Rick Brooks – CEO Chris Work - CFO

Sharon Zackfia – William Blair Dorothy Lakner – Caris & Company Pamela Quitiliano – Oppenheimer Simon Segal – JPMorgan (Paul Alexander) – Bank of America Merrill Lynch Richard Jaffe – Stifel Nicolaus Jeff Van Sinderen – B Riley Dave King – Roth Capital Partners Stephanie Wissink – Piper Jaffray Christian Buss – Credit Suisse Edward Yruma – KeyBanc Andrew Burns – DA Davidson Betty Chen – Wedbush Jennifer Black – Jennifer Black & Associates Linda Tsai - ITG

Good afternoon, ladies and gentlemen, and welcome to the Zumiez Incorporated fiscal 2012 third quarter earnings conference call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. Before we begin, I would like to remind everyone of the company's Safe Harbor language. Today's conference call includes comments concerning Zumiez Inc's business outlook and contains forward-looking statements. These particular forward-looking statements and all other statements that may be made on this call are not based on historical facts, are subject to risks and uncertainties and actual results may differ materially. Additional information concerning a number of factors that could cause actual results to differ materially than the information that will be discussed is available in Zumiez's filings with the SEC. Now, I would like to turn the call over to Mr. Rick Brooks, Zumiez's Chief Executive Officer. You have the floor, sir.

Thank you and welcome, everyone. With me today is Chris Work, our Chief Financial Officer, who will review our financial and operating highlights for the third quarter in a few moments. After our prepared remarks, we will open the call up to your questions. As acknowledged in our October sales release, third quarter sales and earnings were below our initial projections. The shortfall in sales came primarily from softness in Europe, which we attribute to unfavorable weather and pressure on consumer spending as a result of difficult macroeconomic conditions. While Blue Tomato's performance was below plan, we are encouraged that the company was still able to outperform their comparable quarters in the prior year in spite of the tough economic environment. Our teams in Europe and here in the US continue to work on formulating not only a long-term growth vision for Blue Tomato business but in exploring ways we can leverage our combined strengths. For the quarter, comparable store sales increased 3.7%. This year the important first six weeks of the quarter, our peak back-to-school season, performed in line with the upper end of our guidance. However, after another good back-to-school sales, gains were more modest the remainder of the quarter, which is especially true in October which has always been a traditional month for us and is one of our lowest volume periods of the year. Turning our focus to November, we experienced variability in sales by region driven in part by warm weather generally and Hurricane Sandy in the East. For the period, comparable sales decreased 4.2% driven primarily by steep declines in the snow business and in men's footwear. While we're disappointed with our November results, we're encouraged that sales trends improved as the month progressed and we continue to see positive performance across our men's and junior's apparel categories, excluding the impact of snow-related outerwear. As such, we are staying the course with respect to the key business drivers we've outlined in the past: higher store productivity, domestic new store growth, greater penetration in ecommerce and international expansion. Domestically, we opened 14 new stores this quarter working towards our long-term goal of 600 to 700 domestic locations; through November, 43 new Zumiez stores in the US. The third quarter marked the first fall back-to-school for our comp stores in Canada. Although consisting of only a handful of stores, results have been promising and give us increased faith in our long-term target of 60 to 70 stores in this market. Our zumiez.com business continues to show strong momentum and their sales represented approximately 7.8% of domestic business in the quarter. We're excited by the opportunities this channel holds for engaging our online consumer by further involving and extending our exceptional product and service experience to the virtual marketplace. Let me finish by saying we are confident in the strength of the action sports lifestyle. As evidenced by the growth in our men's and women's apparel, excluding the impact of the snow-related outerwear, as well as a positive comps in our skate hard goods category throughout this year. What's apparent, we faced challenges across our snow business, as well as a cyclical decline in the men's footwear business. There remains strength in the brands that we partner with and in our team's ability to execute. We're dedicated to the core operating philosophies that provided the math for our past successes and have us on track to deliver consistent sales and earnings growth over the long term. Our confidence in the future was affirmed by our board when it recently gave the company authorization to repurchase our common stock. With that, I will pass the call to Chris to review our financial results for the quarter. Chris?

Thanks, Rick. Good afternoon, everyone. I'll begin by briefly reviewing the third quarter. Then I'll move on to guidance before wrapping up our prepared remarks. Net sales for the quarter were up 16.9% to $180 million with Blue Tomato adding $8.1 million to our top line. Excluding the impact of Blue Tomato, our North American net sales were up $17.9 million or 11.7% over the comparable period last year. The increase in sales was driven by the addition of 48 net new stores since the end of the third quarter last year and a 3.7% comparable store increase in the quarter on top of a 65 comp increase last year. In terms of category performance: men's, junior's, footwear and hard goods comp positive while accessories and boy's comp negative. We continued to see an increase in dollars per transaction this quarter compared with a year ago driven by higher average unit retail prices. These gains were offset by declines in the number of transactions and the units per transaction. Our domestic ecommerce platform continued its healthy growth pattern with net sales on zumiez.com up 32.3% in the third quarter compared to the prior year quarter. For the third quarter, gross profit increased to $67.1 million or 37.3% of sales compared to $59.9 million or 38.9% of sales in the third quarter of last year. The 160 basis point decline was primarily driven by step up in inventory to estimated fair value as part of the accounting associated with the Blue Tomato acquisition and by web fulfillment and shipping expenses increasing as a percent to total sales. Excluding the Blue Tomato impact, product margins improved slightly in the quarter. SG&A expenses for the quarter were $45.7 million or 25.4% of net sales compared to $37.1 million or 24.1% of net sales in the prior year quarter. Excluding cost recognized in the quarter for continued future incentive payments and the amortization of intangible assets associated with the Blue Tomato acquisition, as well as exit costs associated with the relocation of our home office, SG&A expenses were 23.7% of net sales reflecting expense leverage on higher net sales in the quarter. Operating profit was $21.1 million or 11.9% of net sales down from $22.8 million or 14.8% of net sales during the third quarter of last year. We generated net income of $12.7 million or $0.40 per diluted share compared to $14.1 million or $0.45 per diluted share during the third quarter of 2011. Let me again layout the impact of the quarter and to our year-to-date result of certain expenses that should be taken into consideration when looking at our results. One-time costs associated with the acquisition of Blue Tomato were $1.4 million in the quarter for the step-up in inventory value impacting diluted earnings per share by approximately $0.03. Year-to-date, these one-time costs totaled $3.3 million impacting diluted earnings per share by approximately $0.09 and include $1.9 million inventory step-up and $1.98 million in acquisition costs that were offset by $0.5 million foreign currency gain on the transaction. Costs associated with the acquisition that are considered ongoing charges were $2.6 million in the quarter impacting diluted earnings per share by approximately $0.07 and include $2.0 million of contingent earn-out and $0.6 million of intangible amortization. Year-to-date these charges were $3.5 million impacting diluted earnings per share by approximately $0.09. In the quarter, we recognized an additional $0.5 million of exit cost associated with the relocation of our web fulfillment center to Edwardsville, Kansas and our corporate offices to Lynnwood, Washington, impacting diluted earnings per share by approximately $0.01. Year-to-date, relocation costs were $2.1 million, impacting diluted earnings per share by approximately $0.04. Looking now to our key balance sheet highlights, we ended the quarter with cash and current marketable securities of $98.3 million, down from $172.8 million at the end of fiscal 2011. This decline was largely the result of cash paid for the acquisition of Blue Tomato and capital expenditures offset by cash generated by operations. As of the end of the quarter, we had $1.9 million in outstanding debt acquired from Blue Tomato and no outstanding balances on our revolving credit facility. Capital expenditures in the quarter were $12.1 million, primarily related to the 16 new stores we opened during the third quarter. Inventory was $109.8 million at October 27, 2012. In North America, on a per square foot basis, inventory was down slightly compared to the end f the prior year third quarter. Now to our November results: our comparable store sales decreased 4.2% for the four-week period ended November 24, 2012. In the prior year, comparable store sales increased 8.4% for the four-week period ended November 26, 2011. Total net sales for the four-week period ended November 24, 2012 increased 14.4% to $53.7 million compared to $46.9 million for the prior year four-week period. On a weekly basis, comps were negative 14.3%, negative 7.4%, positive 3.7% and negative 1.0% in weeks one through four respectively. Excluding the first 10 days of the period during which Hurricane Sandy and the Presidential Election occurred, we experienced a comp decline of approximately 1% over the same period a year ago. Our comp over the important Black Friday weekend defined as Thursday to Sunday was a positive low single-digit. The decrease in comparable stores sales in the period was attributed to a decrease in comparable store transactions offset by an increase in dollars per transaction. Dollars per transaction were up for the four-week period due to an increase in average unit retail while we experienced flat units per transaction. During the four-week period, juniors comp positive, while accessories, footwear, hard goods, men's and boy's comp negative. Year-to-date, 2012 comparable store sales were 6.7% on top of 8.3% for the same period last year. Now, let me outline our guidance. As always, in putting forth this guidance, we want to remind everyone of the complexity of estimated sales, product margin and earnings growth given the variety of factors that impact performance including challenging macroeconomic conditions. For the fourth quarter, we are planning same-store sales to be in the range of a decrease 3% to 4% and total sales to be in the range of $218 million to $221 million. Consolidated operating margin to be in the 13.5% to 14.5% range and diluted earnings per share between $0.59 and $0.62. The fourth quarter guidance assumes a decline in product margin compared to last year, primarily related to a modest decline in our domestic margins as a result of our current sales projections and lower margin experienced for our Blue Tomato business due to their product mix and effects of the inventory step-up. We anticipate our fourth quarter costs associated with the acquisition to be approximately $3 million or approximately $0.08 per diluted share which include $2.1 million of contingent incentive payment, $0.6 million of tangible asset amortization and $0.3 million of inventory step-up. Inclusive of these charges, Blue Tomato is expected to be slightly dilutive for the quarter. With regard to the full year, I'd like to remind everyone there will be an extra week in fiscal 2012, resulting in a 14-week fourth quarter and a 53-week fiscal year. The extra week will benefit sales and earnings growth in fiscal 2012 by approximately $9 million or 40.05 per diluted share respectively and will be a detriment to sales and earnings growth rates in fiscal 2013. We have opened 56 new stores in 2012 including 10 in Canada and acquired eight stores in Europe with no more planned for the year. We expect capital expenditures for the year to be between $42 million and $44 million and depreciation and amortization of about $23 million. We anticipate our effective tax rate for the fourth quarter and the year to be higher than our 2011 effective tax rate, primarily resulting from the tax effects of the acquisition of Blue Tomato. With that, we will now open up the call for some questions.

(Operator Instruction) Your first question comes from the line of Sharon Zackfia – William Blair. Sharon Zackfia – William Blair: So first question on Blue Tomato, just a clarification on the inventory step-up in the quarter – if you could actually give us what the dollar amount was; then can you give us – obviously, if you're expecting Blue Tomato to be dilutive in the fourth quarter, I think originally this was to be accretive, have you lowered your expectations for sales for Blue Tomato going into the holidays?

I'll start, Sharon, with the sales item that Chris comment on, the step-up and basis in Q3. Yes, we have, as you would guess, based upon the Q2 – our Q3 results for Blue Tomato, we have – as we always are in our own business as well I might add and here in the US we're constantly evaluating the forecast and our plan as we look ahead of quarter. So we have taken down their sales estimate somehow. I'll be clear though that we're still expecting that they are going to outperform where they were in their prior quarter a year ago. Chris?

To get to the first part of your question, Sharon, regarding to the inventory step-up, we took the charge of about $1.4 million in the third quarter or about $0.03 per share and we're projecting about $0.3 million of inventory step to hit in the fourth quarter. Sharon Zackfia – William Blair: Then my second question will be on the core Zumiez business. I guess taking that run rate, excluding the first 10 days of October, where you were down 1% -- obviously if you were projective 3% to 4% for the full quarter, you're expecting that to get worse again, going forward. So just what your thought process is there going into the heart of the holiday season.

Sharon, as we talk about how we set those targets, you're right. If we look at our run rate, you would see that that probably would yield a little bit higher result than the range we provided but, again, there is a lot of knowns I would tell you as we go into the quarter. We want to be appropriately positioned relative to our forecast. So we're cautious. We had a tough winter season a year ago and if it's tough again, we're not quite sure what the reflection of that would be.

Your next question comes from the line of Dorothy Lakner – Caris & Company. Dorothy Lakner – Caris & Company: I wondered if you could just give us a little bit of color on I guess on Black Friday, how it was different from last year, particularly in terms of the genders with junior's being positive but everything else negative. So is there something in particular that would explain that, just what kind of trends did you see either surprised you or they were different from that from what they were a year ago?

First, to reiterate what Chris said is that, true, as we would define that weekend, which is now – now we have to say Thursday, starting on Thursday through Sunday, we were up approximately in the low – somewhere in the low single digits, so we actually comped positive across those four days. We were slightly more promotional, very slightly I would add, more promotional across those days and we saw improvement in our business and I would tell you that we saw that pretty much across most categories probably with the exception of our snow business. So that's probably as much I can give you relatively speaking right. For the month, women's was better. It would have been again sequentially better over that weekend.

Your next question comes from the line of Pamela Quitiliano – Oppenheimer. Pamela Quitiliano – Oppenheimer: Just one quick housekeeping question. The Black Friday comp was a positive low-single digit. What was it last year?

We'd have to have to get back to you on that, Pam. Pamela, I do remember this now. The Black Friday comp a year ago was generally in line with our overall comp for the period. Pamela Quitiliano - Oppenheimer: Just a clarification on the promotional cadence. Obviously in the stores you have that logo 50% off of sale and then the sales on the boards, boots bindings as well. Was that planned for the whole weekend initially? The reason I ask is actually because when I was in Black Friday at midnight, the personnel were very excited about it but they said you will have to do it now because we are not going to have it for the rest of the weekend. So I was very surprised to see it going forward and then, well obviously, they are not the ones making the plans so they could have just been misinformed. Then just when we think about the remainder of the holiday season and how aggressively promotion in the mall is, even though you guys clearly don't participate in the way more of the, what we think as typical teen retailers do, is there any difference in the flow of new goods that are coming in or is it a type of promotional cadence you are going to offer or anything we should think the difference this year versus last year to drive traffic?

Pam, well first, I do want to make sure that we highlight one of your comments, which was, we are far less promotional than most of our competitors in the mall environment. So most of what you saw on Black Friday was part of our plan promotion. A lot of what we did on Friday was the same that we did a year ago on Black Friday. There were just a few more categories of product like snow outerwear that was added into the mix. Then as we go forward, you are going to see us adjust strategies. We already have adjusted strategies over the last few days as to how we look at what we are going to do, whether we are going to continue some promotional environments, we are going to hard marks in some areas. So you will see us adjust as we go forward throughout the period based upon rates of sales and upon the actual performance of the company. So finishing the thought, I would tell you that promotionally, again, you are going to see us respond to the marketplace. That's why you should think about how we manage our business. We're managing a very fine level, very detailed level on inventory and we'll take markdowns as we need relative to performance of the business. Now the product flow side of it, again, I would tell you the same thing. We still have latitude in many categories of business to move orders around, move orders up, push orders out, cancel orders. So again, it's the same thing as I'd characterize for you as we do on promotions, as we do with managing the flow of product. Pamela Quitiliano - Oppenheimer: Then just the Black Friday promotion, was that all along intended to be the whole weekend?

Yes.

Your next question comes from the line of Simon Segal – JPMorgan. Simon Segal – JPMorgan: So I was hoping you could talk a little bit more about that core top line. Just as you think about the ultimate pass I guess back to positive comps, what do you think needs to happen to see the transaction number turn positive? Are there any incremental marketing events, something in your control that you guys can do to drive that traffic? Maybe as you look back on November, was there any strong divergence in those early trends geographically? Anything there would be helpful. Then, just quickly on Blue Tomato, broadly when you look at the deceleration in the sales, it looks Q1 grew about 40% on kind of that constant currency and then followed by the 7% in the second quarter. We don't really know third quarter rate yet but just when we think about the recent strength, what's the right way to think about that top line going forward?

So in regards to the first part of your question, Simon, on looking again, thinking about the top line and the issue about transactions, I understand why you would ask the question but we are going to get a gain in any way we can get a gain and if we drive a gain on AUR, we are going to get it that way and we are happy with the gain on AUR, I might ad. So I am as I've said to many over the last few months, not that, all that concerned about how we think about and how we get the gain. The point is to get a gain if you can get it. Now, I will tell you that we have a strong history if you look at last year's weekly result, you'll see that when shoppers come out around those peak days, we have tended to do well and, as we said in our commentary relative to the peak back-to-school, we think we did pretty well. I would anticipate that when we see those peaks hit, we're going to get our fair share of that business to design that top line is and, again, I don't care whether we drive it on AUR, we drive it on transactions, we're going to take it any way we can get it. Geographic trends, what I would tell you is that as we said again in the commentary here at the beginning of the call is warm weather, that affects us and so generally there is not a lot of variation across the country pretty much as we said a steep decline in our winter business. It was worse in the northern top and northern tier and the west where venue is more important and we were stronger, a better performer in the southern, particularly Texas and the southeast, so again, it's more tied to our comment regarding weather in terms of the regional performance I would say that it necessarily is to some trends generally geographic cost to company.

Lastly, on your Blue Tomato question, I think we came out in June and talked about Blue Tomato and gave you a little bit of background on their operating results. They have been expecting just under 30% increases in year-over-year sales and very strong performance. However, as things have slowed down a little bit, this year primarily due to weather but also economic challenges across Europe, their sales have been impacted by that as well and we continue to be very optimistic about the long-term focus but there is no question that Europe has some challenges today. So we are encouraged that they are operating as a positive year-over-year on their comps even though they are not included in our comps at this point and we'll continue to work with them on the long-term plan. But overall again, when we said this in the past, we do believe there could be a long-term benefit to us here as the challenges in Europe is going to lead to more share consolidation and we believe that we've got some great operators on our team and they have a good handle on what's going on in the European marketplace and we'll continue to grow in this pattern. Simon Segal - JPMorgan: So Chris, on the flipside, so the expenses for the contingent payments were at that 18.1 million in euros I think at the end of last quarter. Does the lighter top line mean that you guys get a little benefit on the contingent side and maybe that number comes in?

Yes, it's certainly something and we talked about this when we first set this portion of the (inaudible) or the expense out to guys, as this is something we have to evaluate each quarter but this is a long-term metric that is going to be analyzed on our 4/30/2015 results. So we will continue to look at this on a quarterly and your thought is correct. If they are not able to meet the metrics that we've set out, we will have to make some adjustments there. But this is a long-term goal and we're still working through that modeling. So we've continued to accrue where we think the most likely outcome is at this point.

Your next question comes from the line of (Paul Alexander) – Bank of America Merrill Lynch. (Paul Alexander) – Bank of America Merrill Lynch: Rick, a couple of questions ago you said you'd respond to the marketplace just as it evolves. Can you talk about that marketplace, in particular just the macro environment you're seeing, the resilience in your customers? We've seen over the last couple of months just shaky traffic and trends across retailers. It's not just only when there's a hurricane or warm weather. It just seems to be a worse trend in general. Can you just talk about that, what you think is happening?

I probably know less about it than those of you that are out there looking at mall to retailers in the market more frequently. I'm very focused on what we do and how we manage in this environment. But it does seem to us that there is – despite the relatively high consumer confidence there is, it feels to us that I think the promotion environment in the mall reflects it, but there seems to be a lot of anxiety in the marketplace. So relative to how the consumer is actually shopping in the mall. So that's how our mindset is, right, as we think about Q4. As we have demonstrated over the years, we are really good at managing our business on a very, very fine level in how we think about taking specific markdowns, or moving product through or adjusting on an order and that strength of our partnership with our brands is another real positive in our ability to maneuver the business. So yes, our general feeling is that it's going to be – that there seems to be a general level of anxiety about there. Again, I think that's reflected in how promotional the mall is and again as we commented earlier – I think as one of the analysts commented, we're far less promotional than most of our competitors on the mall. But we have that ability, Paul, both to – as we work with our branded partners to move things up that are working to push or cancel things that aren't and to be very, very targeted at how we think about markdowns and new volume. The last part of that, I also like to make sure I emphasize, is in the strength of our sales team. It's one thing that people that you just can't underestimate. We have great sales people in our stores and that's a real strength in this kind of environment because when you give them the tools for markdowns, they're very good at moving product. (Paul Alexander) – Bank of America Merrill Lynch: Just a follow-up, you said you were very focused on what you do and couple of questions ago you said you are seeing a cyclical decline in footwear. Can you just expand on that, what is that cyclical decline? Is it related to innovation or strength of certain brands or strength of a trend?

This is our assessment of the market and I'll remind people that we've been on a run with footwear for a number of years now where footwear has been a very strong contributor for us and specifically to make sure we're clear about this and go back to our comments at the beginning of the call is we're talking about men's footwear in this conversation. I think it's become clear. I read it in many of your notes that we've seen athletic footwear really start to take off both in the sense of athletic shoes, but we're seeing that really calling out basketball and running as categories. Obviously those are areas that we play. If you don't come to us for basketball shoes or for running shoes, they come to us for a skate shoe. So I think that we have some challenges there relative to just a cyclical cycle in footwear. I would anticipate that we're probably more likely in the early phases of an athletic footwear trend, than the later phase at this point based upon our experience what we see in the marketplace. So as we think about what we're going to do with footwear going forward, we definitely think we have some opportunities where we know we're missing a few things with some key brands in our current business. We can correct those things as we look into the January and into the springtime, but again I would tell you I think that this is a cyclical trend relative to fashion and what kids are choosing to wear and athletic footwear is going to be in a stronger cycle and I think that's going to provide headwinds for our – in our men's footwear business.

Your next question comes from the line of Richard Jaffe – Stifel Nicolaus. Richard Jaffe – Stifel Nicolaus: Just wondering if there is further opportunity on the women's side not so much on footwear but on the apparel side. The fashion component of women's seems to be performing very well in other venues and wondering if that's something you guys would want to press a little bit harder on?

We certainly feel there is as we have talked about here for I think over – particularly last few years we have talked a lot about going back three or so years ago when we changed the leader in our women's team and brought in new – I should sya, brought in new leadership of our women's team. I think we – as I said, I think on one of the earlier, previous quarterly calls this year we feel like we have really developed what I believe is probably the most sustainable strategy to pass in our women's area in a number of years that we are executing well against it in terms of what those core strategies are from a women's business and we think there is some opportunity as we go forward. Now, those will be – we are going to obviously do whatever we can hear in Q4 about that but we are definitely taking bigger positions relative in our women's business as we look into the first quarter of next year. So yes, the women's team has done a great job and I guess I'd also like to comment they have done a great job relative to our positioning as an action sports lifestyle brand which is still very, very important to us. You have heard me say I think before that we don't want to do things at women's that is in conflict with our fundamental positioning as a lifestyle retailer. So I feel really great about what they have done and we certainly agree with you that there is something opportunity for this – opportunity on women's area as we look forward. Richard Jaffe – Stifel Nicolaus: Could you put a number on what you think the women side could grow to as a percent of total sales or …

I am not going to get too detailed about that. I would say historically women's as we look back into prior year, it's been a high as I think 15% to 16% of our mix and obviously we're still below that substantially. So there is an opportunity from historical perspective to say that there is – that we can grow the business significantly as part of the mix.

Your next question comes from the line of Jeff Van Sinderen – B Riley. Jeff Van Sinderen – B Riley: Maybe you can just talk about – I know we've talkeda bout promotions here but do you think being less promotional than most of your team brethren just generally weighs on you when the environment is promotional and maybe that it doesn't sort of – it doesn't let you reflect the true strength of your underlying business. I guess, maybe how do you think about that? And then also, did you say merchandise margins on Black Friday weekend were down on slightly higher promotions versus last year and then, for the remainder of Q4, you're planning on being slightly more promotional and finally how should we think about the snow business going forward?

Let me see, Jeff, if I can get that all in there and Chris will remind me on what I miss. First part of your question, our promotional cadence relative to our competitor set and does that hurt our business, and I would tell you it certainly does on sales but you know what? If we are a branded – we are primarily a branded retailer. We don't have the advantage of the vertical guys who have the advantage on their margin as they have structured in their business and you know what? We have – we carry a lot of really unique brands that – the idea that we would go 40 off the whole store on brands that are selling at full price today. That's just not what we do. That's not being a good partner for these young brands that really have great brand equity and we want to be a great partner for our branded partners. So yes, from that perspective, it puts at a discount, particularly perhaps in a gift giving season when it's not our core customer in marking the buy and I would probably even say that's more so relative to what the spirit of the Black Friday weekends become. But I think it's also reason that typically and historically as you get in those days in advance of Christmas, those very peak days, very violent peaks in those few days in events of Christmas and historically how we do in the days after Christmas, when it's all our customer that's coming in. I think you see that we do really, really well. For me, that's always a reflection that those really items that kids really want to get, really want to have that's on their Christmas list are things that we have in our stores. So I am wiling to trade off because – you've heard in our brands, Jeff, to take deep, deep markdowns to be competitive with a lot of the other retailers in the mall and we don't believe think in a long term it's a good thing for our position in the market, so perhaps we do. As you know, we certainly try and capture the value consumer through what we do through bundling on product and trying to hit the right price points. So I'll just stop at that point and what was the next on the question list there? What was next Jeff? Jeff Van Sinderen – B Riley: I was just asking about merchandise margin on Black Friday weekend. Did you say they were down slightly and slightly higher promotions versus last year?

We did not say but your logic would make sense I think as you would think about it if we're slightly more promotional that we would probably slightly expect to see that. But we don't actually say that and we don't look at that line. What really matters is where we end up for the entire period and where we end up over the whole quarter. Jeff Van Sinderen – B Riley: Then how should we think about the snow business going forward?

Yes, I'm glad you asked about that, Jeff. Snow – we're having for whatever the reasons, whether it's climate change or other reasons, we are definitely – and I know we're not along in this – having a very tough snow year again on top of last year's very tough snow year. Now, if it snows big in December in large parts of the country, well, then we are going to see our snow business improve here as we move through the fourth quarter. But you get a (inaudible) with snow is that we have to reassess the amount of risk we take relative to how we manage this business and the rewards relative to the sales results we can drive on a consistent year-over-year basis relative to the risk we take with inventory. When I say that, to be clear, when we talk about the snow business, we are talking about both, the snow hard goods side of the business as well as the now outerwear side of the business. So I have challenged our teams here over the next few months to really – and we did this about three years ago. We basically reinvented the way that we sold snow throughout the company and we need to do that again with this primary idea that we have to reassess the amount of risk we take relative to inventory in relationship to the amount of reward we potentially have on the sales side relative to how frequently we are seeing good snow years in the business today. So we have challenges around that. There is no doubt about that but, again, I have a lot of confidence in our team's ability to execute to think through these issues. We already have a lot of really interesting ideas about how we might approach it' but we do have to change. So we would be talking more about that. I think as we get through this season and we are in position to think about how we plan our snow business going forward. To be clear to – I want to – as we talked about coming into this snow season, we all knew that typically one bad snow year like last year leads to two snow years because there's a lot of carryover product that we have in our system. Now, as you know, I think we did a pretty good job of managing through that last year. But that's definitely an issue that's out there today and the longer that there's a lack of cold weather and snow, the bigger those issues become. So those are definitely some challenges for us and we have to go back to the drawing board and how we think about the risk and reward ratio between inventory and sales in our snow business.

Your next question comes from the line of Dave King – Roth Capital Partners. Dave King – Roth Capital Partners: I guess first off, just a follow-up to a prior question on footwear. If I'm just trying to get a sense of – it sounds like you think some of that because more and more people are moving towards more athletic footwear. I get that. So is it fair to say then Rick that that's – it's cross brands then in terms of skate footwear that you're experiencing this, or is there anything to read into specific brands and whether or not you got the product right or anything like that?

There are definite opportunities on the product side, Dave, and I think I mentioned that in a comment earlier, there are some things we missed which we can correct and as I said, we will correct here over the next – starting in January and more so as we work into spring. There's always movement among brand mixes. But it's clear I think and if you were to look at our mix four years ago on our footwear wall to where it is today, it's changed significantly and bigger brands are owning a larger portion of the wall. And many of the smaller footwear brands are the ones that are really struggling in this environment. So again, we always expect to see movement around brands and velocity of sales relative to brands outperforming other brands, that's a natural thing in our business where we sell lots of brands, but in general that's been the trend over the last three and four years. Dave King – Roth Capital Partners: Then I guess just taking a step back, is there any indication that this trend in call it skate footwear or maybe action sports footwear is a harbinger of things to come for broader action sports and maybe just – I just wanted to dig into your comment. I think you said earlier in the call that you had confidence in the strength of action sports lifestyle and just maybe you could talked a little bit more about where that confidence comes from and as we think about that going forward?

I'll start by reiterating a couple of the points we made in our earlier commentary at the beginning of the call, which is – I believe in the lifestyle. The lifestyle has real residence and we talked at the beginning of the call, we called out a couple of areas that continue to do well and as you adjusting for snow outwear, we actually had positive comps in November in our men's and women's business and for most of this year that would be, we could say that's also true. The other very important point that we made at the top was that our skate hard goods business has been a positive comping business all year long for us this year. So, I think those are indicators that the lifestyle is resonating what we have and our challenges right now tend be more around the snow business, and then the cyclical or what I consider to be a fashion trend around footwear. So, I'm not seeing fewer people at the Skate Park. I'm not – that's not what I'm experiencing or seeing and I think our skate business reflects that. By the way many of you heard over the years about how we expected that our skate business would start to rebound with the shift in demographics with more 12-year-olds entering our marketplace. So we've kind of been seeing that in our experience in our business. So I'm still confident about where action sports is at and again, we are still doing well in many parts of our business. By the way, we are still having a good year in our core business here in the US So I don't see it that way, Dave that there is some major issue with action sports. I see there is a cyclical issue related to footwear and I do see that snow in general is just – it's a changing business for many reasons and including the fact that it doesn't snow as much. David King – Roth Capital Partners: And that's (inaudible), we are getting rain out here in the West now and so hopefully that does translate to something. But actually a quick follow-up on that, I mean, we think of – do you think it's – and then I won't take up any more time. Do you think it's fair to say or maybe any comment, is there any comment you have on, is action sports still as brand focused? Are there any signs on horizon now that it is becoming more fashion driven at all and is that something you worry about it already?

You will remember that at the end of last year when we talked about our brand making some private label penetration, we indicated a private label penetration actually ticked down slightly last year and that brands have been stronger. I will not be surprised that as we complete this year and we need to complete the full year to make sure because, fourth quarter is obviously huge for us in terms of overall volumes. But I will not be surprised that we find that this year the private label penetration also ticks down and that we are selling more brands rather than our private label for the year.

Your next question comes from the line of Stephanie Wissink – Piper Jaffray. Stephanie Wissink – Piper Jaffray: Chris, if you could just clarify, I think you once did a weekly cadence of November in the final week. If I heard you correctly, it was down 1%. If you could just help reconcile that relative to the Black Friday weekend being up low single digits, what's the variance there?

Let me take that, Steph, and at the top - and I think again, it gets back to the idea of that we are not a promotional retailer and it ties back that idea, because so many people were counting their Black Friday deals in advance of Black Friday and the weekend. That moved volume, from my perspective, out of the Sunday, Monday and Tuesday and Wednesday of that week, and pushed traffic towards the Black Friday weekend itself. So why we were down, 1%, overall for that week is as we said, we were up in the low single digits for the weekend. You can then ensure what those first four days of that week were like, so which is, they were not very good and that reflects again in my mind that the whole push and from a consumer's mentality is not to shop those days as the deals are going to get better starting on Thursday and into Friday. Again, I think that for us not being a promotional driven, discount driven retailer, that probably has a disproportionate impact on us. Stephanie Wissink – Piper Jaffray: So thinking about that for a second as you plan your business over the next, call it, four weeks or so, how do you think about them, those big traffic weekends to try to capture share without foregoing margins?

I think, I kind of commented earlier on this Steph, I'm going to come back to it, which is again, if you would look at our volumes in those peak weeks, typically weeks four and five around December based on how Christmas falls, the immediate days before Christmas and the days after Christmas, we've historically done very, very well in those time periods. As we get closer to Christmas, what we find from my experience historically is that we do well then because the things that kids really want that are on the parent shopping list for the things that kids really want are things only we have and that play to our strength and our position in the marketplace. I don't think that's going to change, and then of course, when kids come out post, we have traditionally done very well in those days afterwards, that's because that's actually our shopper now, not a gift giver coming out. So I am going to continue to believe that we're going to have strength around those time periods. I think again as we talked about our challenges are going to be in these middle weeks where we would expect to be softer in advance of those weeks four and five, particularly week five this year in the way the Christmas holiday falls, and so how we do then will be what drives our promotional cadence here as we look through these first three weeks of the period. We'll determine how aggressive we get from a promotional point of view and if we're doing pretty well, you might not see much change. If you do, then we'll take the markdowns that we need to take or just our inventory positioning to make sure that we come out of the season in a good inventory position. Stephanie Wissink – Piper Jaffray: Then, Rick, if you could just talk a little bit about your store growth plans for 2013, I am assuming you are starting to look at some deals, on how are those deals shaping up and what is the plan broadly after the next year and then just one more and a follow-up after that

Yes, we're not going to actually comment on what we're thinking about. We said generally that we expect to see 8% to 10% unit growth is what we've been saying. I can tell you that we are working towards those goals, Steph, and that again, we'll talk more formerly when we come out in March with the year-end results and talk about more broadly what we're thinking for next year. But at this point, we are working towards that goal that we've stated previously of 8% to 10% unit growth and I will say we still have some openings in that number. We are not locked in committed fully for those units of at this point. But that's typical also for this time of the year. Stephanie Wissink – Piper Jaffray: Then Chuck, recently you said (earlier breakup of that) 12-year-old customer that you're seeing engaging in skate. If you could just (inaudible) bit on that customer, what you think is going to be important to that teen as they age out through your category over maybe the next five years or so?

Again, I think we are not going to expect just to have any different pattern probably that we've seen adds any teen ages to our business. Again, where the bubble is, as you know right, we had a huge bubble in the mid-2000s in terms of that group and skate was big and then we moved into more of a street skate focus I think as they aged through that. So, there are number of phases I think will place throughout that lifecycle. But the core skate market is really in our mind in our business a 12 to 15-year-old in terms of the marketplace. Now, we have plenty of 16 to 20-year-olds as skate two and older, but the core business, the real bubble I think is the most true is in that 12 to 15-year-old age group. So, we'd expect to see that that group will lead the way relative to the hard goods business and into skate apparel.

Your next question comes from the line of Christian Buss – Credit Suisse. Christian Buss – Credit Suisse: I was wondering if you could talk a bit about how you're thinking about the different categories that you've emphasized within the store and if there is any shift that you think you need to make or that you're considering making, given what seems to be some challenges in the category as a whole if the action support category as a whole?

Well, again, I'm going to take exceptions with that, Christian. We are not – as I said, I don't think there is something fundamentally wrong with the action sports category as a whole. So, I'm not going to – not going to buy into the premise of that portion of your question. No, I don't think that you're going to see us take any different positionings relative to how we're positioning different categories in the store. We currently have plans in that way of thinking about our business. It's more about this point about relative to managing inventory positions and whether or not it snows, relative to how we think about hard goods and outerwear. Christian Buss – Credit Suisse: Can you talk a bit about your regional merchandising initiatives where you are with that and what kind of opportunities you still have there?

Sure, again – we think as most of you know, we allow a lot of latitudes to our teams across the country in terms of how they think about merchandising their stores that require general direction, in terms of how we have generally bought it. But there's a lot of fine tuning that goes on between what our buyers do and the latitude we provide our individual store managers to actually present the product in the store. So, none of that has really changed and while we're continuing to work on very aggressively, Christian, is our ability to micro assorted stores, and we've talked a lot about that, the new tools we have in place. We have made huge strides over the last three years and we're implementing that, the new software tools we have in place for assortment planning. I get that – over the last couple of years, the real complexity has been added to that has been the idea of multiple channels of selling and how we think about assortment planning on micro assorting stores relative to the idea of omni-channel retail. So, last couple of years, that's provided a whole new way for us to think about micro assortment of stores and how we evaluate what's really selling out the store and what's not, where sales are originated versus where sales are fulfilled, how the inter-play works between what we do from a marketing perspective and what happens online for our consumers. So, the whole new level of thinking about what we do in terms of the front-end of the merchandise, which is really about the detailed level of local micro assorting stores. I will tell you this is going to be an ongoing challenge for us and I think we're well-positioned. We have incredibly powerful tools to dynamically assort stores at very, very detailed levels, which we are doing today and I think we are going to only get better at it as we move forward. Christian Buss – Credit Suisse: Are you thinking on the ecommerce side on the omni-channel side, maybe it's a better way of putting it, making it possible to ship to store to be able to pick up in store. I know you the find it in the store feature available now?

We have a whole list of activities and things that we are doing to drive omni-channel retail, Christian, so I'm not going to get into specifics, but I can tell you that we are actively aggressively pursuing the opportunities that are in front of us. We think, as we said before, the key part of our strategy how we're going to integrate all of our channels of business from marketing to the website to our physical stores, the social channels that we're involved in and again I think we're at the very, very early stages of this idea of omni-channel retail. We have a long ways to go I think as this plays out. But I would tell you I think that we are doing well in terms of kinds of things we're doing here and I'm not sharing all the things we're doing, but we have a clear roadmap to where we're going with this and you're going to see us do many, many things here over the next 12 to 24 months as we continue to drive this effort forward. I also want to make sure I connect again, I said this earlier in relationship to another question that I want to make sure I make the point. One of our key advantages in omni-channel retail it's the strength of our sales teams in our stores, and having real sales people that can drive a sale and giving them more tools to make that sale possible through omni-channel is a huge advantage for us I think because there are only a few retailers I think in operation today that can really claim to have a true sales force and we are one of those few. So that can be a real advantage for us over the next 18, 24, 36 months and we roll out our game plan, our map for what we are going to do in omni-channel retail. Christian Buss – Credit Suisse: Then I think I may have missed this but was the online growth year-over-year?

It was 32.3%.

Your next question comes from the line of Edward Yruma – KeyBanc. Edward Yruma – KeyBanc: Just had a quick question. It seems like other retailers are starting to adopt your philosophy of trying to capture these young and emergent brands. Has that environment to kind of capture those trendy brands become more competitive and have the economics around some of those brands changed?

Everyone is trying to get out to and get the brands itself and that's much pretty much – that's kind of what people had want to do, is go capture those hot, young brands that they believe you can sell. So yes, I would say it's increased. I think our competitors have always tried to do that and pursue those young brands. It's a question of their degree of success in doing it. Now whatever they're doing the success is I'm totally comfortable that again we do it I think the way we run our business relative to empowering our managers, giving – we are essentially bringing the independent shop experience into the mall with managers who will talk about owning their stores and are driving on engaging with customers on the sales floor. Build a micro assort stores and then to take that idea of independent shop and leverage that idea with an omni-channel idea is an incredibly powerful thing, getting back to the strength of the people that are on our sales teams. So as brands think about who they want to partner, I can tell you that I still feel very, very comfortable that we are the top of the list as young brands come forward and forge their way through the core shop environment, we are the place they come, because I really believe that we do it right and we do it in that idea bringing that independent shop experience into the mainstream of the mob, really empowered employees, great sales teams, some brands surrounded by other great brands and then connecting it with the power of a larger retailer through our omni-channel strategies. So, yes, it's always been there and we are always going to fight that battle, but I think we are the choice and I think experience shows that to be true where young brands want to come to emerge. Edward Yruma – KeyBanc: Has the willingness of other competitors to discount some of these emergent brands, change the economics behind some of the business that you do?

That's a great, great question, Ed, and I don't want to comment what our competitors do in terms of discounting the young brands, all right. That conversation used to take place between our branded partners and their retailers. I just want to make sure that I emphasize a point that that's not what we do because we believe that these brands have real strength, we believe in these young brands, we want to do the right thing in supporting them. And the right thing is to reflect the fact they have real equity and real value and pricing power. And we want them, as part of their brand positioning through marketing, through distribution, and through great unique product to yield the price that they deserve to get, which is these are full-price brands. So our position is that to be a good partner as a retailer for these brands is we need to do what's right for them like they do what's right for us. And so, while other people may choose to discount them, that is not what we are going to do and I don't think it maybe toward disadvantage in the short-term, but it's not to a disadvantage in the long-term in terms of again be in the place that young brands come to be in a quality retail environment.

Your next question comes from the line of Andrew burns – DA Davidson. Andrew Burns – DA Davidson: Most of my questions have been answered, just a quick point of clarification on the snow, clearly some headwinds in that business weather related and just the category in general, but I wasn't clear on whether you saw your assortment was where it needed to be or if you saw there was a bit of misstep within your specific assortment or is it primarily just a headwind to the category?

I am glad that you asked it, so we can make sure we're clear in how we're thinking, how we're responding to that. I don't have a big issue with our assortment at all. I think our assortment is from the brand selection that we carry to how we locate specific brands and specific markets around the country, again how we micro assort those brands across the country. I don't think we're off in any major way in terms of what we're doing to assortments. These are bigger, broader issues in the snow hard goods business, in our snow business in general.

Your next question comes from the line of Betty Chen – Wedbush. Betty Chen – Wedbush: I was wondering, Rick, as you think about Blue Tomato in Europe, is the weakness in terms from a macro perspective primarily coming from Austria or are you seeing in other countries that they sell to online? Then in terms of the business, it looks like from the press release that you had opened several stores in Germany. I was just curious how we should think about store opening plans for Blue Tomato in 2013? Then my second question is in regard to the cash balance. Really pleased to see the Board had authorized a buyback plan earlier in the quarter. Can you remind us what is the cash balance you'd like to keep on the balance sheet? Then lastly for housekeeping, what is the percentage of footwear sales for – or men's footwear sales and also what is the percentage of snow business in the fourth quarter if we consider hard goods and outer wear in that category?

So, relative to Blue Tomato and your couple of questions there, macro weakness how are we seeing it? We just had a conversation with the Blue Tomato team yesterday. We're generally seeing it starting to filter more broadly across Europe and I think you probably most recently may have heard this relative to France itself. But it's generally been the Southern tier, but I think we are starting to feel in some other parts of Europe. So, nothing to be surprised here and I want to reemphasize what Chris in an earlier question regarding our thinking about Blue Tomato, from my perspective, it's a highly fragmented marketplace in Europe. This is actually to our advantage because the Blue Tomato team, they are great operators of what they do and they are real leaders in Europe in the action sports marketplace. So, this is unfortunately a very tough economic environment and I think the strong players are going to be the ones that survive and the ones that gain share and I think we are well positioned in that sense. So, yes, there are short-term issues relative to the macro environment. It may get worse before it gets better? I don't know. Either way I think it benefits us in the long term. We continue to believe that this is a great long-term opportunity to build the kind of action sports retail chain in Europe like we have here in the US and which just simply does not exist there today and again we think we have the best partner to do that with. Relative to the store plans, for growth in Europe, again Chris commented on how many stores we've added there this year. We're not going to really comment going forward, that's part of – as we said at the top of the call and our thinking about developing a five-year long-term plan and as Chris said, we're working closely with the Blue Tomato team and our leadership teams there and putting that together, where you need a few more months to really lay that out, look through the details. So we're not prepared to really talk about how we might think about that, just like we won't really specifically talk about US store growth at this point in time. Cash balances and how much we – how do we think about the balance of cash on our – that we like to keep on our balance sheet. I think most management teams are always happy with healthy cash balances on their balance sheet. What we do is we periodically, at least annually, sometimes more frequently, we'll work with our Board, as our Board challenges us on this question, and we lay out for them, some set of parameters of what do we need in terms of cash positioning to make sure that we can survive and thrive I would say, survive and thrive if there was tough economic times here in the US, relative to recession, what cash balance we need there, how much balance we need if we saw opportunities in the marketplace for small acquisitions, we look at what that balance may need to be and we look at just generally, where do we need to fund our business relative to CapEx on a typical year, relative to again, how much cash we think we're going to generate. So, all those factors come together and we say, okay this is where we think the balance should be, the kind of our minimum threshold. Then the Board looks at that and says, do we feel comfortable then that we excess cash that we should be looking at ways to return that value to shareholders. We go through that process as I said at least annually, some times more often depending on where we're at and that's an ongoing process. So, it's not like I have a number that I pull out and say this is it, because I think it's dynamic and it's changing all the time, but it's an ongoing process and our board is really leading the way on that in terms of how we use cash relative to delivering value for our shareholders. Chris, you want to comment on the rest?

Your question around snow penetration within the fourth quarter, it has been as high as 20%, really good snow year and get down into mid-teens, even low teens in bad snow year. So 2011 as we mentioned was a tougher snow year and would have been on the lower side there, but can get up to 20%. Then on the footwear side of things, we don't necessarily breakout the men's and women's breakout, but footwear in 2011 was about 24% of sales.

Men's is by far the largest part of that, Betty.

Your next question comes from the line of Jennifer Black – Jennifer Black & Associates. Jennifer Black – Jennifer Black & Associates: You did a great job with your limited-edition collaboration with Supra and (Stacie) and I know you sold out really quick. I just wondered if you could expand your limited-edition merchandise, obviously it would be on an ongoing basis, but what have to change, but is that something that you could do to spark interest and drive traffic, and then I have a follow-up.

First I'm always appreciative and I would know – I should know you would be on top of looking at what we are trying to do there and we did it for a lot of reasons. Again we look at these opportunities because we do want to provide uniqueness for our customer and I think the way they did that through the combination of some really great brands in the Black and Gold theme was pretty creative. I think we had a lot of fun with it and we are able not only to do it by – rather say presented by what we do I stores but again present it through all of the social networks and social channels that we are using, our brands got behind it and again we really appreciate their support in helping us carry forward an idea like this. Yes, we hope that it would drive traffic now. I don't think it's necessarily an important traffic driver on a Black Friday weekend, it's obviously not relative to what's going on and what the consumer does out there for Black Friday. But you are going to see us, I think, you are probably aware that we have a series that is coming up over the next few weekends, themed events, unique product to us and I think you will see us continue to theoretically do this as we look out for the next year based upon our success over the next few weekends. Jennifer Black – Jennifer Black & Associates: Then my second question is, I just wondered, if you had an outlook on gift cards and just I guess from a big picture perspective?

Yes. Gift cards are as you would expect incredibly important in this time of year and we do measure on a regular basis during the days between Thanksgiving and the 24th of December, exactly how we are doing at every location in gift card sales. As we would not actually sales as you know but they are – for reporting terms and we will evaluate that in terms of trying to incent and measure our teams are doing. So we have a big gift card business and have a very successful one. I would expect that our history will say that again based upon demand for the kind of products we are selling, that we'll able to have another good year of gift cards and that is we have a very, very high redemption rate in the first 30 days for the gift cards, in fact, very, very redemption rates in the first 10 days post-Christmas. So, much higher than what you read – our redemption rates are much higher than what you read for a typical retailer for gift cards, which again speaks, it's not just something we do measure; we actually look at redemption rates day by day following December 25, because what we are looking to see, again, we are using as a measure of how quickly consumers want to spend their money in our stores, right. So we are looking at that on a regular basis each year to see if we see any change in the pattern. I can tell you, the last year, they've been very consistent.

Your next question comes from the line of Linda Tsai – ITG. Linda Tsai – ITG: Over the next five weeks, will you offer more compelling value packages? I think in the past, the holiday shopper has responded well to these if they tend to be a gift giver, like a mom who is more attuned to value?

Yes. Linda, we are always looking for opportunities to do and provide value in a way that makes sense relative to the selling season. So in a gift giving environment, yes, we will try to look at how we would bundle packages together, so, an obvious one would be snow jackets and snow pants for example in terms of how we price that package. But also, we look at the sales process in the holiday season much, much different than we look sales process in – for example in a back-to-school season. So the back-to-school season, our bundling strategies are built around outfit building and that doesn't – it clearly does not work as well in a gift giving environment where it tends to be more item driven environment. So, you'll see us, yes, we'll have those programs out there, but you'll see us much more focused on how do we do it on trying to put like items together that make sense to put together in terms of providing value for the consumer. Linda Tsai – ITG: I just have another two follow-ups. I was little unclear on when you said earlier, is your private label going to make higher low percentage of overall sales this year and then what was the driver behind that?

Again, to be clear I didn't say – I said I wouldn't be surprised that private label – I don't know where it's going to end up at this point because fourth quarter is a significant component of our overall sales. Last year though private label, our mix of private label declined relative to our total sales by a small amount, it wasn't a huge decline, but that did decline as a percent of our total business and my comment was I wouldn't be surprised as we complete this year that we would see that same trend this year. The reason for that and again I think it's a really great thing. The reason for that is the power of the young brands that we're selling and car customers simply is choosing to buy the branded item and we're going to where the customer takes us and I think that's a great thing from my perspective if they want to buy the logo of the hot brand, we're happy to sell them that logo of a hot brand. So it's a reflection of the nature of what the consumer wants to buy and in this case they are buying a bit more last year and I may turn out again this year that they're buying a bit more of the branded mix relative to our private label. Linda Tsai – ITG: Then my final question is have you actually expanded your snow business across your store base or was that just a function of store that I visited maybe that was just a result of micro merchandising?

That would be a result of micro merchandizing because we actually did the opposite this year. We could track the snow business across our store base and there are fewer – we actually have fewer stores this year, so as snow hard goods that we did at this time a year ago. Now what you saw there is a really good thing and I'm glad you noticed that Linda is that this is a clear example of how we do micro assort stores and our team looks very carefully at this and says if the store performed this way last year, then we ought to think about changing their mix to reflect, particularly we think our omni-channel sales. Change their mix to reflect, but we think that store can now sell and demonstrate that they can perform. So what you saw was an example of micro assorting of stores, but in aggregate, we have fewer stores as snow hard gets this year. Linda Tsai – ITG: So it's more concentrated in a smaller group of stores?

Correct.

Your next question comes from the line of Sharon Zackfia – William Blair. Sharon Zackfia – William Blair: Just a quick follow-up. I think if you takeout all of the charges in the fourth quarter you're looking for operating margin to be down around the 100 basis points, which is probably a little bit better than I would expect on a negative comp. So is there anything kind of unusual going on there in terms of incentive accrual or reversals or anything we should think about?

Sharon, the only place I'll start with it is that there is a benefit from the 53rd week relative to some leveraging of expenses in January, because rents (inaudible) over that cycle. So, Chris do you want to take it from there?

Obviously on a negative comp as well, there will be some levers that we have to look at in the business, and incentive comp is one of them and there's a couple of other areas as well that we have funded based on results. So, we're looking at those overall, but on a negative comp and each kind of data point along the model, the expense structure will change slightly. Sharon Zackfia – William Blair: But to be clear, do you have an incentive comp reversal model than the guidance or not?

I think that's a good assumption, yes.

Your next question comes from the line of Steph Wissink – Piper Jaffray. Steph Wissink – Piper Jaffray: A real quick follow-up regarding on the store managers and in terms of the turnover, if you could just give us an update on some of the stats. I'm sure it's kind of how you're communicating with them through what is more of a competitive environment here, build and retain kind of that culture that you've worked so hard to build.

Yes, well, again I feel very good, Sharon, about how we are positioned with our store management teams. Again, we invest both in each other very greatly and the commitment of what we expect from our store teams in particularly our managers and the training that we provide to them. So typically, we only look at turnover levels, really on a full year basis. I'm not going to comment on any internal levers, although I don't expect any significant historical differences at this point, in what I would look at for our store manager turnover. You know what? Yes, we are very good about communicating to them where our challenges are and what we're going to do in this environment, culturally that expects that, that we'll have an open and (honest) style about where we are at and how we think about things and the challenges and how we think about driving volume. We have certainly asked our store managers what they think about how we can improve the performance. So fundamentally though, there is nothing that's different in what we are doing relative to how we think about our store managers nor do I believe as we get through this end of the year, will we see any fundamental difference in turnover rates.

Ladies and gentlemen, since there are no further questions in queue, I'd now like to turn the call over to Mr. Rick Brooks for closing remarks.

Thank you, (Jeff), and again, we really appreciate everyone's time, and questions today, some really good, I thought questions in terms of the business, and again I appreciate your interest. And we're going to look forward to hopefully a successful holiday season as we move through this fourth quarter, and talking with you again in March when we talk about our full year results. So, thank you very everybody and have a great holiday season.

Ladies and gentlemen that concludes today's conference. Thank you for your participation. You may now disconnect. Have a wonderful day.