayne, our Chief Executive Officer, will then comment on our broader strategy initiatives. Following that, we'll 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, and good afternoon, everyone. I will start my prepared commentary by discussing our record second quarter performance versus the prior comparable quarter. Then I will share our thoughts concerning the remainder of the year. Total company net sales for the quarter increased by 11% to a second quarter record of $676 million. The increase was driven by a robust Direct-to-Consumer growth rate of 22% and a $26 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 net sales from our Direct-to-Consumer channel, increased by 4%. This includes increases of 12% and 6% at Free People and Urban Outfitters, respectively, while Anthropologie was flat for the quarter. Total company's comparable store net sales declined by 1% driven by a 4% decrease in the average unit selling price and a 1% decrease in units per transaction, each of which were partially offset by a 4% increase in transactions. Direct-to-Consumer net sales increased by 22% to $138 million with penetration-to-total net sales accelerating 190 basis points to 20%. These results were largely driven by a 31% increase in website traffic to over 42 million customer visits. Wholesale net sales increased 17% to $37 million. This increase was driven by an 18% increase in Free People wholesale, partially offset by the transition of Leifsdottir to the Anthropologie brand. Gross profit for the quarter increased 10% to $255 million. The gross profit rate declined 30 basis points to 37.6%. The decrease in gross profit rate was primarily due to the deleveraging of initial merchandise costs and store occupancy costs, both of which were partially offset by a reduction in merchandise markdowns. The deleverage in store occupancy costs relates to negative comparable store net sales as well as an increased number of store openings versus the prior year comparable quarter. The deleveraging and initial merchandise costs is due in part to the mix of our assortment as well as an increase in web-exclusive product sold through our Direct-to-Consumer channel. Total selling, general and administrative expenses for the quarter increased by 11% to $159 million. Total selling, general and administrative expenses for the quarter expressed as a percentage of net sales decreased by 4 basis points to 23.4%. Operating income for the quarter was $96 million, with an operating profit margin of 14.2%. Net income was $61 million or $0.42 per diluted share. Turning to the balance sheet, total inventories at quarter end increased by $20 million to $323 million, a 7% increase versus the prior comparable quarter. The growth in total inventories is primarily related to the acquisition of inventory to stock new and noncomparable stores and the growth in our Direct-to-Consumer channel, partially offset by a 5% decrease in comparable store inventories. Lastly, we ended the quarter with $363 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: we are planning to open approximately 51 new stores with approximately 11 new stores expected to open in the third quarter; by brand, we are planning approximately 18 new Urban Outfitters stores globally, 15 new Free People stores, 16 new Anthropologie stores and 1 new store each for Terrain and BHLDN. We continue to plan for gradual, year-over-year margin rate improvement. As previously discussed, we believe our margin rate improvement opportunity is greater in the fourth quarter than in the third quarter based on last year's performance. In the second quarter, we capitalized on strong trends that we saw materializing in the first quarter, resulting in our gross profit margin exceeding our Q2 internal expectations. We do not extrapolate our second quarter margin rate into third quarter performance as they are distinctly separate seasons. Our margin rate plans 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 by remaining committed to investing in our business to drive long-term growth. This means increased spending, partially driven by the opening of our new West Coast fulfillment center; increased marketing and customer acquisition efforts; and 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 Ted. Tedford G. Marlow: Thank you, Frank. When we spoke in March, I said our focus would be on addressing the opportunity of reengaging our core customer. It was and still is my feeling that an opportunity exists to improve upon top line performance, margin and the operating productivity of the Urban Outfitters brand. I believe the best approach to delivering on this opportunity is to sharpen our focus on our core customer. At this point the past 6 months have been a bit of a blur, seeming more akin to 15 minutes versus 6 months. However, I am pleased to report that the Urban Outfitters brand has delivered improved top line growth over the past 2 quarters accompanied by improved operating contribution. Thus, I would like to spend a couple of minutes reviewing where we stand on the continuum of opportunity which exists for our business. In the quarter, we delivered comp sales growth in North America and Europe. Our retail segment comp was plus 6 driven by our Direct-to-Consumer channel, which delivered well over 20% growth in sales and our stores, which posted low single-digit, comparable positive sales. Inventories were well managed, running leaner on a comp basis and lower on a weeks-of-supply basis than last year, resulting in lower markdowns in the quarter. In North America, all business categories delivered comp sales growth except women's accessories, which was low single-digit negative. Men's apparel and accessories were our strongest categories during the quarter. In Europe, our men's apparel and accessories were our strongest categories as well. Though the economic challenges of the European market are no doubt providing some headwind we believe we executed well, improving our conversion on lower traffic in our European stores. Additionally, we delivered dramatic year-over-year growth in our Direct-to-Consumer channel fueled by strong comp performance in all merchandise categories. When I consider our performance in the quarter, I further reflect upon my comments on the March conference call. I felt we had an opportunity in our assortment and our brand voice to achieve more variety in our offering and therefore broaden our appeal to a broader spectrum of customers. We applied time and attention to this throughout the spring season, aligning creative design and our merchant team on the cultural touch points, which are critical part of our customers' lives. Hopefully, you have noticed a change to our look and voice. I personally believe consistency and brand presentation is way overrated, particularly with our core customer. They are looking for newness and an element of surprise. Our brand should not continually look the same but over time, it should certainly feel the same. I feel we have made progress on this opportunity; however, I am confident you will see improvement. The look, voice and experience of our brand will further evolve, bringing us the productive connection with our core constituency that drives the growth. As I consider growth at Urban Outfitters, I am quite excited about the opportunities which we have spelled out in the latest update of our strategic plan. We will be reviewing these with our Board next week. As a result, I will not venture into the specifics. However, I feel safe in sharing that our plan provides that we will continue to bring the uniqueness of the Urban Outfitters brick-and-mortar retail experience to markets in North America and internationally. We will continue to leverage the upside growth opportunity of Direct-to-Consumer with robust initiatives and investment. We will identify new product and brand development opportunities to add to our experiential retail offering. We will seek to develop new retail formats to deliver on the opportunity of customer centricity and richness of experience. Before I turn the call over, I wish to thank and acknowledge the strength of our team at Urban Outfitters. As we came through the spring and summer, our team has really come together and aligned on the forward strategies of the business. Additionally, we have added to the asset base of our team with recent key leadership hires in North America and Europe. I am confident that as we head into the back half of fiscal 2013 and set our sights on the growth opportunities ahead, we have the nucleus of success from a talent standpoint in place. And now I will turn the call over to Dick for closing comments. Richard A. Hayne: Thank you, Ted, and good afternoon, everyone. As Frank reported, the company posted record sales and profit for the second quarter. Our brands built on some of the early product successes delivered in the first quarter, like colored denim, other bottoms and dresses, and invested in these categories with excellent results. From a channel perspective, newly opened stores, strong Direct-to-Consumer demand and a robust wholesale business drove the year-over-year sales increases. At the same time, our brand teams managed inventories tightly, leading to lower markdowns as a percent of total sales and to higher profits. Overall, we are pleased with our performance and believe it reflects the steady progress we set out to deliver. Highlights of the quarter include Direct-to-Consumer comp sales accelerated from Q1 with all brands registering solid, double-digit, year-over-year gains. This resulted in the Direct-to-Consumer penetration increasing by 190 basis points to 20%. The Urban brand delivered positive retail comps in all product categories except women's accessories; the Anthropologie brand produced positive regular price comparable sales; the Free People brand drove comparable sales gains in the retail and wholesale channels; total comparable store inventories decreased by 5%; and, as Ted mentioned, the performance of the European operations softened somewhat in the second quarter. This was primarily due to weakness in our London stores. We are not, however, Euro skeptics. We will continue to invest in our European businesses and are particularly excited about the opportunities we see to expand our Direct-to-Consumer channel across Europe. Now let me discuss some exciting developments in our North American Direct-to-Consumer business. As I mentioned above, sales during the quarter in this business accelerated significantly. The growth was largely driven by a 31% year-over-year increase in traffic to our web and mobile sites, a 75% year-over-year increase in web-exclusive product available on those sites, and the launch of a number of technology improvements geared to support the web channel. I'll go over 3 major initiatives. First, we successfully launched our of pick, pack and ship capability. This gives us the ability to fulfill an online or in-store order from any store or fulfillment location in the United States based on inventory availability, proximity or a number of other factors. This functionality has a number of very important benefits, including enabling our brands to sell web-exclusive items that had been returned to the stores without first returning them to the fulfillment center. It also allows us to ship orders that are out of stock in the fulfillment center but in stock in the store. And finally, it allows the brands to better manage the disposal of their in-store markdowns. We have successfully tested this function toward the end of the second quarter and have slowly included more stores and more product categories. Based on the analysis of our early results, we estimate that this initiative should account for many millions of dollars in additional sales across all brands in the second half of this year. The second initiative helping to accelerate the Direct-to-Consumer growth is our company-wide effort to focus on customer acquisition. This includes increasing the marketing spend at each brand. Historically, we have managed our marketing and related customer acquisition costs based on the conversion rate and the immediate revenue generated. We are now able to utilize our internal consumer database to calculate an approximate lifetime value of new customers and thus, we can more accurately adjust the cost to the benefits of acquisition. Using these new tools, we increased total web-based marketing expenditures by 21% in the second quarter, and we plan to accelerate the rate of increase in the second half of the year. Some of this increase in Web-based marketing is offset by a decrease in our catalog marketing expenses. Finally, during the second quarter we successfully continued to expand our web-exclusive product offering. As an example, last year during the second quarter, we offered approximately 750 dress styles online across all of our brands. This year, we increased that offering by approximately 50% and saw an excellent return. We believe we can continue to enlarge the assortment in dresses and many other categories as well. These are 3 examples of the many initiatives we have to increase sales at our Direct-to-Consumer channel. But we have not forgotten about other areas of growth. As I mentioned earlier, we continue to invest in new stores, both domestically and internationally. In total, we plan to open approximately 51 new stores this year. In addition, we are currently engaged in the process of rethinking the bricks-and-mortar experience with the goal of making it more exciting and enticing. We are also planning to expand our distribution of the Free People wholesale product around the globe, concentrating first on the U.K. later this year and then in Japan in fiscal year 2014. In summary, we are excited about the progress made during the second quarter. Our entire organization is focused on continued, steady, year-over-year improvement throughout the remainder of the year. Our longer-term goal is to grow annual revenues significantly faster than the industry average and more commensurate with our historic rate. We are mindful of the challenges we face: an extremely competitive retail environment and a fragile world economy. But I believe we have the elements for success: our brands are compelling, our strategy is clear and we have strong merchants in place. I thank our senior team and all of our 18,000 coworkers worldwide for their hard work, their dedication and their inspiration. I also thank our shareholders for their continued support. At this time, we'll open the call to questions. [Operator Instructions]

[Operator Instructions] Our first question comes from Adrienne Tennant from Janney Capital Markets. Adrienne Tennant - Janney Montgomery Scott LLC, Research Division: Dick, my one question, and I will stick to one, is can you talk about -- you have the cadence in the management commentary. You said May followed by June followed by July. And I was just wondering, is that -- did Anthro follow that cadence? Where are we in the Anthro turn? Sometimes you talk about us sort of on the target, rungs out from bull's-eye. If you can talk about, are you happy with the speed of that turn? And should we be seeing the improvements in stores in August as we walk the stores now? Richard A. Hayne: Adrienne, I've never heard 5 questions combined. Adrienne Tennant - Janney Montgomery Scott LLC, Research Division: It's one. It's all about Anthro. Richard A. Hayne: Okay. Well, I'll give David a chance to answer the Anthro question. We don't normally give the cadence broken out by brand, and so I won't do it. I won't start today. David, do you want to answer that? David W. McCreight: Certainly. We think the Anthro team has made a lot of progress in the past 7 or 8 months. As Ted said, it's growing very quickly. The biggest area of focus for us and the biggest area of progress is get -- really tuning in on our customer. But we think we still have a long way to go before we reach the heights that Anthro has reached before, but we're making solid progress, both in the U.S. and abroad.

Our next question comes from Brian Tunick from JPMorgan. Brian J. Tunick - JP Morgan Chase & Co, Research Division: I guess, Frank, usually -- I think the last conference call or 2, you've talked about sort of your opportunity to recover, I think, 200-plus basis points of gross margins for this year, and I wasn't sure I heard you say that again. So just curious if you're affirming that opportunity. And also, if you can give a little more color sort of on the IMU pressure. Sort of what happened from a mix of assortment perspective? Francis J. Conforti: All right. Yes, this is Frank, and thanks for your question. So we're still planning the year consistently with how we spoke about it on previous calls. So the 200 to 250 basis points of improvement in year-over-year margin on an annual basis is still how we're planning for the year. And I know you threw a second question in there, but my suspicion is that there may be a few others that are out there that will ask that, so I'll answer it anyway. The IMU deleverage in the quarter was really driven by 2 things. First, we had a higher penetration of market purchased product versus our own internal design products in the quarter. And that was a result of our merchants doing a fantastic job of chasing the trends that they saw on the first quarter, enabling that -- enabling to keep those in the consumers' hands in the second quarter. So the second item driving our IMU deleverage in the quarter was we had a higher penetration a web-exclusive product in the second quarter. The good news for each of these items is our MMU, so including our markdown rate, was favorable on a year-over-year basis. So both of these items, we were able to improve our markdown rate on a year-over-year basis despite the fact that IMU did deleverage slightly.

Our next question comes from Kimberly Greenberger from Morgan Stanley. Kimberly C. Greenberger - Morgan Stanley, Research Division: The inventory looks like it's in great shape, Dick, and I'm wondering if you can help us with the negative 5% comp store inventory. Is it similar by brand? And then if you could just help us understand how you have bought or planned inventory here in the back half, that would be great. Richard A. Hayne: Thank you, Kimberly. The comp store inventory for all brands has improved not necessarily exactly the same rate, but in general I think we believe that each of the brands has an opportunity to increase its turn and therefore bring down inventories even further -- store inventories even further as we go forward. So as I said in my prepared remarks, we hope to achieve year-over-year increases in productivity and to decrease store -- comp store inventories in each of the brands. Francis J. Conforti: And Kimberly, this is Frank. I'd just like to add that as you're looking forward to the next few quarters, you should continue to plan to expect to see our total inventory growth in line with sales.

Our next question comes from Neely Tamminga from Piper Jaffray. Neely J.N. Tamminga - Piper Jaffray Companies, Research Division: I was just hoping maybe David could just pipe in a little bit more specifically on the road map to rebalancing the price points at Anthro. Kind of where are you in that strategy? Are you pleased? How should we think about the timing at the back half as you roll that out?

Thanks, Neely. So for the -- as we went through most of the – for the first half of the year, price points were comparable for total Anthro to the prior year. However, beginning in Q3, we think we'll have made adjustments to our price points for -- particularly in the apparel area, we'll be below last year and closer to 2010 averages.

Our next question comes from Janet Kloppenburg from JJK Research.

Just a couple of questions on the guidance. Frank, I think you said that you're expecting more gross margin improvement in the fourth quarter versus the third. So perhaps you could elaborate on that. And also, Frank, you had guided us pretty rigidly on expenses up, I think, mid to high teens in the second quarter, and I'm really happy that, that didn't happen. But I'm wondering what -- if you could just talk a little bit about why that spending didn't happen, if it was pushed into the third or fourth or if there's just greater efficiencies being achieved. Francis J. Conforti: Thanks for your question. Yes, as far as gross profit margin improvement, we do look at the opportunity to be more significant in the fourth quarter versus the third. And that's more about comparability than anything else. If you remember, our markdown challenges were more drastic in the fourth quarter last year than it was in the third. So that's why we're still planning for the year consistently, and we still think the opportunity is greater for us in the fourth quarter versus the third. As it relates to SG&A growth, it did come in slightly lower than where we were planning the growth to be. There's really 2 factors driving that shortfall. One is, we weren't able to hire as many headcount as we had planned. I can tell you that the hiring did accelerate, though, each month within the quarter, and we are continuing to accelerate headcount additions towards the back half of the year. The second item is our web-based marketing. So as we had in our prepared commentary, we did accelerate our web-based marketing within the quarter, not as much as we had originally planned and we do continue to accelerate -- we are planning to accelerate that further in the third and the fourth quarter. Thank you.

Our next question comes from Marni Shapiro from Retail Tracker. Marni Shapiro - The Retail Tracker: If you could just talk a little bit – the transaction number looks great at plus 4. I'm wondering if you can parse that out a little bit. Are you seeing traffic increase in the stores? Or is that really driven by conversion? And is it at both Anthro and Urban? Richard A. Hayne: I didn't understand the first part of your question. Could you repeat it? Marni Shapiro - The Retail Tracker: Sure. You guys noted that transactions were up about 4% in the quarter, and I was curious if that was driven by increased traffic to the store or was it conversion, and if it was at both Anthropologie and Urban Outfitters. If you can parse that out. I'm not sure if you can. Richard A. Hayne: Yes, we can. So we do not have traffic counters in stores -- in the North American stores. We have them in Europe. So just anecdotally, we don't think that traffic has increased dramatically. So I would suggest that at least some of it is due to conversion. But that's all anecdotally.

Our next question comes from Dana Telsey from Telsey Advisory Group. Dana Lauren Telsey - Telsey Advisory Group LLC: Can you talk a little bit about what you're seeing in Europe, how it differs? And just lastly, on each of the divisions, private label versus brands, given what we've been seeing in the stores lately, the change in some of the brands and also the enhancements to private label. Richard A. Hayne: Okay, Europe. We have, as you would expect, a little bit of stronger headwinds in Europe, I believe, with the sort of economic mess that's going on there that I'm sure you all are dealing with even more than we are. We also had a little bit of a shift in the tourist cadence with -- in London, particularly with the Queen's Jubilee and the Olympics. And we saw a little bit of effect on -- we believe from that. And then some of the issues there were what I would call self-inflicted product issues. So you wrap all that up and the store comps were softer than we would have liked, as I mentioned in our prepared comments. But we don't see this as a long-term issue. Barring any huge macro event, and we're betting against that we continue to, and expect to, open more stores across Northern Europe. And as I said, we are excited about the prospects of increasing our Direct-to-Consumer business across Europe. So I think it's pretty much business as usual, and we expect a return to normalcy there.

Our next question comes from Anna Andreeva from FBR. Anna A. Andreeva - FBR Capital Markets & Co., Research Division: I had a couple of questions. First, if you could comment about the trend in the business quarter to date. This is the beginning of easier comparisons for you guys. And then secondly, if you can talk about some of the categories at Anthropologie that are working. Obviously, it's a bottom trend out there that is working quite a bit, but it seems like some of the other categories are picking up as well. Maybe if you could talk about that. Richard A. Hayne: Okay, I thank you for your question. I -- we don't comment too much on immediate trends. But I can tell you that the trend line has not changed significantly in the first part of this quarter. So probably no other comments necessary there. It is a bottoms-driven cycle, and I'm extraordinarily proud of and pleased with the brands and the talent within the brands that have been able to adjust and adapt to that. Urban Outfitters and all of these brands have consistently done better in tops-driven cycles, and they really have stepped up and adjusted to this new environment. I don't expect that to change. The -- certainly the -- it's -- continues to be a bottom-driven cycle, and we expect to be able to continue to deliver. So thank you.

Our next question comes from John Morris from Bank of Montréal. John D. Morris - BMO Capital Markets Canada: Yes, question, I think, you for, Frank, and maybe Dick about some of your sourcing costs. I'm wondering if you were able to achieve what looks like a much better-than-expected gross margin. Obviously, you got the lower markdowns. I'm wondering on the cost side of the equation, you see sort of costing coming from sourcing with those headwinds that you've had. Were you doing anything there to mitigate that? Was that coming in a little bit better than you would have expected? And would it have kind of implication? Or what's your outlook with respect to some of those costing headwinds as you look ahead to the back half? Richard A. Hayne: Well, as Frank mentioned, the -- a lot of the IMU pressure came from us sourcing more product directly from the market as opposed to our own sourcing from -- for our own product. As it pertains to our own product, that which we source internally, we're certainly seeing a lifting of pressure that we experienced last year with commodity prices the way they are and some other factors. So we think that as we go into the back half and particularly as we go into the first quarter of next year, we will see improved IMU potential on our own source product. And then it'll always be about what kind of mix we have between our own source product and the -- and market goods.

Our next question comes from Erika Maschmeyer from Robert W. Baird. Erika K. Maschmeyer - Robert W. Baird & Co. Incorporated, Research Division: You mentioned you're rethinking bricks and mortar and opening slightly fewer stores than originally planned in fiscal '13. Could you talk about how you're thinking about opening for next year and beyond? Could this mean potentially fewer store openings and, I'm assuming, faster online growth? Richard A. Hayne: Well, we do anticipate faster online growth. But we also anticipate slightly fewer stores being opened, and it's not because we believe stores are no longer the vehicle. Our stores are -- continue to be very profitable, and so we are opening stores. As you probably realize, we have for probably the last 10 or so years talked about an upper limit of the number of stores that we want to open in North America. And that number, for both Anthropologie and Urban Outfitters, is somewhere around 200 to 250, and the number for Free People is somewhere probably around 100 or maybe slightly more. So given the fact that we have a certain number of stores left to open, it -- I think it's prudent for us to open them less quickly, meaning that we don't -- we could, given our capabilities, open most of them that are remaining in the next year or 2, but I don't think that, that would be a particularly smart thing to do. So we will de-accelerate the number of stores that we open in North America. We continue to grow the number of stores we have internationally, and we believe that, that is the right thing to do. At the same time, we believe that Direct-to-Consumer will continue to increase its penetration to total stores -- to total sales, I mean.

Our next question comes from Lorraine Hutchinson from Bank of America Merrill Lynch. Lorraine Maikis Hutchinson - BofA Merrill Lynch, Research Division: Just following up on Erica's question. Can you take a longer view on Europe and just discuss what you think the ultimate store penetration would be there? And then any updated thoughts on your Asian expansion. Richard A. Hayne: Yes. I think you're aware of the fact that the spend on the types of product that we sell is greater across the European common market than it is in our market here in North America. Now that doesn't necessarily mean we have 200 to 250 stores open, but we believe that there's significant room to open many more stores than we currently have. And we will continue to do that primarily across Northern Europe. It's a little bit more difficult for us to open stores without a JV in places like Italy and Spain, so -- and that's something that we will and are investing -- investigating. So I believe that Europe is still a fertile ground for us. We plan to continue to grow that, both with stores and with direct. As to Asia, Urban Outfitters is exploring the possibility of opening a store sometime in the next 2 years. We will also start our Direct-to-Consumer business in Asia. And Anthropologie will follow, I hope, soon thereafter. And as I said on the call -- I mean, our prepared remarks, Free People is already in discussions to place their wholesale product in Asia, and they intend to launch their Direct-to-Consumer business there as well.

Our next question comes from Paul Lejuez from Nomura Securities. Paul Lejuez - Nomura Securities Co. Ltd., Research Division: Just wondering about the lower percentage of your own product and more third party. Just wondering if you view that as a structural shift. Where are you in one versus the other today versus where you think that's going? And how different is that in Europe versus the U.S.? And then just one clarification. Can you just repeat what you just said about the cadence for comps during the quarter? Richard A. Hayne: Okay, I'll take the first part of the question and let Frank get the second. I believe that it is not a shift in strategy to go more into the market. It came back for really 2 reasons: one, there's a shift in the -- or there is -- was and there currently is, a shift in the penetration of different classifications as some of those are more favorable to the market; and then secondly, we -- as you heard Frank discuss and I discussed it as well, we added lot of product that we are calling web exclusive. And this web-exclusive product tends to be significantly fewer units. And for that, we relied more on the market than we normally would. As the web business grows, we would expect that to switch back to our own design and our own production overseas. So I don't think there's any shift in the -- in our strategy. Frank, you want to... Francis J. Conforti: Yes. So as it relates to the retail segment comp, May was our strongest month followed by July and then June; July and June being relatively comparable. It's also important to remember, though, that June and July were our easiest comparisons, so please don't -- May was the easiest comparison, so it doesn't imply a deceleration during the quarter.

Our next question comes from Barbara Wyckoff from CLSA. Barbara Wyckoff - Credit Agricole Securities (USA) Inc., Research Division: Question on Terrain. Are there any key differences in the new Terrain store in Westport versus the Glen Mills store? Richard A. Hayne: When you say key differences, are you -- what are you referring to? Barbara Wyckoff - Credit Agricole Securities (USA) Inc., Research Division: Well, just are you -- what are you learning from Westport relative to the other that would -- that is different? I mean outside of just, I guess, the landscaping? Big difference would be landscaping, right? Richard A. Hayne: Well, there are a number differences, Barbara. First of all, it's a much smaller store in terms of total square footage. The amount of space that we have devoted to the plant material is significantly less in Westport than it is in Pennsylvania. Secondly, we do not have a large landscaping business established yet. We are in the process of -- we are doing some landscaping jobs in the Connecticut area, but we are not yet -- have an infrastructure that supports a lot of that. So we're just doing -- we're starting it very, very slowly. That's a key difference. We are seeing results that favor Westport over the Pennsylvania store in terms of sales, but that's exactly how we planned it. And so I don't think that there's much to be learned there. We're seeing a lot of success with our indoor product in both -- in terms of both plants and the decorative accessory products. So I think that's about it.

Our next question comes from Roxanne Meyer from UBS. Roxanne Meyer - UBS Investment Bank, Research Division: You mentioned a desire to create a more exciting store experience, though in my view, you've already got the industry-leading experience with the customer that spends more time in your stores, probably the most. So I was just curious what you're planning to do there. And where is the opportunity to really improve upon that experience? And then just to follow up on Paul's question, how do you think about the penetration of the market labels in the third quarter versus the second quarter? Richard A. Hayne: Okay, I'm going to take your first question and tell you that we're not prepared right now to talk about it. We believe that there are a lot of things that can be done, and we believe that it's all about experience and entertainment. And I'll kind of leave it at that. Probably sometime in the next 6 months or so, we'll be prepared to talk in a little bit more depth, and we will probably have some kind of -- at one of our functions or one of the conferences, we may be ready to launch what exactly we're going to do. But it will -- I'm excited about it, and I think everybody here in Philadelphia home office is excited about it. So I expect it to be something that we'll roll out in the next 2 years. And I now forget your second part of your question. Oh, the market. I think I've pretty fully explained that. Frank, you want to take a shot at it? Francis J. Conforti: No, I think we wouldn't comment on, nor do we plan for, where we would end up within a quarter between market versus own design. Some of those things just happen ratably over the quarter as we react into where trends are.

Our next question comes from Betty Chen from Wedbush Securities. Betty Y. Chen - Wedbush Securities Inc., Research Division: Dick, I was wondering if you can talk a little bit more about the web exclusive. It looks like the team is having a lot of success on that front. Can you remind us what mix of the merchandise is now considered exclusive? And does that vary much by brand? Where do you expect that target to be maybe by the second half, over the longer term? And then you mentioned that as the web business grows, you would expect more of those to be in-house. Is that part of the hiring that Frank was mentioning earlier that, I guess, where we'll -- we need to do -- maybe build up an internal design team for the web exclusives? Or what should we be looking for? Richard A. Hayne: Okay, the web-exclusive product is, just as it would suggest, product that's available on the web but is not available in the stores. It is driving a lot of the sales increases on the web. It is one of the primary factors that is driving that. And it tends to be product that -- as opposed to separate categories, it tends to be additional choices that we give the customer in product categories that we already offer. We've done an analysis of these kinds of things and have found that many of the web pure-play people have a significantly greater assortment of product than we offer, and we offer a product assortment that is pretty much in line with a lot of the traditional bricks-and-mortar people. And so this is just an effort on our part to get more in line with those pure-play people. And as I said, it -- we've had a lot of success doing it. So we'll continue to do it, but we do it measurably, meaning that we measure the results, and we want the penetration not to exceed that which what -- that is, what the customer wants. So we look at the productivity with the inventory versus the sales, and we'll add product based on her response to that assortment that we offer.

Our next question comes from Liz Pierce from Roth Capital Partners. Elizabeth O. Pierce - Roth Capital Partners, LLC, Research Division: Most of mine are -- have been answered, but I do have just one quick one for Ted. Could you just -- on the accessory side for women, is it just kind of where we are trend-wise? Or has there been a change in the buyers or what? Tedford G. Marlow: Sure. We are seeing a bit of weakness in the accessory category, both in North America and Europe, and it's common classifications in both businesses. Our shoe business, which is part of women's accessories, remained strong. But as you know, there are a number of categories within the complex, and some of them were probably pretty commonsensical as to why they may not be trending right now. Easiest of those would be belts. When you have jeans that are almost impossible to get on, there's not a lot of need for a belt. So other than that, it's -- there are other categories that, as you see how outfits are being put together today or people on the street today, just aren't part of the outfit of the moment, that we are up against some business from last year. I guess the good news in there is that we have maintained good margin performance in the category. We have not taken the markdowns that we took and the inventory position that we had last year. So from a contribution standpoint, the business has treated us pretty well. But on the top line, I mean, we've got a little less than we were looking for.

Our next question comes from Margaret Whitfield from Sterne Agee. Margaret B. Whitfield - Sterne Agee & Leach Inc., Research Division: I would like to explore the price changes at Anthro. What kind of a price decrease are we talking about? What kind of a margin effect might this have? Is this going to continue into quarter 4? And have you already done this in the stores? And what's been the response? I would imagine it would pick up the full price sales. Francis J. Conforti: No, actually, as you think through, this is something strategically we follow. We evaluated what happened last year. And as I said earlier, our prices were higher in Q1 and Q2 than they were for the prior year, but the receipts for Q3 will come in, let’s put it low -- mid-single digits lower than the prior year's averages without impairing initial markups.

[Operator Instructions] Our next question comes from Richard Jaffe from Stifel, Nicolaus. Richard Ellis Jaffe - Stifel, Nicolaus & Co., Inc., Research Division: A question on direct, obviously a source of great satisfaction for you guys. I'm wondering, how high is up? Have you broadened the assortments? Have you seen tremendous growth? Does this become the biggest division within the organization? Is this going to be a lot larger than 20% of sales? How do you envision it? Richard A. Hayne: Richard, I have a long history of putting my foot in my mouth, starting many years back. And I think my -- one of my more recent foot-in-mouth experiences was predicting that the Direct business would account for more than 50% of our sales and well within 5 years. I -- so I don't go there. I don't know that it would be 5 years. But I'm very confident that at some point in the future, and hopefully within my lifetime, knock on wood, that the Direct business will account for more than 50% of total sales.

Our next question comes from Christian Buss from Credit Suisse.

This is actually Darla Shay in for Christian. I know that you spoke about pricing in terms of Anthro, but if you can maybe just mention how we should think about Urban Outfitters' pricing for the back half of the year. Tedford G. Marlow: Sure, the -- our average unit sales were down slightly in the -- in Q2. Currently, it's right in line with LY. We could come up of really tied to mix a bit more, a little short of last year on AUS, but I don’t think it's going to be a meaningful difference in the business in North America. European market, we're dealing with a little bit of an anomaly with an exchange rate situation, so that's different math. But the base business in North America, I think we ought to be pretty close as we go into the back half.

Our next question comes from Robin Murchison from SunTrust. Robin S. Murchison - SunTrust Robinson Humphrey, Inc., Research Division: Actually, I got it.

Our last question comes from Laura Champine from Canaccord. Laura A. Champine - Canaccord Genuity, Research Division: This is just a detail thing. I think that's all that's left. But I think there was mention in the press release that margins were slightly negatively impacted by some product that was online only. Did I read that right? And why would that product be lower margin? Richard A. Hayne: The reason it's lower margin is that we offered a lot more assortment online. And as a result, some of those -- when we didn't also offer it in the store, we ordered fewer units and therefore, a smaller order. So whether or not it was ordered through the market, or whether it was ordered as part of our own design, because the unit was smaller, we -- our IMU was greater. Francis J. Conforti: This is Frank. I'd just like to add that our IMU was lower. So we deleveraged IMU. But overall, maintained margin was favorable. So we did have a lower markdown rate on that product. So it was more productive overall.

Thank you. And that does end our Q&A session today. Richard A. Hayne: Okay, thank you very much.

Ladies and gentlemen, thanks for participating in today's program. This concludes the program. You may all disconnect.