Eric Artz - Chief Financial Officer Glen Senk - Chief Executive Officer, Interim Global President of the Urban Outfitters Brand and Director Freeman Zausner - Chief Administrative Officer

Sharon Zackfia - William Blair & Company L.L.C. Dana Telsey - Telsey Advisory Group Stacy Pak - Barclays Capital Jeff Black - Citigroup Inc Richard Jaffe - Stifel, Nicolaus & Co., Inc. Christine Chen - Needham & Company, LLC Lizabeth Dunn - FBR Capital Markets & Co. Paul Lejuez - Nomura Securities Co. Ltd. Betty Chen - Wedbush Securities Inc. Michelle Tan - Goldman Sachs Group Inc. Adrienne Tennant - Janney Montgomery Scott LLC Brian Tunick - JP Morgan Chase & Co Howard Tubin - RBC Capital Markets, LLC Marni Shapiro - The Retail Tracker Roxanne Meyer - UBS Investment Bank Erika Maschmeyer - Robert W. Baird & Co. Incorporated Samantha Panella - Raymond James & Associates, Inc. Neely Tamminga - Piper Jaffray Companies Kimberly Greenberger - Morgan Stanley Lorraine Hutchinson - BofA Merrill Lynch Janet Kloppenburg - JJK Research

Good day, ladies and gentlemen, and welcome to the Urban Outfitters, Inc. First Quarter Fiscal 2012 Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. The following discussions may include forward-looking statements. Please note that actual results may differ materially from those statements. Additional information concerning factors that could cause actual results to differ materially from projected results is contained in the company's filings with the Securities and Exchange Commission. I would now like to introduce your host for today's conference, Mr. Glen Senk, CEO. Sir, you may begin.

Good afternoon, and welcome to the URBN quarterly conference call. With me today is Eric Artz, Chief Financial Officer; Oona McCullough, Director of Investor Relations; and a majority of our executive management team. Earlier this afternoon, the company issued a press release outlining financial and operating results for the 3 months period ending April 30, 2011. Eric will begin today's call by providing details on our performance. I will continue the prepared commentary with closing remarks, then the group and I will be pleased to answer any questions you may have. As usual, the text of today's conference call along with detailed management commentary, will be posted to our corporate website at www.urbanoufittersinc.com. I'll now turn the call over to Eric.

Thank you, Glen. The following summarizes our first quarter fiscal 2012 performance versus the comparable quarter last year. Net sales increased 9% to a first quarter record of $524 million. Excluding the Leifsdottir one-time transition costs of $3 million during the current quarter, income from operations decreased 25% to $62 million or an operating margin of 11.8%. Net income as reported was $39 million or $0.23 per diluted share. Comparable Retail segment sales, which include our direct-to-consumer channel, decreased 1%, with increases of 30% and 1% at Free People and Urban Outfitters, respectively, while Anthropologie decreased 6% in the quarter. Total company comparable store net sales decreased 5%. Direct-to-consumer comparable net sales rose 15% with direct penetration increasing to 20%. Wholesale net sales increased 22% to $31 million. Gross profit decreased 4% to $193 million, while gross profit margins decreased 493 basis points to 36.9%. Selling, general and administrative expense, expressed as a percentage of net sales, increased 96 basis points to 25.7%. Comparable Retail segment inventories at cost, which include our direct-to-consumer channel, were 6% higher at quarter's end, while comparable store inventories increased 1%. Finally, during the quarter, the company repurchased and retired 4.8 million common shares for $149 million, leaving 5.7 million shares remaining on the current authorization to purchase up to 10 million shares. Turning to our key business metrics, I'll begin by providing detail on sales for the quarter. New and noncomparable store sales contributed $48 million to the consolidated net sales increase. The company opened 10 new stores in the quarter: 3 Anthropologie stores, 5 Free People stores and 2 Urban Outfitters stores. Within the quarter, total company comparable store sales were strongest in April, followed by February then March. Within North America, sales in Anthropologie and Urban Outfitters were strongest in the south and weakest in the northeast, while sales at Free People were strongest in the west and weakest in the northeast. In Europe, sales at Urban Outfitters were strongest in Continental Europe and weakest in Ireland. By store type, sales in Anthropologie were strongest in lifestyle centers and weakest in malls and street locations, while Urban Outfitters were strongest in malls and lifestyle centers and weakest in street locations. Sales at Free People were strong across all venues. The comparable store net sales decline was driven by decreases in average unit selling prices, average number of units per transaction and total transaction counts of 2%, 1% and 3%, respectively. Direct-to-consumer revenue increased 19% to $102 million. The penetration of direct-to-consumer net sales to total company net sales increased 150 basis points to 20%, with results largely driven by a 24% increase in website traffic to over 31 million visits. For Retail segment sales, intimates and home were strongest at Anthropologie, men's and home were strongest at Urban Outfitters, while all categories were strong at Free People. Wholesale segment sales for the quarter increased 22% to $31 million, driven by a 15% increase at Free People and increased off-price sales at Leifsdottir. I'd now like to turn your attention to gross margin operating expense and income. Gross profit in the quarter decreased 4% to $193 million, and the gross margin rate decreased 493 basis points to 36.9%. This decline was primarily due to increased markdowns to clear slow-moving women's apparel inventory at Anthropologie and Urban Outfitters, as well as a $2 million nonrecurring loss associated with the selloff of Leifsdottir wholesale inventories. Total selling, general and administrative expenses for the quarter as a percentage of sales increased 96 basis points to 25.7% due primarily to the deleverage of store operating costs caused by negative store comparable sales. Additional items contributing to the deleverage in the quarter were investments in new technology, planned transition costs for our new distribution and fulfillment centers in Europe and $1 million of Leifsdottir nonrecurring transition costs. The company's effective tax rate was 35.8% for the quarter versus 35.9% for the prior comparable period. As we look forward to the balance of the year, while we will not provide specific guidance, it may be helpful for you to consider the following. We continue to plan to open 50 to 55 new stores this year. The productivity of our inventory continues to lag our expectations, and we therefore anticipate increased markdown levels in the second quarter similar to what we experienced in the first quarter. We remain focused on managing our selling, general and administrative expenses in light of negative comparable sales, but we also remain committed to investing in our long-term growth initiatives. Our estimated leverage point for expenses in the first half remains at an approximate 4% comparable store sales increase. We also remain on track with our long-term capital projects, including the addition of a West Coast fulfillment center and expansion of our home offices and continue to plan for fiscal 2012 capital expenditures of $175 million to $195 million. Finally, we are planning our annual effective tax rate at 36.5%. With that as a financial backdrop, I'll turn the call back over to Glen, who will proceed with his closing commentary.

Thank you, Eric. Let me begin my prepared remarks by stating that the organization and I were disappointed with our overall first quarter performance. While it's true that we achieved many highlights during the quarter including record consolidated sales, the successful launch of BHLDN and strength in the entirety of Free People along with select categories at Anthropologie and Urban Outfitters, our performance in the all-important women's apparel and accessory divisions at Anthropologie and Urban Outfitters did not meet our expectations. We can do better, and I want to assure you that we are keenly focused on the right priorities, namely assortment and product execution in conjunction with achieving a compelling expression of the brands across our stores, catalogs and websites. To help accomplish this objective, I have personally reoriented my time over the last several months working with the merchant teams at Anthropologie and Urban Outfitters on assortment architecture, distortion strategies and our overall process from design through allocation. I'm also working to help the merchants feel emboldened again, encouraging them to move forward with conviction and to place their buys with confidence. While I always urge managed risk, now is not the time for increased conservatism or an overly cautious approach. I've also spent a good amount of time in the area of talent development, reviewing our structure and of course, our staff. Anthropologie recently announced the addition of Judy Collinson as Executive Director of women's apparel and the return of Johanna Uurasjarvi to the position of Executive Creative Design Director. Judy is a world-class merchant and brings a fresh perspective from her vast experience at Barneys New York, while Johanna's 10 years of prior experience with Anthropologie will enhance the already strong merchant team led by Co-President, Wendy Wurtzburger. I am also pleased to announce that Terence Bogan will join the Urban Outfitters brand as General Merchandise Manager of women's apparel effective June 6. With 18 years of history at Barneys CO-OP, Terence is another world-class innovative merchant and we are excited to welcome him to the team. I'd also remind you that we are in the midst of a Chief Merchandising Officer search for the Urban Outfitters brand, and we hope to have news on that front shortly. Before I close, I'd like to reiterate that I continue to believe change is good for our business and that our merchants are best in class. Managing through this transition is a highly iterative process, however, with a complex web of interdependencies. It takes time for the merchant and design teams, which number in the hundreds, to fully absorb the change. Once that understanding occurs, they adjust the product and continue to rebalance the assortment and buys based on real time selling information. In tandem, the store, catalog and Web teams adjust and refine their messaging across all channels. And ultimately, the customer must embrace the change, which typically occurs in an asyndetic [ph] manner. I'm confident that we are taking the necessary steps to bring our women's apparel and accessories performance back to our high standards. We are making progress. I see it, but it will take time to play out, so I anticipate the improvement to occur gradually over the course of the year. In the meantime, I want to be sure to recognize the organizations' superb operational execution, from store operations to fulfillment, from technology to sourcing, from planning and allocation to finance, the performance has been outstanding. As always, we continue to invest in our future, and our planned strategic growth initiatives for the year include opening 50 to 55 new stores; accelerated investment in the direct channel, including incremental circulation and marketing spend based on the initial learnings from our consumer insight initiative; accelerated European expansion, including our new distribution and fulfillment centers and accelerated store expansion in Germany; continued new systems development, including the final implementation of our order management system, a new planning and allocation system and the rollout of mobile POS systems across all 3 brands; and finally, an increased investment in BHLDN, with the second quarter launch of home furnishings, the third quarter store opening in Houston and an early 2012 store opening in Chicago. In closing, although disappointed with our current performance, I'm highly encouraged by each brand's progress and by our team's focus, energy and commitment. We are more confident than ever in the strength of our business model, which is based on delivering a compelling differentiated mix of product through unique, multichannel shopping experiences that create emotional connections with the customer. As always, I'd like to offer my heartfelt thanks to the Urban team and to our shareholders for their continued support. I will now open the call to questions, and as is our custom, we will limit the queries to one per caller.

[Operator Instructions] Our first question comes from Liz Dunn with FBR Capital Markets. Lizabeth Dunn - FBR Capital Markets & Co.: So I guess my question relates to the fashion. To what extent are you now looking at this as a fashion miss versus a fashion shift, and what corrective action is happening to address the fashion miss? Like, are there key categories that you feel you didn't have that you should have had in the first quarter? And well, should we just expect gradual improvement as we move through the year, or is it really more back-half opportunity? [Audio Gap]

Our next question comes from Janet Kloppenburg with JJK Research. Janet Kloppenburg - JJK Research: [Technical Difficulty]

Okay. Liz, your question really wasn't that bad. Anyway, actually it was a great question. I would still characterize our issue as a fashion shift. But I would say that we were -- we did not distort into what we knew properly. And if I think about how I have been spending my time, really, over the last few months, it's getting the merchants to more closely understand what's going on in the business and to be braver embracing those shifts. So of course, we're never going to love everything that we have. We're always going to have missed opportunities. But I think by and large, our stores look good, and I think that there's -- obviously, we're all disappointed in our performance. I think there may be some surprise, and I think the surprise comes more from the way we're buying the product rather than the product that we're buying.

Our next question is from Janet Kloppenburg. [JJK Research] Janet Kloppenburg - JJK Research: I was wondering, since I only have one question, if Eric could just help us understand the gross margin and SG&A guidance a little bit for the second quarter. I think we should take out the one-time charges for Leifsdottir. And then would you expect the gross margin pressure to be about the same, or is it possible that it could be not as severe? And with respect to the SG&A, were there any one-time reversals there or cutbacks on projects or anything that may have helped that resolve out and could that continue as we go forward, Eric?

Sure, Janet. On the gross margin side, clearly, the number one factor that we continue to face is this women's apparel category, the productivity of that inventory and ultimately, the resulting merchant margins through the period. So when I talk about similar experience expected or planned for in Q2 that we experienced in Q1, I am saying on a rate basis compared last year to this year, a similar experience expected, including the Leifsdottir charge. So if we're down 493 basis points, I'm basically saying that we're planning for similar performance in the second quarter. When it comes to the SG&A piece, I did call out that we had about a $1 million nonrecurring charge associated with Leifsdottir that we will not see repeat. Talked about the 4% leverage point in the second quarter still holding true. As Glen mentioned and as I mentioned as well, we are not cutting back on any of our long-term investment programs. So I think as we enter the second half of the year, we have the opportunity to return on the SG&A side to more a historical leverage point in the 1 to 2 range as we get past the DC implementation and some other systems work that we're doing here in the second quarter. So first half, about a 4% leverage point; second half, opportunity to be closer to our historical 1% to 2%.

Our next question comes from Adrienne Tennant with Janney Capital Markets. Adrienne Tennant - Janney Montgomery Scott LLC: Glen, my question is sort of -- it's one question about inventory. You buy your inventory on weeks of supply, which is really different than the way you had done it in 2006. And as we go into the stores, the stores don't look overburdened with either markdown inventory or front-of-store inventory. So I guess my question is, is that what you're talking about when you say it's about how we're buying versus what we're buying? And this notion of having 50% open to buy available to you, how should we think about that in making the turn sort of a lot easier "this time" versus the last time around?

Okay. Thanks, Adrienne. First of all, on a 2-year basis, let me remind everyone that the inventory, the comparable retail store inventory, is down 2% on a comparable store sales gain of 6%. So there's actually an 8-point differential between inventory and sales, comp store sales, on a 2-year basis. And I think you're right. I think our stores look clean and the inventory levels look appropriate. When Eric talks about productivity and I talk about productivity of the inventory being less than it was a year ago, what I mean is we're just not getting the regular price sell-throughs on a style-by-style basis that we would have a year ago. And when I say this is an iterative process and when I sound confident, it's because when I look at the weekly sales, I see lots of highs and lows in the performance. So when we're in the throes of a cycle and we have real clarity and the buyers are buying with clarity, the variation of sell-throughs is going to be pretty narrow. When there's less clarity, we're going to have things that are selling through at 25% or 30% in a given week and things that are maybe selling through at 2% or 3% or 4%. And in total, the sell-through is going to be lower. The productivity is going to be lower. So what we have to do is really dig into the selling on a week-by-week out basis and make sure we understand the information, the patterns that are happening, so that we shift the whole productivity level of the inventory higher. I think it's easier for us now than it was 5 or 6 years ago because we do have more flexibility in the supply chain. But also, as I said on the call, we have hundreds. I think we probably have 600 merchants, including designers, in the home office. And it takes a while to get everybody on the same page and to understand all of the related selling because every time one trend happens, there's a knock-on effect to many, many other things. And quite frankly, I guess I'm waiting for someone to ask me about this, so I might as well say it now, I wasn't spending enough time on this. And I think if -- I had clarity 6 months ago or even 3 months ago, when I went back and checked in with the organization at the middle level or the upper middle level, I think the clarity wasn't as great as I expected it to be. So I'm more involved. I'm not telling people what to do, but I'm asking tougher questions, and I'm making sure that they are strategic and brave when it comes to spending their money. And I hope -- I mean, we're not seeing the results of that yet, but I'm optimistic and I believe we'll see the results of that in an iterative basis as we go forward through the remainder of the year.

Our next question comes from Kimberly Greenberger with Morgan Stanley. Kimberly Greenberger - Morgan Stanley: Glen, I wanted to ask you also about the inventory management philosophy and understanding that you want your merchants to be bold with their choices in order to navigate through this shift better. Given the underperformance of your inventory productivity, is there an opportunity to buy inventory a little bit more conservatively until the merchants have that clarity and then to encourage them to chase into trend once they see it? Or how do you think about it? Could you just help us understand how you're encouraging them to approach the business?

Yes, that's a great question, Kimberly. If anything, I think the merchants were probably being too conservative, and there's a difference between planning your inventories at the aggregate level versus buying each product with confidence. And I think part of the learning curve of being a merchant and part of the ability that a more mature merchant has is they have to have an ability. We have to have an ability to look forward. If we just look with the rearview mirror, the stores aren't going to be exciting. They're not going to be compelling. I've been saying for over a year now that we don't really see price elasticity, we see newness elasticity. And given the headwinds and the change, it is particularly difficult for the younger buyers to move forward boldly. And quite frankly, that's the job of the divisional merchandise managers, the general merchandise managers, the chief merchandising officers and myself is to help them and to give them confidence. I'll never forget in 2006, one of the things Dick [Hayne] said to me when we were struggling is, he said, "Glen, I'd rather be wrong than be irrelevant." And that was a very motivational thing for me. I was running the brand back then. It was a very motivational thing for me to hear because we have to keep the brand moving forward. I have complete confidence that we're going to get there, and the last thing I do is want to stall people by being conservative. So I don't know if that answers your question, I hope it does.

Our next question comes from Michelle Tan with Goldman Sachs. Michelle Tan - Goldman Sachs Group Inc.: Great. I had a question on Europe. I know it's still a small piece of the business, but a number of us were a bit surprised by the weakness that you saw there at the start of the year. I was wondering if you could give us an update on the business. And then Glen, any thoughts on what needs to be tweaked or anything you want to tweak when you approach those new markets?

I'll ask Eric to start.

Michelle, so yes, back in February when we spoke to you, we were witnessing firsthand what was happening in the U.K. market where most of our stores are located, whether it be the traffic declines or the austerity measures or the changes in tax rate. What we can say is that as we progress through the quarter, for both brands, Urban and Anthropologie, we saw improvement each month in our comp store sales. And by the time we got to April, the Urban Europe business on a comp basis actually outperformed the domestic business in the month of April. So I think it's -- the market has improved somewhat on a traffic basis, and I think the team over there executed extremely well as the quarter progressed and we continue to make progress. So we feel pretty good about where that business is overall at the moment.

And in terms of the learnings, I was there a couple of weeks ago. I think, again, the stores look good, the inventories are well controlled. We made a lot of progress with site selection. I think one of the things we've learned is that there's an opportunity for us to be more aggressive with marketing, and we're doing that and learning about it. So we feel optimistic with our European business in both brands.

Our next question comes from Neely Tamminga with Piper Jaffray. Neely Tamminga - Piper Jaffray Companies: Great. Glen, I'm just wondering, along the context of, really, customer management and how -- with the rapid pace of technology, how you guys are tapping into the CRM system that you have at least currently over at Anthro [Anthropologie], as well as some of the social comments to really continue to embolden those buyers as you go on this progress. So it'd be helpful to get a sense of that.

Yes, great question. I think, as you know, we went live with our system. I guess, it's about 8 months now, and we've collected -- I should know this number off the top of my head, but I don't. I think over 3 million -- data on over 3 million names. Eric's going to make me honest in a minute. And what we're learning now, Neely, is how to use that basic data. We don't have that number, so we'll have to get back to you. But we're learning how to use that data with basic blocking and tackling right now; so circulation strategies, messaging, email segmentation, a young version of loyalty and so on. As the year progresses and as we get into next year, we'll be going from kind of 101 to 102. 102 I would say is more consumer insight; so really understanding how each of the segments look in terms of early adopter or late adopter, understanding how to segment the stores better and understanding related buying better. This organization, because we're all merchants and we've grown up that way, we tend to measure everything through the merchandise lens. What the customer engagement gives us an opportunity to do is measure it through customer lifetime value and double-check our merchandise assumptions, but that's kind of probably the second tier. And we've always viewed this as a multiyear progression, and we have to stay focused on the blocking -- the basic blocking, tackling really at least for the first half of this year.

Our next question comes from Brian Tunick with JPMorgan. Brian Tunick - JP Morgan Chase & Co: I guess, Glen, on the announcement of Leifsdottir being brought in-house here, is there a chance of how you're really looking sort of now at the whole portfolio? Is it more sort of maybe reigning in and thinking about the talent outside or even your time and how much time are you spending on the Urban Outfitters division? Can you maybe just talk about how the Leifsdottir decision may have changed things?

Yes, that's a great question, Brian. I think really it is in part a question of resource allocation. But it's also we have internal guidelines with regard to all of our new brands: Terrain, Leifsdottir, BHLDN, anything else new that we do. And we have -- and we haven't disclosed this, but we do have sales hurdles or less hurdles, return on investment hurdles and so on. And we made the determination with Leifsdottir that it was not going to have -- that the brand, as terrific a job as the group did and they did a great job, that it was not going to have the kind of long-term potential that we needed it to have to be a standalone brand. And we did feel that we could better deploy the resources back inside Anthropologie and other new businesses that we have, so it's as simple as that. And I think it's just as a buyer when you buy 10 products, you never expect all of them to work. I think we've been very transparent over the years saying that we don't expect every new thing we try to hit the ballpark. And in Leifsdottir, we did well with it, but it didn't -- we didn't think that it ultimately had the potential that we needed to see. And quite frankly, part of the learning for us was the launch of BHLDN. BHLDN was a smash success. I mean, the website went live at 5:00 a.m. on February 14, and we sold our first wedding dress by 5:13 that morning and I think we sold about 170 wedding dresses the first day. And when you see that kind of reaction to something, it reorients your priorities. I mean, quite frankly, it's like getting 10 items and then having one sell at 50% and one sell at 5%. When you go back to re-buy, you put your money where you're getting the action. We think, as I said in the prepared remarks, we're opening -- we launched home furnishings a couple of days ago in BHLDN. We're opening the first store in August. We're opening the second store at the end of the year, the beginning of next year. And I don't want to get ahead of myself, but based -- if I compare the reaction to BHLDN to any new business we've done to date, BHLDN looks like it's going to be good for us. And we have other ideas, by the way, and we need to stay fluid and disciplined. And one last thing about Leifsdottir, I'm very proud of the amount of write-off. When I look at us compared to our peer group and I look at what our peer group has done and the impact that experimenting has had on them, I'm proud of the way we managed this. So all in all, it was a good thing for us. I'm happy to have Johanna and many of our team back in Leifsdottir. They're also focusing on the Anthropologie Shoe and Accessory business. We haven't spent a lot of time talking about that, but we have 2 stores open now, and we have very positive results on those things. So it's just onward and forward. One other answer to your question, I do believe and the board believes that this business will always be comprised or it will be comprised, let's say, in the next 10 years of 6 to 8 meaningful businesses. We do not believe that this will be an Urban Outfitters, Anthropologie and Free People portfolio of companies. It will be more than that.

Our next question comes from Christine Chen with Needham & Company. Christine Chen - Needham & Company, LLC: I wanted to ask, you seem to have been focusing more on accessories, both as far as your marketing through emails as well as just merchandising in the stores. How quickly can you check that and chase that? And do you think that you'll be at the penetration you'd like to be by the second half of the year?

Yes, I said on the last call that I didn't feel the 2 bigger brands had done enough to drive their kind of intimate apparel and accessory business. And after the earnings call, usually the day after the earnings call, I have a meeting with my senior managers. So there are about 115 or 125 people in the room, and I asked everyone to raise their hands and to tell me who agreed and who didn't agree. And it was a much lower number of people who agreed with me than I expected. And the great thing about our company is we're very honest with each other, and I thanked everyone for being honest with me. And then I asked them, specifically with intimate apparel, to start talking about our peer group who have public information, such as Victoria's Secret and to look at the comp businesses. Then we looked internally and we looked at Free People and the penetration of intimate apparel at Free People relative to their total business. And it's much, much higher at Free People than it is at Anthropologie or Urban Outfitters. So when I say that, I think I took for granted that my sense of what was happening in the business got down into the organization. I learned that it didn't -- that I haven't been forceful enough. I would say the same is true with accessories. I can see our Accessory business in the quarter got better, but I still think we have a ways to go. So you're going to see a lot of focus in all of our brands on every accessory category, first and foremost shoes, but jewelry, scarves, hair accessories, leather goods, you name it. I think it's a big opportunity for the company. We are investing in our competencies from a sourcing point of view, from a design point of view, and it's a real focus and you'll continue to see a lot of it.

Our next question comes from Stacy Pak with Barclays Capital. Stacy Pak - Barclays Capital: Glen, I guess I'm hoping you can discuss a little bit more the fashion progress being made in each of the big businesses. Maybe you can talk about it in your bull's eye, you always bring up performance in the catalog and whether you're confident you'll be in the ring by the second half. And I'm hoping you can weave in -- I mean, the comps overall looked stronger, the reported comps, than where at least I thought they were running. So I'm wondering if there was something going on, and why the difference with direct? Was there -- is that the same fashion issue, or is there something else?

Okay, so let me try. There are a couple of questions in there, but I'll try to remember them. If you look at a 2-year basis total Retail segment comp, the businesses are fairly close. I think Anthropologie was 16% comp for the first quarter on a 2-year basis, total Retail segment and Urban was 11%. And that's pretty typical over the year. There's always, usually, one or the other brands that's always a couple of points ahead of the other one. And that's another way of answering your question that what's going on in each of the brands is a little different from one another, but I would say they are similar in terms of their progress. Do I feel confident that we're going to be in the bull's eye by the second quarter, third quarter or fourth quarter? Quite frankly, I'm never confident that we're going to be in the bull's eye. I'm confident in the team. I'm confident in the process. I'm confident -- I think one of my biggest learnings is that I needed to spend more time on this, and I am. So I'm confident in my own ability to help bring clarity to the situation, and that's what I can tell you. With regard to direct-to-consumer, we were disappointed in our direct-to-consumer sales. They were up 19% in total, I guess, 15% in comp, but we were disappointed in that. And I think some of that had to do with Anthropologie, where we did not execute a couple of the catalogs well in the first quarter, and I also think we didn't execute the website as well as we could have. I remember at ICR, I spoke about how much I like the March catalog. In retrospect, I meant -- what I really meant was that I liked the photography. I hadn't seen the catalog, the printed catalog at that time. In the last earnings call, I said that we didn't -- somehow someone made a decision not to put prices in the catalog on the pages. I think that was suicide, and that was the month of March. And in Anthropologie, we normally don't go into this detail, March far underperformed February and April in terms of the direct-to-consumer business. I also think that we just got a little stale on the websites. The other 2 brands, I think, look good. Free People looks spectacular with their direct-to-consumer execution, and I think Urban's made a lot of progress and continues to look good.

Our next question comes from Betty Chen with Wedbush Morgan Securities. Betty Chen - Wedbush Securities Inc.: Glen, given what you've said about resource allocation and the fact that you're also spending more time with each of the respective teams on merchandising and design, how should we think about the profile of the next Urban Outfitters' global brand president? Are you more inclined to look for someone with more of a merchandising background or someone who is going to be focused more operationally? And any timing or update on that search will be helpful.

Yes, as I said, our priority was really the GMM search, and I'm really, really pleased that Terence is going to be joining us the first week in June. And our second priority was the CMO search. Now remember, the CMO will have all areas of responsibility with the exception of direct-to-consumer and stores. And our stores' organization is run by a gentleman who's been with the company 18 years I think, 18 or 19 years, and our direct-to-consumer business is also run by a very tenured, able person. So what I really need to focus on is the product content, the planning, the assortment architecture, all of the kinds of things I spoke about in the prepared comments. So that's where my focus has been. In terms of your question, what are we looking for, that's a tough question. We have a board meeting tomorrow. We're going to spend a lot of time in executive session talking about that. I think it's clear to us that people who know the women's apparel business have an easier time running our brands. Our company lives and dies currently by women's apparel, and to the extent that someone knows it, they're just going to be able to have more impact. I do want to thank Steve [Murray] for what he did do because I think outside of the product, he got a lot done. And quite frankly, it's making me a lot more -- a lot easier for me to be effective in the ranks. He did a wonderful job of kind of pulling the thread from concept development right through to the stores, including direct-to-consumer. He got everyone working together as a team, and it's just a much easier business for me to manage today than I imagine it would've been a year ago. So I want to thank him for that, but he was not -- women's apparel was not his comfort zone, and I think that was a learning for us, so you're right.

Our next question comes from Dana Telsey with Telsey Advisory Group. Dana Telsey - Telsey Advisory Group: With the multiple systems initiative you have in place, the single SKU, TradeStone or new order management system and then I think the upcoming new allocation system, how do you see them enhancing the sales margins and inventory management of each brand? Is it different by each brand?

Yes, I'm going to ask Freeman Zausner to take this on, and then to the extent that I need to add to it, I will.

Dana, I'm going to -- as to how the brands handled, I'll let Glen answer that. But I would say that the quarter and through this month has been one of the best quarters that IT has ever had. Rushton [ph] is going live in the next few days. WMS was implemented at GAP just a week or 2 ago. Sterling went live over this weekend with the Sterling Order Management. Tremendous progress made and continue to evolve the Merkle product and add on more and more capabilities. MID development is ongoing and as you know, we said we'll have up on the third quarter with 2 major brands. TradeStone is being wrapped up in the first part of the traits and implementation. ITR is now being fully threaded through the major brands. The websites for both Urban and Anthro are re-skinned or the sites were redesigned, and then a lot of development details and tremendous amount of functionality underneath that floor both -- actually, all 3 brands with respect to their web platforms. I'll turn over the other part of your question to Glen.

So Dana, as I think about it, I mean, of course, each of the brands is going to use the systems in their own way, but the benefit is consistent across all brands and across all channels and I would characterize the benefit as follows. There are certain systems that allow us to be more efficient. So for example, TradeStone, which is our product development and supply chain management tool. So that allows the company to go from a CAD system and Excel spreadsheet and emails to a project management environment where everything is done online real time, and that's really about efficiency, creating efficiency. And then there are systems that allow us to recognize patterns better. So MID, which is a new allocation system that we're about to implement in the 2 big brands, what that allows us to do is recognize the attribute selling by location so that we can optimize the inventory we put in each store. When you look at ITR, which Freeman referred to, that's our assortment-planning tool. That allows the merchants to really understand the return on investment by attribute and do what-if scenarios in real time so that they can optimize their inventory. And then the third kind of bucket is, I would say, monetizing creativity. And that's another thing that I've been working on as I've gotten back into the organization, buying part of the organization more closely is I'm very, very focused on kind of unloading the operational aspects related to buying and design that happen as the business gets bigger including multichannel, multinational, so that our -- the creative part of the organization can really focus on the things that matter the most, which is developing product and experiences that are compelling. So I would say that the systems work we do really revolves around those 3 things regardless of how each of the brands use it.

Our next question comes from Howard Tubin with RBC. Howard Tubin - RBC Capital Markets, LLC: You guys were fairly aggressive buying stock back in the quarter. Should we expect that to continue going forward?

I'll lob that one to Eric.

I'm sorry.

Stock buyback, we were aggressive in the quarter and should they expect that to continue.

So yes, we're very pleased with what we accomplished in the quarter. It continues to be a strategic initiative for us. We set out a year ago to reenergize the program. We've accomplished a lot in the first quarter. I believe we have 5.6 million shares remaining on our authorization, and we'll revisit the topic tomorrow with our board again. The reason I was distracted, we got a number for whoever asked the previous call on the number of people on our consumer database. It's 7.4 million.

Told you Eric would keep me honest. Okay. I had one brand in mind instead of the total company. That's the phenomenal number by the way. That's increased dramatically since the last time I looked at it.

Our next question comes from Richard Jaffe with Stifel, Nicolaus. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: Glen, if you could just go a little further on Anthropologie versus Urban. Anthro, a different business, a little bit more expensive, a little bit more fashion-forward, obviously dominated by the women's apparel and yet seems to be lagging a bit from Urban. I know it's a one-year, not a multiyear fact, but I'm trying to understand the difference in the results and what we should think about in terms of its recovery versus Urban.

Richard, I would -- first of all, I would argue that one is not necessarily more fashion-forward than the other. In fact, if I had to put a stake in the ground, I'd probably say that Urban was reacting more to the fashion than the Anthropologie customer does, but they both filter the fashion in their own way. And then secondly, I really -- I would say that they're both around equal in terms of their progression. I think the numbers in the first quarter look better for Urban on a one-year basis. On a 2-year basis, they look better for Anthropologie. But if I had to place a bet as to who's going to turn around first, I really couldn't say. I have to say I'm loving working with the Urban team. The morale is terrific. People are excited. I feel very good about the product that I saw for fall. But I also have to say that I think Wendy, Judy, Johanna; Todd Magill, our Design Director at Anthropologie; they're working tremendously well as a unit and they feel like they're making a lot of progress. So I don't really -- until it actually happens, I don't have any news for you.

Our next question comes from Jeff Black with Citigroup. Jeff Black - Citigroup Inc: Glen, how do we feel about the cost pressures in 2H, and is that playing into our thinking on units on the inventory? And I guess the real question is, do we look at your inventory levels and say you're going to manage to these weeks of supply until something turns? Or do we see a point where we see inventory come back much closer to the rate of sales that could give us a bit more confidence in the gross margin trends?

Yes, Jeff, I think if I look at the comp store inventory, I feel good with where it is. I really don't think that week -- from a weeks of supply point of view that we could be much lower or we'd want to be much lower than where we are. I think the margin pressure is coming from that lack of productivity, it's not coming from over buying. Now absolutely when a business has traction, when there's wind behind the sails, you always have to reduce the weeks of supply. And when a business is challenging, you increase the weeks of supply. But I feel that -- because the inventory is less productive, I feel that given what our trends are right now, our inventory is the right number. With regard to cost pressures, I would hold to what I said in the third quarter call and the first quarter call, meaning the third quarter and fourth quarter, in that there are cost pressures, but I think we have a lot of levers that we can play with. And of course, I'm concerned about the sourcing environment, but my real concern is getting the product right. In Free People, we had very positive maintain margins in the first quarter. Why? Because the product was fantastic, and I don't want to -- and I mean, I basically put a line in the sand with the merchants, I don't want to see cheaper fabrics, I don't want to see detail taken out of product. If anything, I want to see more expensive products and more detail put in the product. I believe firmly that if the product is compelling, that the customers will buy it at regular price, and that's why I want people focused. So from a sourcing environment, not easy but not insurmountable, I think we have an easier time than many people in our peer group given the nature of our product, and I am very confident that if we get the product back and get the distortions back, we'll be fine from a maintain margin point of view.

Our next question comes from Roxanne Meyer with UBS. Roxanne Meyer - UBS Investment Bank: A lot of my questions have been answered, but I'm just wondering if you could talk about any inventory turns by brand and if the productivity is kind of similar at both brands. And also, is there anything to the trend where accounts receivable is up?

I'll answer it first, then I'll ask Eric. The inventory kind of productivity between the 2 big brands is relatively equal. Obviously at Free People, it's better. And Eric, I'll defer the rest of the question to you.

Yes, the slight increase in accounts receivable in the quarter was due to the timing of credit card receivables. We ended our quarter on a Sunday, so that's the only meaningful difference there in comparison.

Our next question comes from Sam Panella with Raymond James. Samantha Panella - Raymond James & Associates, Inc.: Glen, I understand what you're saying in terms of not really seeing price elasticity but newness elasticity, and when the product is right, you can push the price points. However, we've noticed some pretty high price points at the Urban Outfitters division both in the stores and online in the $300 range. Is there anything going on there, like, how you're thinking about this brand and the price point going forward? Is there any issues maybe that reminds you of when Free People may be pushed the prices too high a couple years ago?

Yes, Sam, thanks for bringing that up because there may be confusion. What Urban is doing and what I'm very pleased that they're doing is they have this initiative called Around the World, and they're bringing it to more stores and the website. And what that is, is they pick, and I may not have the exact number, but let's say 30 world-class designs -- designers who are very kind of aligned with the Urban philosophy and they're featuring that product. I wouldn't want you to get the impression that it's 30% of the inventory level. It's a small percentage of the inventory level, and it's used to, in part -- I mean, we sell it, but it's also used to create a halo effect and a point of differentiation. Think of it in the way that you think of the sound objects for Anthropologie. And with regard to Free People, I think one of the things they've been very successful with is adding many layers of price points on the website. If you go to the Free People website now, you will see things that are $300, $400, $500. And as long as you buy them properly, it's fine. Actually, from our point of view, it creates a lot of excitement for the assortment in total. So it's really a question of managing it, but what you're seeing is intentional and we think it's a good thing.

Our next question comes from Lorraine Hutchinson with Bank of America. Lorraine Hutchinson - BofA Merrill Lynch: Glen, could you talk a little bit about the performance of stores that you've opened within the past year and then any hits or misses that you've seen from those new stores?

Yes, I'll ask Eric, because I know Eric's done a lot of work on that, so I'll ask Eric to help me.

Yes, the stores open more than a year have actually performed better than the average of the fleet for this recent class of stores. So I think we had some good openings in Europe. Cardiff, Bath, Spitalfields all come to mind as great locations. We've had some recent openings in Canada. Vancouver comes to mind. Calgary comes to mind from last year. So we feel good about the pace that we're opening the stores and the performance of the recent classes.

And I'll just add on to that, we look at a lot of different ways. When we look at the class that's 3 years older or more, we're also seeing that class have basically the same comp increases as the newer stores. And I double-checked that this morning when I looked at it, because it's unusual I think. But the reality is we kind of don't know when our mature stores mature still because we're not seeing a comp decrement in our older stores, and we've done a better job with our newer stores in the last few years designing them and operating them.

Our next question comes from Paul Lejuez with Nomura. Paul Lejuez - Nomura Securities Co. Ltd.: Glen, you talked a little bit about how you're spending your time. If you compare that to how you were spending your time about 6 months ago, I'm just wondering kind of where you found the hours in the day? What things have you been able to kind of push aside temporarily? And then Eric, just to clarify, did you talk about deleverage on buying and occupancy versus merch margin, and if not, can you share that with us?

So Paul, thanks for bringing that up. I'm sure people are interested in that. We've done a lot of work in the last couple of years relating to building infrastructure, both for our direct-to-consumer business and our International business. We've done a lot of strategic work, and we now have an operating committee that is headed up by Freeman and I have basically pulled away from that work. It's in very capable hands, and I'm spending less time in that area. I am going to spend -- make myself less available for some of the IR work. I love meeting with you guys, but quite frankly, it can take a lot of time. And so I think Oona's really gotten up and running, as has Eric, so I'll be cutting down the time on that. And I would say that really, I need to spend about 50% of my time with the merchants and the creative folks working on the product and the messaging. And I don't want to be the kind of CEO who is picking thread colors on jean pockets, but the team needs me right now. I love doing it. I think I'm good at it. I think I can help the company this way. And when I feel I can back off, I will, but right now, that's how I'm spending my time. I think I'll ask Eric to call you after the call since everyone will get angry at me if we allow him to answer the second question.

Our next question comes from Erika Maschmeyer with Robert W. Baird. Erika Maschmeyer - Robert W. Baird & Co. Incorporated: First, just a clarification on the fashion front. When you talk about the surprise being more from the way you're buying than the product that you're buying, is the issue that there's too much diversity and you're not taking big enough bets in styles because there isn't enough confidence? And then could you just give a little bit more detail about the incremental marketing spend and your accelerated European expansion that you mentioned on the call?

Yes, great question, Erika. I think that it's people's general instinct to never distort enough. So if we get 5,000 units of something and we sell 1,000 units in the first week, so it's a 20% sell-through. Typically, a less mature buyer will come back and maybe they'll buy 8,000 units or 9,000 units of a similar item the next time, where in fact, they should buy 25,000 units. And it's just human nature to be conservative that way. People don't go to the margin quickly. It can take them many, many buying cycles to kind of realize how big is big, and that is the difference between a more mature merchant and someone who's maybe 2 to 5 years into the job. And yes, you're absolutely right. That's exactly what we're seeing. We're seeing things come in and evaporate quickly. And then of course, we're seeing things that maybe look a little bit like last year's best sellers and those are the things, quite frankly, that aren't selling. But they're the things that people are generally comfortable buying because they have success with it a year ago or 6 months ago. So it really is a question of getting people to be braver and kind of put their money where their vision is. And I'll ask Eric to take the second question offline.

Our next question comes from Sharon Zackfia with William Blair & Company. Sharon Zackfia - William Blair & Company L.L.C.: Just following up on Erika's question. I mean, Free People's been doing very well over the past 5, 6 quarters, and my perception from 6 months ago was that the fashion coming out of Free People is very clear and that, that might be able to be translated across the other 2 divisions. Is there something that's not translatable about it? Or is it really about that the Urban and Anthropologie teams haven't been as brave as the Free People team in terms of the ordering cadence?

Yes, absolutely the latter, and for whatever reason -- and this was the learning for me. For whatever reason, they weren't paying enough attention. And I'm just being honest with you, that's the bottom line. And if I look at the Intimates business, for example, irrespective of the fashion, that's kind of, I think, a secular thing that's happening. It's not really a fashion thing that's happening. They needed to learn from that. And I think what happens is everyone gets on a treadmill, they have 9 million things going on and they don't get the perspective that I can have or some other people can have, overlooking the whole thing and quite frankly, looking at our peer group as well as our internal resources. And I'm angry at myself. I should have verified what I was feeling. I should have gone deeper into the ranks and verified understanding, and that was my learning. I don't blame them. Quite frankly, I blame myself. Sharon Zackfia - William Blair & Company L.L.C.: Glen, I don't know if my line is still open, but does that change the way you manage the divisions going forward? I mean, it always has seemed that they're very separate and siloed. But does it make sense to have more cross-brand meetings?

No. I'll answer that because it's something I feel very passionately about. It's one thing to learn from other brands either inside the company or outside the portfolio, and it's another thing to focus too much on that. Quite frankly, there's so much information now that's available, not only on our own company on others. All you need to do and I'm telling you all on this call do it is go read the ratings reviews on other people's websites. If I want to know what's trending for any of our competitors, I just go to their website. So I see what's front and forward on their web, and I look at the ratings and reviews and I see what people are -- what the customers are reading about that. Our merchants need to do that. They needed to be more aware of what was driving other people's businesses, including their sister company. So I'm working to make that happen.

Our last question comes from Marni Shapiro with The Retail Tracker. Marni Shapiro - The Retail Tracker: So if I'm looking forward here, I'm curious if you're seeing different trends on the coast and in the cities and online than you're seeing in the aggregate across the country at Anthro and Urban. And I'm curious what the reactions been from editors and blogs and things like that, because they tend to be a little bit more forward-looking.

Yes, Marni, in both of our big businesses, the south, for whatever reason, has been doing better than the north or the West Coast. And I noticed -- I know the only people that reported so far earnings, I think, were Nordstrom and funnily enough, they had the same observation. So whether or not that has to do with being up against the oil spill or whether or not it's weather-related, who the heck knows. My sense of reading the business on a regional basis is that the fashion that I believe is going to turn our business around will work everywhere. I don't think it's a regional trend. The other thing I would say is I think there is a lot of information on the blogs and the magazines now. And I think it's some of the most wearable -- what I've been reading is some of the most wearable and exciting fashion I've seen in a long time, and I think we have to catch up to it. I don't think the stores -- they look reasonably good right now, but they don't look as good as a lot of the magazines and blogs that I'm reading and we have to get there. Everyone, I'd like to thank everyone. Great questions. I'm very focused on doing better. I think those of you who know me know that I do not like underperforming, and we're going to try and make that difference as soon as we can. Thank you so much and look forward to seeing you all in the next few months.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the conference, and you may now disconnect.