Good day, and welcome to the Abercrombie & Fitch Fourth Quarter 2012 Earnings Results Conference Call. Today's call is being recorded. [Operator Instructions] At this time, I would like to turn the conference over to Brian Logan. Mr. Logan, please go ahead.

Good morning, and welcome to our fourth quarter earnings call. Earlier today, we released our fourth quarter sales and earnings, income statement, balance sheet, store opening and closing summary and an updated financial history. Please feel free to reference these materials available on our website. Also available on our website is an investor presentation, which we will be referring to in our comments during this call. Today's earnings call is being recorded, and the replay may be accessed through the Internet at abercrombie.com under the Investors section. The call is scheduled for 1 hour. Joining me today are Mike Jeffries and Jonathan Ramsden. Before we begin, I remind you that any forward-looking statements we may make today are subject to the Safe Harbor statement found in our SEC filings. In addition, in our press release this morning, we announced that the company has converted to the cost method of accounting for inventory. We will discuss the background to and impact of this change later in these prepared remarks. In general, our comments for the fourth quarter and full year 2012 results are based on the retail method of accounting to be consistent with the basis on which we gave our guidance coming into the quarter. Also, as a reminder, the fiscal 2012 retailer calendar includes a 53rd week, and therefore, fourth quarter and full year comparable sales are compared to the respective 14-week and 53-week periods ended February 4, 2012. Finally, effective with the fourth quarter results, we are moving to reporting our primary comparable sales metric inclusive of direct-to-consumer sales. We believe this change is appropriate now that we have a more established comparable source -- store -- excuse me, comparable sales base for our international direct-to-consumer operations. For comparison purposes, we are also continuing to provide comp store sales excluding direct-to-consumer. We will now begin the call with a few remarks from Mike, followed by a review of the financial performance for the quarter from Jonathan and me. After our prepared comments, we will be available to take your questions for as long as time permits. With that, I will turn the call over to Mike.

Good morning, everyone. We are very pleased with our results for the fourth quarter. Our sales were in line with our guidance coming into the quarter, and our earnings exceeded expectations due to a very strong gross margin performance, along with continued tight expense control. Excluding impairment charges, our adjusted diluted earnings per share for the year was $3.22 under the retail method. Total sales for the quarter were up 11%. Total comparable sales, including direct-to-consumer sales, were down 1%, with the U.S. flat and international down 3%. Despite a challenging U.S. retail environment, over the holiday period, our core U.S. chain store plus U.S. DTC comparable metric remained positive, as reflected in the chart in our investor presentation. Our international comparable sales represented a further sequential improvement in the trend, with growth remaining very strong in direct-to-consumer. This trend improvement was most notable in Hollister, where we had positive comp store sales in Scandinavia, Belgium, Spain, Hong Kong and China. Importantly, we saw a significant sequential improvement in our sales trend in the U.K., despite that economy dipping back into negative growth. Overall, international sales represented 1/3 of our business for the quarter. If international business in U.S. stores is included, the figure is closer to 40%. While international comparable sales have been negative for the past several quarters, we are encouraged by the improving trend and by the diversification benefits of our increasingly global presence. Turning to gross margin. Our strong performance for the quarter reflected a significant year-over-year benefit from lower product cost, but also a moderated promotional stance during the high-volume holiday shopping periods and the effect of generally lower levels of clearance inventory. We also saw a good sell-through in key categories, such as outerwear and jeans. On a full year basis, we achieved overall…

Thanks, Mike, and good morning, everyone. Brian will talk in more detail about the retail-to-cost conversion in a few minutes, but I'd like to say that we are very pleased to be making this change. We believe the cost method better aligns with our focus on realized selling margin. It is already giving us much better visibility and drill-down capability into our merchandise plans. The conversion resulted in an increase in diluted EPS for 2011 and a reduction for 2012, which is primarily due to markdowns taken on very high carryover inventory for the end of 2011. In general, on a forward-looking basis, we do not expect the change to be significant to reported EPS. Brian will go into more detail on this in a moment. Moving on to the numbers. To reiterate what Mike just said, we are very pleased with our results for the quarter. The company's net sales increased 11% to $1.469 billion. Total U.S. sales, including DTC, increased 1%, and international sales, including DTC, were up 34%. Total DTC sales, including shipping and handling, were up 26%. Including direct-to-consumer, comp sales were down 1% to last year, comprising comp store sales down 4% and comp DTC sales up 17%. Within the quarter, comparable sales were stronger in November and January. Gross margin for the quarter under the retail method improved 920 basis points year-over-year, reflecting a significant year-over-year benefit from lower product cost and much lower carryover fall inventory. In addition, gross margin benefited from a moderated promotional stance during the high-volume holiday shopping periods and the effect of generally lower levels of clearance inventory. On an adjusted non-GAAP basis, operating expense as a percent of sales for the quarter was approximately 180 basis points higher than last year, driven primarily by the deleveraging effect of…

Thanks, Jonathan. I will start by taking a few minutes to discuss the retail-to-cost conversion. In addition to my comments, please refer to the change in method of accounting for inventory Q&A, included as an appendix in our investor presentation. During the fourth quarter, we changed our method of accounting for inventory from the retail method to the weighted average cost method. This was enabled by a systems conversion project that has been underway for some time, but which was completed during the quarter. Under the former retail method, a cost-to-retail relationship was established at the item level based upon weighted average cost and initial retail selling price. When the retail selling price of an item was permanently reduced, the company reduced the value of its inventory and recorded a charge to cost of goods sold, so as to maintain the already established cost-to-retail relationship. For example, if a permanent markdown was taken to reduce the retail selling price of an item by 10%, the book value of inventory on hand would also be reduced by 10%, with a corresponding charge to cost of goods sold. In addition, the value of inventory on hand at the end of a reporting period was reduced and charged to cost of goods sold by recording a valuation reserve that represented future anticipated permanent reductions in retail selling price. Under the cost method, the company does not reduce the value of its inventory or recognize any impact of permanent reductions to the retail selling price in cost of goods sold, unless the company expects to sell the merchandise below original cost. In which case, the inventory will be reduced to the expected selling price. Using the same example I gave a moment ago, under the cost method, inventory book value would not be reduced…

[Operator Instructions] Our first question today will come from Betty Chen, Wedbush Securities.

I was wondering, Jonathan, if you can talk a little bit, or Mike, about the guidance for Q1 comps of down high-single digit. I think you mentioned in your prepared remarks some impact maybe from macro conditions, as well as the inventory flow. Is it also based upon some of the trends you're seeing now in February? And also why we should expect that to increase significantly in the second quarter. And that would be really helpful.

Let me take a stab at this. We have come into the first quarter knowing that we have tailwinds, primarily from the lack of cold weather inventory that we had on hand last year. We are anticipating sales losses due to that through the middle of March. We were also very concerned about the macroeconomic situation coming into the first quarter. Second quarter, we see that we won't have the same problem in terms of liquidating carryover merchandise. However, we also see that we will be in a better position versus last year. If you'll remember, we had a real problem with flowing newness into the stores. We also think that the cannibalization effect is diminishing in Europe, so first quarter is really going to be a margin opportunity. We believe that, for the reasons I just mentioned, second quarter, we'll see a resumption of healthier sales levels.

Our next question will come from Randy Konik with Jefferies.

Jonathan, can you give us a little perspective on just what you saw in the international business during the quarter in terms of maybe traffic or regional perspective and just remind us what were the compares we're going to face up against in international going forward? And then, just lastly, any update on how you're thinking about, from a planning -- what you're working on from a planning and allocation perspective with regards to the inventory? Just it is nice to see that the fall carryover is down. And should we expect these carryover levels to continue to moderate as we go forward through the year and beyond?

Randy, sure. I mean, on the first point, we saw a sequential improvement in the trend everywhere, pretty much, in Europe. I don't think there was any -- there were any exceptions to that. And we saw the 2-year trend pick up a bit in the stores, and obviously, we had very strong direct-to-consumer growth, so the overall comp for international, as we said, was down a little bit. In Europe, it was actually slightly better than that, given the very strong direct-to-consumer growth we saw in Europe. In terms of compares, we do get more of a tailwind coming into Q2. We did see a step-down in the international business from Q1 to Q2 of last year, so that's one of the tailwinds that will help us from a comp standpoint in Q2. In terms of inventory levels, we expect them to be down year-over-year at the end of Q1 and Q2 on a dollar basis. We haven't given guidance for the back half of the year at this point.

Next we'll hear from Barbara Wyckoff, CLSA.

How are the U.S. stores that don't serve tourists doing, now that the other 2 retailers are sort of forging their own identity? And then, just as a follow-up, can you talk about the learnings in the stores in the various countries in Asia? And then, lastly, as things have stabilized or starting to stabilize in Europe, are there any stores that you would not open today, if you could make that decision again?

Would you repeat the first part of the question, Barbara? I'm a little...

Okay. Of the U.S. stores that don't serve tourists, how are they doing, now that your prior direct competitors are sort of dancing to their own thing, they've forged their own identity and they're not copying you?

Yes. We call those the promotional stores which have no tourist business, and we're pleased with how they're doing. The trend clearly improved during the year, and I think you're right that we are all in kind of different zones. And those stores in the U.S. did better than the stores that were tourist-related, which relates to the weakness in the international business versus the U.S. Jonathan, do you want to talk about the second part of the question?

Sure. Yes, Barbara, I think on the second point, we've always said there are probably 1 or 2, maybe 3 stores in Europe that, if we had our time again, we might not open. Frankly, one of the ones we've talked about in the past has had a dramatic improvement over the last few months, so I think we wouldn't really include it in that category anymore today. So there's probably 1 or 2 at this point that we would not have opened, if we were doing it over again.

Next we'll hear from Janet Kloppenburg, JJK Research.

A couple of questions, particularly on the guidance. I think what you're saying is that your clearance inventory is down significantly, so you're orphaning a lot of business because of that. Perhaps you could talk a little bit about full price selling trends and what you're seeing there and if there's encouragement -- if there are encouraging signs there both domestically and internationally. Also, in the third quarter, you gave us a breakdown in the U.S. of the flagship comp versus the branch comp. I was wondering, Jonathan, if you could talk a little bit about that. And Michael, do you think the macroeconomic situation in the United States has worsened from the fourth quarter to the first quarter? And is that affecting -- is that also affecting comps here in the month of February? If you could talk a little bit about February trends, that would help because we've been hearing that it's tough this month, and I think there's a lot of reasons behind that. But I'd love to hear more.

Okay. We can't comment on current quarter business. We haven't and we won't. I will comment on regular price selling. I think we have lots of good news within regular price selling, and I believe that we are taking advantage of the merchandise initiatives in terms of more current fashion. I think you're seeing that in our assortments, and you will see it on an ongoing basis. The floor set that we did this week, I thought, was new, different. The floor set we're going to do March week 1 is going to be more newness; March week 3, more newness. So I am encouraged by how new fashion is selling. Now we can go from there to Jonathan.

Janet, on the second part of the question, flagship and tourist stores in the U.S. were -- did comp negatively, better than the international rate, and they did sequentially improve from Q3 to Q4.

Next is Marni Shapiro, The Retail Tracker.

Your stores don't have very much inventory in them at all. Thinking about throwing a party in one of them. I was curious about -- dovetailing on what Janet was asking about the new merchandise. It seems that the inventory you're bringing in of the new product is -- you're not bringing in much of it and it's turning very quickly. So as we move into March and later in the season, is the assumption that you'll increase the percentage -- the buys behind that fashion? Clearly, the denim will remain a core part of your buy. But what I'm seeing is a lot of what you have in fashion that is selling, you're buying so few units that it's turning too quickly. And I'm curious how -- as we march the season, how that's going to change.

You are absolutely correct that we're turning it quickly. We planned on turning it quickly. We will increase the inventory levels through deeper buys as we proceed through the quarter. We'll be very happy with where we are from an inventory level perspective in second quarter. That's one of the reasons for my optimism about second quarter becoming very much better than first quarter. But your question and your observation is a good one, that's really based on the good news, which is we're turning through this new fashion very quickly.

Liz Dunn with Macquarie has our next question.

I guess, first, just a clarification on the guidance. If you had not made this accounting change, would the rate of EPS growth be similar that you're forecasting for 2013? And then, also, I was just wondering about your decision to draw down on the debt. Can we assume that, that will be used for repurchases?

Liz, on the first part, had we stayed on the retail method, we would have expected that the guidance would have been broadly comparable to what we're guiding to on the cost method. I think part of that is the effect that Brian described in his comments, of that benefit we had in the first quarter of 2012 from markdowns that were taken in 2000 -- in the fourth quarter of 2011 on that high fall carryover inventory. So broadly speaking, as we said, with normalized inventory levels, we would expect that the results on the retail and cost method would not significantly diverge, so the guidance would have been broadly similar. Although, obviously, it's somewhat academic at this point, and it would depend on what assumptions we made about markdown reserves at the end of 2012. In terms of the decision to draw down on the debt, that was part of the arrangement for adjusting the facility. That will add to the capital we have available for repurchases or for other capital allocation priorities during the year.

Next we'll turn to Lorraine Hutchinson, Bank of America Merrill Lynch.

How are you thinking about the long-term store count in Asia? And are there any lessons learned in Europe that you've applied to the rollout over there?

Lorraine, that's a great question. It's something we have not yet, at this point, put a specific external goal on, on where we see store count or volume going. It's something that we are focusing a lot on internally. We're going through a comprehensive review of our long-term strategic plan, which we'll be working on over the next few months. And as part of that, we are doing a very deep dive into Asia. Now we have a basis there of having opened quite a few stores, we're looking at the real estate opportunity, productivity levels, where we can be with the direct business relative to the stores, what marketing efforts we need to support the growth in different markets, and it does vary by market. So we're in the midst of diving into that, as well as, frankly, beyond Asia, other parts of the world such as the Middle East, the southern hemisphere. So at this point, we're not ready or able to give a specific outlook for Asia, but we're getting closer to being able to do that. I think in terms of lessons applied from Europe, clearly, Europe has been a huge success for us, so I don't think there are a lot of negative lessons we would take out of that. We'll certainly be conscious of the cannibalization point as we open up in Asia. I don't think there are any other sort of significant learnings that we would apply. I think Asia, having said all of that, is very different to Europe, and we need to be mindful of that as we enter into -- in the region.

I think I'd like to add, though, that we're continuing to gain optimism about Asia, and let's just go through the reasons. In China, we're comping positively at Raffles City in Shanghai and MixC in Shenzhen, and we expect to comp positively at Galleria in Beijing when it enters the comp phase. We recently opened our fourth Hollister store in China. We believe that the Shanghai flagship will be important to the development of the brand, the brand awareness in China. Hong Kong remains a really bright spot. Festival Walk remains strong even after opening Hysan and Pedder Street and is comping positively. Festival Walk and Hysan are 2 of our highest performing Hollister stores in the world, and in addition, Pedder Street is obviously doing major volume. We're enthusiastic about Korea. We opened our second Hollister store in Seoul a couple of weeks ago, and we're excited about Japan with the introduction of the Hollister brand there. So we think Asia is currently a major opportunity for us, and we're off to a very good start.

Kimberly Greenberger with Morgan Stanley has a question.

Mike, I'm wondering if you can share some of your strategic thinking behind this change in accounting methodology. It strikes me that it's not simply just a change in accounting methodology, but you're looking to drive different organizational behavior. And I'm wondering if you can talk about anything you've seen so far. And what do you think the medium- and long-term financial benefits of this sort of new way of thinking, new way of running the organization are likely to be?

I'll let Jonathan have a stab at that.

Let me just give a couple of high-level observations on that, Kimberly. I think, historically, on the retail method, our focus was on IMU and our systems were oriented towards IMU. And to some degree, as merchandise moved through the cycle, we lost visibility on the original historic cost of the merchandise and therefore, had limited visibility on the selling margin. So given the evolution of our business model, given the complexity of our business model and the multiple different channels we operate in and the different economics of those channels, a very different story to where we were 4 or 5 years ago, being able to focus on selling margin is extremely helpful in how we look at the business across channels and within channels. And the systems conversion we've gone through gives us much favorability to drill down into the numbers and to understand what's rolling up into the overall plans, as opposed to having to have done a lot of that stuff outside the system for the past couple of years while we've been working through this system conversion project. So high level, that's how I would characterize it.

I would reinforce that. Kimberly, it's a way for us to have a better detailed view of the business, which is a complicated business today. I'm thrilled with what I'm seeing in our sessions and I think I have said this, what we're uncovering in these sessions looking at the business this way. Big opportunity.

Our next question will come from Jeff Black with Avondale Partners.

Just staying on that topic. On the -- Mike, you mentioned you're looking at processes and investments that had a high return, that you're not getting that return out of now. Can we talk about what are some examples of what that might hit? I mean, are you talking on the investment side about store concepts that might not be generating the return you thought? Are you talking about product investments that aren't generating the return or categories? And is that primarily domestic or does that also get to some of the international things you've been doing?

Jeff, I'd rather not talk about this now because we have, as I said, a team looking at everything we're doing. We said, and I'll say again, we hope to bring more color to this conversation at the end of the quarter. But speaking to anything now, I think, would be premature.

Our next question will come from Brian Tunick with JPMorgan.

I guess, for maybe Mike, you had made some comments that you guys are looking for AUR opportunities in the U.S. And just curious about your comments or thoughts about AURs on the international side of the business, what do you think we're going to see over the next year or so from a price point perspective and maybe how that flow through to where you think international margins should come out. And maybe Jonathan, on the capital allocation side, can you remind us sort of what's your minimum cash balance sort of view and how the partnership in the Middle East -- maybe how the economics might work for you versus all the company-owned stores that you've opened before?

Okay. Let me go for the first part of the question. The AURs will, over the year, increase in the international stores. We -- and this is going to come through, honestly, ticketing a little higher in those stores. I think if we got too low, it did not impact the sales, it probably impacted the sales negatively. So we have upside in AUR in the international stores. We'll start to see the benefit end of second quarter, clearly in the fall. Before I turn it over to Jonathan, I'm going to be in Roosevelt Field on Saturday morning, if you're going to be around, Brian, or anybody. Jonathan?

Brian, on the second part of the question, we've said in the past, and it remains the case, that we want to have, at any given point in time, including at the trough of the cycle, cash on hand of $350 million so that's our lower guardrail in terms of what's available to fund repurchases or other capital priorities at any given point in time. In terms of the economics in the Middle East, on a four-wall basis, we would view the model as being very similar to elsewhere in the world. Our partner there will be sharing in the capital investment, and they will also be taking a return related to the investment they're making in those stores.

Steph Wissink with Piper Jaffray has a question.

Mike, if you could just share with us a little bit about how you're using or plan to use the CRM database, which is quite robust at this point, to target your marketing or allocate your merchandise and even some of the things that you've mentioned around AURs. If you could just share with us a little bit of your intentions there.

Jonathan?

Sure. Steph, well, the good news, at this point, we have a robust amount of data in the database, a lot of customer information. The next step, as we've described in the past, is to start leveraging that in terms of how we segment and ultimately, personalize messaging to different groups of consumers. So we're getting closer to being able to make that a reality. We've talked about it for a fairly long period of time as we've built up the programs. But with the back office system developments and the number of customers we now have in the database, that's much closer to being a reality. The other things we continue to look at is the overall content of the clubs and the programs, how we increase the front-end engagement with the customers to make sure we keep the numbers growing in those clubs and they continue to be active participants in the clubs.

Our next question will come from Dana Telsey, Telsey Advisory Group.

Product flow improvement and speed to market certainly is going to factor in your improved performance. Where are you relative to the goal? And does it differ by channel? Does it differ by men's or women's? Or does it differ by domestic and international?

Domestic and international would be the same. It is more important in female than in male. We are cautious about how much we're increasing our chase component of speed to market because there -- as I've said, there's some downside to chase. But I think it's most apparent in the female portion of our business across the brands.

John Kernan with Cowen is next.

It looked like the -- a little bit of a follow-up to Brian Tunic's question. It looked like the international four-wall margin was down about 600 basis points year-over-year. The domestic four-wall margin was up year-over-year for the full fiscal year. What is embedded in your guidance in terms of those 2, the change in the four-wall margin both internationally and domestically in 2013?

John, in terms of the international margins, I mean, we continue to expect that they are going to remain at 30% or greater, which they were on both the retail and cost methods for 2012. We would expect to continue to make some progress on the U.S. store margins. And DTC, we would expect to remain, now on the restated cost method, in that kind of high-30s range in terms of an overall segment margin.

Lindsay Drucker Mann with Goldman Sachs has a question.

So Jonathan, I was hoping you could give some detail on what your AUCs -- as it relates to gross margin, what your AUCs were in the period and also your AURs and then what your outlook is for AUC specifically in the first and second quarter. And then, just on the inventory point, maybe you could help us kind of understand how much money perhaps you left on the table by the inventory being so thin in the period. Any metrics you can give as far as what your average inventory was during holiday versus the normal run rate or any other way for us to quantify the impact of that?

Okay. I'll try to get through as much of that as I can, Lindsay. AUC during the fourth quarter was down in the mid-teens range. That was something we'd indicated, I think, coming into the quarter. It was broadly where we expected it to be. That's broadly in line with where we're going to be for Q1. We would still expect AUC to be down year-over-year in Q2. The question about how many dollars left on the table due to thin inventory levels, that's a really tough question to answer. I think we are very happy with how we margined out during the quarter. Clearly, we had a very substantial rate -- gross margin rate improvement on both the retail and the cost methods. I think we're happy with that. We're happy that we were able to be more promotion -- be less promotional. So I'm not sure, if we were doing it all over again, we would have chosen to approach it any differently, quite frankly. Average inventory versus holiday run rates, I'm not sure that's something we can really get into, frankly.

Our next question will come from Erika Maschmeyer, Robert W. Baird.

I just wanted to follow up on your kind of early gut instincts on AUR and where you expect to be able to increase that in the U.S. And then I know last year you had tried to get it a bit higher internationally. How do you think you will go about it differently this time? And then just one quick clarification. Does your Q1 comp guidance include DTC?

Instincts on AUR, again, I'd really not like to get into detail because we have a wonderful team really investigating this. But we see that, just low-hanging fruit, our new systems will enable us to be pricing better by segment, by tier. There's an opportunity, immediate opportunity, to how we are tiering fashion versus core by tier. There are lots of opportunities here. But again, let's save this conversation until this team comes up with its conclusions.

And Erika, yes, the Q1 guidance is total comparable sales.

Next is Adrienne Tennant, Janney Capital Markets.

Mike, so the spring trend, it seems like you're spot on there. I was wondering what -- you had said something about deeper buys entering the second quarter. And I was just wondering if you meant more choice count on breadth or deeper key items. And then secondarily, Jonathan, just so I understand this accounting change, it sounds like when markdowns are high, retail understates earnings; when they're lower, the retail method overstates the earnings. So this year, it would seem that the cost method would understate the earnings. And I'm just wondering when do we sort of normalize that and get that back so that overall earnings power of the company remains the same. So sorry if I'm not understanding that correctly.

Let me respond to the first part of the question. I think Marni got that exactly right, we need deeper buys, not more breadth, and you'll see that in second quarter. Jonathan?

Adrienne, on the second point, in terms of normalizing going forward, as we said earlier, if we have normalized inventory levels at the beginning of a period and end of a period, there shouldn't be a significant divergence between the retail and cost methods. So assuming at the end of 2013 our inventory levels are normal, then the EPS we would deliver under the cost method would not be significantly different to what we would have delivered under the retail method is the short answer. I think we're anticipating there were going to be quite a few questions around this, and certainly, we'll be happy to talk to people one-on-one as we work through today and early next week in terms of follow-up calls. But that's probably the headline that's most helpful.

Our final question today will come from Anna Andreeva with FBR.

Just, Jonathan, to double check, is there any impact from the change in accounting in the first quarter? Just trying to understand if there's any of that headwind to get to your guidance for a slight loss. And I'm not sure if I missed this, but what were the four-wall returns internationally in the 4Q? I think you gave us the year on the cost basis, but what was it on the retail basis in the fourth quarter?

On the cost method, the international four-wall was 33.8% in Q4. We're checking the retail figure. Importantly, the methodology we've changed to now includes all third-party selloff of excess merchandise in those margins. So that's actually a slightly more conservative way of presenting those international margins, but we think it's comparable with the U.S. stores. If you look at Q1, if you go to the very end of our investor presentation and you look at the restated cost method data for 2012, you'll see that, first of all, overall our restated cost method basis EPS for 2012 Q1 was a loss of $0.25. And if you look at Q1 by segment, you'll see, for example, that U.S. stores had a 7.9% four-wall margin in the first quarter of '12, which is obviously very low. And that reflected the fact that in the first quarter of last year, we were selling a lot of fall carryover merchandise at significant markdowns. The AURs were not always all that low because a lot of it was outerwear, for example, but the margin we were making on that carryover was extremely low. And therefore, when you restate Q1 on the cost method, the earnings per share goes down significantly from where it had been on the retail method. So relative to that Q1 restated loss of $0.25, we're anticipating significant year-over-year progress in EPS to come up with that slight loss in Q1 of 2013. On the retail method, in Q4 of last year, the international margin would have been in the range of 33% to 34% -- sorry, 37%, sorry I read off the wrong number there, versus the 34% that we're reporting on a restated cost method basis.

And that does conclude our question-and-answer session. I will now turn the call back over to our host for any closing or additional remarks.

I think that's it. Thank you.

Thank you, everyone.

And that does conclude today's conference call. Thank you for your participation.