Good afternoon, ladies and gentlemen. My name is Amber and I will be your conference operator today. At this time, I would like to welcome everyone to the Gap, Inc. Fourth Quarter 2015 Conference Call. At this time, all participants are in a listen-only mode. As a reminder, please limit your questions to one per participant. I would now like to introduce your host, Jack Calandra, Senior Vice President of Corporate Finance and Investor Relations. Jack Calandra - SVP-Corporate Finance & Investor Relations: Good afternoon, everyone. Welcome to Gap, Inc.'s Fourth Quarter 2015 Earnings Conference Call. Before we begin, I'd like to remind you that the information made available on this webcast and conference call contains forward-looking statements. For information on factors that could cause our actual results to differ materially from the forward-looking statements as well as reconciliations and descriptions of non-GAAP financial measures, please refer to today's earnings press release as well as our most recent annual report on Form 10-K and our subsequent filings with the SEC, all of which are available on gapinc.com. These forward-looking statements are based on information as of February 25, 2016, and we assume no obligation to publicly update or revise our forward-looking statements. Joining me on the call today are CEO, Art Peck; and Executive Vice President and CFO, Sabrina Simmons. Sabrina will be using slides to supplement her remarks which you can view by going to the Investors section at gapinc.com. With that, I'd like to turn the call over to Art. Arthur L. Peck - Chief Executive Officer & Director: Thanks, Jack, and good afternoon to everyone. I'm pleased to be speaking to you as we kick off 2016. We've got 2015 behind us and I want to spend a reasonable amount of time going over my inventory of…

Our first question will come from Matthew Boss with JPMorgan.

Hey. Good afternoon. So I guess my first question, as you think about your 2016 game plan and the sense of urgency that you spoke to, does the guidance embed positive comps at all three concepts for the year? And then just along those lines, how should we think about same-store sales opportunity in the front-half versus the second half? Just any color around your expectation and the drivers associated with would be really helpful. Sabrina L. Simmons - Chief Financial Officer & Executive Vice President: Hi, Matthew. I'll start and then if Art has anything to add, he can chime in of course. What I'll tell you is our guidance range always includes a range of scenarios, obviously. We prefer – it's our goal to try and return to positive comps this year, so we prefer to drive to our range with positive comps. But it doesn't necessarily require a positive comp to get to our guidance. So, again, it's a primary goal of ours to try and drive revenue growth and positive comps but not necessarily required to meet our range. Arthur L. Peck - Chief Executive Officer & Director: And the only other thing I'll add to that, Matthew, is what I've said now repeatedly, which is I have a strong bias along with my Presidents and Sabrina to make sure that we are tight on inventory, because obviously we've been very promotional. We don't want to be as promotional and a step in that direction is to make sure we're buying tight and then ideally where we can, is to use our inventory responsive capabilities to chase upside if there is upside.

Great. And on your comment around the potential for deleverage this year, what is the fixed cost hurdle? And can you lever on a negative comp as it relates to the SG&A that you were speaking to that you said may de-lever? Sabrina L. Simmons - Chief Financial Officer & Executive Vice President: Yes, what I'm suggesting is that if we are meeting all of our goals this year, there's especially two categories which there may be reinvestment in. As you can imagine, coming off of the 2015 year we came off of, incentive comp/bonus was absolutely minimal. We also reported that marketing expenses were down over $60 million year-over-year. So those, for example, are two categories that if we're tracking well to our goals and doing as we hope to do, we would be happy to see reinvestment in, and that may cause some deleverage of expense.

Great. Best of luck. Sabrina L. Simmons - Chief Financial Officer & Executive Vice President: Thanks.

As a reminder, please limit your questions to one per participant. Your next question comes from the line of Richard Jaffe with Stifel. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: Thanks very much, guys, and I guess a question following on the comments you made about Old Navy, that the fourth quarter ended on a down note with traffic, but the traffic was back. Could you talk about traffic for each division since Christmas or since the start of the quarter? Sabrina L. Simmons - Chief Financial Officer & Executive Vice President: Yes, at a high-level, Richard, I'll tell you that Banana has actually had the strongest traffic. So consistently, throughout the year and through the fourth quarter, they've had the strongest traffic, which is good news that when the product comes back as we're looking to it to start to come back this month, we're at least getting the footsteps in the door. Gap has had the weakest traffic on the other hand, so the whole year Gap has had the toughest traffic. Now, Old Navy for most of the year had pretty solid traffic, slightly negative, but certainly beating our read of mall traffic. The surprise at Old Navy really came in the month of November and December where it fell off significantly. It did return in January. We're not getting overly excited about that because January is a clearance month, so it's really important to see how we do on traffic in the first quarter. But, again, Banana was the strongest, Gap was the weakest, Old Navy's was pretty good up until November and December. Arthur L. Peck - Chief Executive Officer & Director: And on top of that, one of the most important metrics I look at is what is our sales over traffic spread. And so, that was what was really good. And also what makes me feel good about Old Navy, even though there was a bump in the road, which is for a long time they have had a very attractive sales over traffic spread, which to me really signifies the health of the brand. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: That's helpful. Thank you. Arthur L. Peck - Chief Executive Officer & Director: Yep.

We will go next to Anne-Charlotte Windal with Bernstein. Anne-Charlotte Windal - Sanford C. Bernstein & Co. LLC: Yes. Good afternoon. Thank you for taking my question. A question for you, Art, on the competitive landscape and in particular obviously like Primark entered the U.S. market last year. So I'm sure it's something you're tracking very closely. So what type of impact have you seen from their first store opening, so both at KING OF PRUSSIA and in Boston where I think you have a Gap factory store across the street from Primark. Thank you. Arthur L. Peck - Chief Executive Officer & Director: Yes, something that's absolutely on our landscape. I and my teams are always making sure that we're watching all the competition and certainly a new entrant like Primark, which has had track record of their success and growth very consistently, obviously, that they've had in Europe. I was with the team. In fact, Jack was there with me in the Downtown Crossing store shortly after it opened. We've been looking at it very carefully in the KING OF PRUSSIA store as well and we have our eyes really on it. Probably, the one thing I'll call out is overall two stores in a very large market haven't had a noticeable impact yes. And so if I look across our whole business, too early to call that at the end of the day. Downtown Crossing specifically where you note that we do have a Gap factory store business has remained strong in that store. Traffic is strong in that area. Big grand opening, in fact, with Primark opening as well, but it's very early days and we're on it, we're watching it. My issue there, always with a new competitor, particularly one like Primark, it does come in with very sharp price points with an everyday low pricing policy. Very intrigued to see how the American consumer responds to that against the backdrop of how the whole sector typically prices, which is obviously more promotional pricing. So early days, watching it carefully. Anne-Charlotte Windal - Sanford C. Bernstein & Co. LLC: Thank you.

And we will go next to Lorraine Hutchinson with Bank of America.

Thank you. Good afternoon. Sabrina, you cut a significant amount of costs out of the fourth quarter and I was just curious how you're thinking about the sustainability of that. If things don't track towards positive comps, are there more cuts that you could make to stay within your guidance range in 2016? Sabrina L. Simmons - Chief Financial Officer & Executive Vice President: Yes, we have proven year-over-year, Lorraine, that we're very disciplined about our expenses. Partially our structure helps us, right? So we've talked about the fact that over half of our expense base is related to our stores and over half of that is variable to sales. So when we have sales come down as they did in the fourth quarter, we get some natural variability and expenses come down as well. I mentioned in my previous response as well as in my prepared remarks that we obviously paid minimal bonus in 2015, so that was a portion in the fourth quarter as well as throughout the year, but probably especially in the fourth quarter of how we brought down the expenses and then finally marketing as well. So that is actually the very reason why I'm signaling that there may be some deleverage in 2016 as we hopefully are meeting our goals for the year. That said, we're going to continue to manage our expenses very, very tightly, so you can count on us from an absolute perspective to manage them quite tightly, and I think we've proven that we're petty adept at using the levers depending on how business is performing to bring those in line.

Thank you.

And we will go next to Simeon Siegel with Nomura Securities.

Hi. Sorry about that. Can you hear me? Arthur L. Peck - Chief Executive Officer & Director: Yes.

We can hear you.

Hey, guys. Sorry. So it's small, Sabrina, but just the other U.S. revenues were down. Is that residual Piperlime anniversarying? And maybe anything you guys can share on just the expected Athleta sales growth and trajectory there? Maybe ultimate store fleet size? Thanks. Sabrina L. Simmons - Chief Financial Officer & Executive Vice President: Yes, no, thank you for asking that question. Yes, the other is mostly made up of Piperlime, which of course we closed in the first quarter of last year, Athleta and INTERMIX. And so, yes, it looks down driven by Piperlime. If you exclude Piperlime, we're actually up a low-double-digit in revenue growth there.

Great. Thanks. And then just given the commentary around the debt pay downs, any color on expected interest expense for the year? Sabrina L. Simmons - Chief Financial Officer & Executive Vice President: No, it's pretty easy to calc. We have the bond outstanding and you guys know that's at a 5.95% interest rate. And then the term loans at LIBOR plus 75 basis points. So it won't fluctuate that much.

Great. All right. Thanks a lot. Best of luck for the year. Sabrina L. Simmons - Chief Financial Officer & Executive Vice President: Thanks.

And we will go next to Dorothy Lakner with Topeka Capital Markets.

Thanks. Two quick things, one just on the style misses at Old Navy for Art, you seem comfortable that that's behind the brand. So just wanted to make sure on that. And then for Sabrina, on the strategic actions, the costs, I know you broke it down between OpEx and gross margin for the year. Just wondering how the $25 million in the fourth quarter breaks down? Arthur L. Peck - Chief Executive Officer & Director: Yes, let me take on the style misses, and so to answer your question, am I comfortable that style misses are behind us? No. We're always going to have some style misses, obviously. Design's job is to push creatively and merchandising's job is to counterbalance that with a commercial orientation. We all across our brands and frankly across the industry, one of the bigger style misses of last year was tops went to a silhouette that was a little bit shorter and a little boxier and many women voted that it wasn't very feminine and wasn't very flattering, and it was a style that was out there, but it was a style that frankly didn't really register with a lot of customers and that's a good learning. The word femininity is one that continues to be one that I'm pushing to the front, whether it's across tops or bottoms. Probably a bigger issue. And then there was a little bit of an issue where we got little bit over-assorted. We got pretty enthusiastic about some sweater styles where there was duplicative choice. And it meant that she came in and she bought – it was an or versus an and. And, again, I'm confident that as Sabrina and I have leaned in with the team and learned about the business and looked at how we bought it in February and March and April, obviously, looking at that and making sure we're re-registering where we need to be from a style count and a trend standpoint. We're always going to have some misses. I mean the whole point of the work we're doing is to minimize the misses, and as I keep saying, guess less, guess better and fix faster. Sabrina? Sabrina L. Simmons - Chief Financial Officer & Executive Vice President: Yes, and then, Dorothy, on your question. In the quarter we had $25 million from the strategic actions. $19 million of that was operating expense and $6 million of that was in gross margin. And just to be helpful I'll say again, that full year was $132 million, $98 million was expense and $34 million was gross margin.

Great. Thanks. Sabrina L. Simmons - Chief Financial Officer & Executive Vice President: Sure.

And we will go next to Kimberly Greenberger with Morgan Stanley. Kimberly Conroy Greenberger - Morgan Stanley & Co. LLC: Great. Thank you so much. Art, you spent a lot of time talking about product initiatives at the beginning of the call. And you sound fairly confident that the various divisions are on the right track for 2016. I'm just wondering, is there some evidence you can put around that? We're just trying to figure out what is it that gives you confidence that the adjustments that are being made at the brand level will resonate with customers and generate the sales growth you're looking for? Thanks so much. Arthur L. Peck - Chief Executive Officer & Director: Yes, it's a lot of things and I continue to ask myself this as well, which is because I'm very impatient on marching against the metrics that I know we need to do. So let me just highlight a bunch of things and, again, I'm not going to go through specific quantitative analysis here. But several of the things that I feel very confident will register with our consumers as they start to fold back into the assortment. So we just had huge quality misses. Literally places where whether it was fits or the quality of the fabrication, it made the product very difficult to wear. I think I've cited this before but blazers in Banana Republic women's assortment where it was extremely difficult for the average woman to actually get her arm into the armhole. So if you just take those out and you get back to common sense quality that our customers expect, that is going to register with our customers. A second place, places where we intentionally underdeveloped the product because of either we assumed it wasn't trending or…

And we will go next to Ike Boruchow with Wells Fargo.

Hi, everyone. Thanks for taking my question. I think either Art or Sabrina, I think it was about 175 Gap stores that you guys outlined at your last Analyst Day for closure and I think you did most of those. When you're looking at the fleet right now, if we were to look, you gave us your guidance for footage this year, but if you look three years out, how does that look? Are there fewer stores? Are there similar amount but much smaller boxes? I'm just kind of curious how you think about the business over the next couple years. Arthur L. Peck - Chief Executive Officer & Director: Yes. And I would say right now we feel comfortable with the fleet size. We feel like that sweet spot where we are is a good number. We work it continuously and we're always looking at opportunities to either put a store in place like the Time Square that we announced where there'll be a Gap and an Old Navy going into Times Square. Or a store if it's not delivering or we feel like the real estate is not appropriate for the brand, we will get out of that real estate. But at the moment I'm not ready to call a number different than where we are as we look forward. Second thing, I wouldn't really focus on and I've talked about this is I'm a strong believer in the fact that we can do more business in less real estate in the same location and that is what we're focused on. Obviously you can't flip the fleet overnight into smaller stores, but every opportunity we have, whether it's a lease coming up or a reposition or an opportunity to give some space back and densify, we're going to be taking aggressively advantage of those opportunities. And Gap's got the biggest opportunity there in my view. We tried a store in China. I was in that store a couple weeks ago and super pleased by what I saw. It was a very small store footprint with a full expression of Gap brand and most importantly it worked for the consumer. And so the early days of really thinking aggressively about densifying through fixtures, through folding versus hanging, through how we use the total cube of the store, aisle width, all those kinds of things, I'm very encouraged by the opportunity there. But, again, that's not an overnight flip.

Thank you.

And we will go next to Oliver Chen with Cowen and Company.

Hi, thank you. Art, regarding responsive supply chain, is there an axis we should think about it with respect to store banners, in terms of being – more opportunity to certain banners? And then also the dimension of product category? And as you improve product, I just wanted to get briefed on how you'll sequence in marketing as you have more conviction that product is improving. And just lastly, Sabrina, on the guidance, is our merch margins assumed to be flattish? That would just be helpful. Thank you. Arthur L. Peck - Chief Executive Officer & Director: Yeah, if I think about responsive, and again responsive is a whole bunch of stuff bundled together. But let's just basically talk about one of the things that cuts out many weeks, which is making a multi-season commitment to a fabric, and then having that fabric prepositioned to cut, wash, dye and sew into. That is most powerful as a capability in cotton fabrications. And so that applies to denim, to twill, to knits, et cetera, really consistently across all the brands. If you start getting into synthetics and then obviously wool, silk and those types of things, it's less an issue there because you just can't necessarily platform those fabrics, although you can some of them, not all of them. Importantly, you can also platform yarns for sweaters at the end of the day. So if I think about the least relevant categories, probably accessories, or outerwear. Most relevant would be our core cotton fabrications which we have that are an important part of the business across all of our brands in denim and twill, in knits and fleece, et cetera. So, we wouldn't be pushing on something here if it wasn't meaningful for the entire business. Importantly, it's actually also meaningful…

Okay, great. Both of those frameworks really help. Thank you very much. Arthur L. Peck - Chief Executive Officer & Director: Yep.

We will go next to Paul Lejuez with Citigroup.

Hey, thanks, guys. Can you talk a little bit about the profitability of China in 2015, what you expect for 2016, and just how you expect that business to grow over the next couple of years? Thanks. Sabrina L. Simmons - Chief Financial Officer & Executive Vice President: Yeah, I'll start and then Art can, I'm sure, talk about it as well. So I think we said a few months back publicly that we expected Gap China to be profitable on a management basis in 2015. And in fact, we achieved that goal. So, we are very pleased with that. We would expect, of course, Gap China to continue to improve its profitability year-over-year as time goes on. So, that's Gap China. If you look at China as a whole, of course, we launched Old Navy recently and as you can imagine, just starting a new brand, that one is not profitable yet. And these things, especially in China, take a few years. But the good news is Gap China met its big milestone of profitability this year, and we expect that to continue going forward. Arthur L. Peck - Chief Executive Officer & Director: Let me talk about Old Navy and just underline that there. So, we opened a handful of stores, and I guess in my mind the sequence here – the responsible sequence, is open some stores across some relatively heterogeneous real estate, and then start getting the four-wall model correct. And that's what we have been working on right now. I am really, really big on making sure that we understand the best four-wall model, what kind of sites that's located in, whether it's a lifestyle center, or a street front store, or a value center or whatever, and also the store size. And then once we are comfortable with that, put the hammer down on opening real estate after we've got the four-wall model done. And with Old Navy, I'm not worried about real estate availability. When that business hunts, it hunts in a big way. And it also is a big traffic draw, and so there's a lot of landlord interest out there. So, the pace to me right now is going to be set by making sure that we've really got the four-wall model correctly, but again as I said before, I'm very bullish on that value proposition around the world.

Thanks, guys. Good luck. Arthur L. Peck - Chief Executive Officer & Director: Yep.

And we will go next to Betty Chen with Mizuho Securities.

Hello. Thanks. Good afternoon, everyone. I was wondering, Art, if you can talk a little bit about your initial thoughts having seen the Gap spring product inside the stores, and how it's returned to its heritage. And what are some of the goal posts that you're looking for in order to feel more comfortable investing marketing dollars behind the brand? Thanks. Arthur L. Peck - Chief Executive Officer & Director: Yep. Yeah, again as I said, you can imagine I don't have very long fingernails right now. As the spring product has gotten into the stores and I've been out in the stores a lot. And I've been out in stores a lot on an unannounced basis because I want to see what our customers are seeing versus what's been prepped for a CEO visit, and I went into the – I'll just call one store out right now, went into the store that we have, flagship store on 54th and 5th last week in New York. The product was fully expressed there, spring. We flipped that store. We brought women's down from the second floor down to the first and I walked in and I have to honestly say I'm not sure I've ever felt like that store showed up better as an expression of Gap brand. The color was evident, the femininity was clear. We had strong ownership and it's clear why we're in the business from the standpoint of women's bottoms, whether it's twill, denim, or bistretch bottoms. The accessory statement was very powerful. And so if I think about a from-to of last year, neutral color palette, unfeminine silhouettes, some quality issues in our business, lots of overlapping denim development, et cetera, I feel like the from-to is optimistic print pattern and color, feminine silhouettes, intentional denim development, ownership in the bottoms business, great accessories business. And so, it's a big step in the right direction. The most important metric I look at and I'm not going to go into the detail of this is as we're obviously working our way through product from last year clearance product, et cetera, I want to look at the new product that's current season code and understand how we bought it and then what kind of comp we're running off of it. And those are the most important early leading-edge indicators of whether we're seeing good customer acceptance of the product so that's what I'm looking at right now. And then it'll eventually aggregate obviously, if we're seeing good customer acceptance, we're overselling our buy plan that will aggregate the comp.

Thank you. Good luck.

We will go next to Anna Andreeva with Oppenheimer. Anna Andreeva - Oppenheimer & Co., Inc. (Broker): Great. Thanks so much. Good afternoon, guys, and thanks for taking our question. We had a question on athletic performance by brand. Hoping, Art, you could talk about Athleta performance during the quarter and also Old Navy, where we think it's been a little bit softer as of late. And we've seen additional promotions there. And with 15 new store openings at Athleta for 2016, I think that's reined in a little bit from historic levels. How do you think about this size of the footprint going forward? Thanks. Arthur L. Peck - Chief Executive Officer & Director: That was a lot of questions embedded in one. You did that artfully. Let me comment on Athleta first. Athleta had and I think we mentioned this and I'll just underline it, a very strong back half and I was really pleased with that. The assortment was in line. They were on trend. The product was well bought and I was really pleased with the numbers. If you look at Old Navy because you raised that specifically, we have had excellent performance out of the full family expression of activewear inside of Old Navy. We had been a little bit more promotional so you are correct on that. But that does not signal anything other than we still have excellent performance out of that business and we're seeing very strong growth. I'm really encouraged, frankly, across the whole company as I look at it right now because if you take Athleta, Old Navy is full family active expression, add to it a young girl to tween expression inside of Athleta and then a full family expression inside of Gap. We are present and accounted for…

Our last question will come from the line of Ed Yruma with KeyBanc Capital Markets.

Hey guys, thanks for squeezing me in here. I guess just first, on the role of outlet online, I know you've kind of shifted the presence and really developed full-fledged sites. So, I guess, how should we think about the positioning relative to some of your full-priced sites and whether you're intending to see some cannibalization going forward? And then second, Sabrina, it sounds like a number of other chains are able to renegotiate leases with some of the REITs. I know you guys have been very tight with your ROD, but how should we think about ROD for this year? Thanks. Arthur L. Peck - Chief Executive Officer & Director: Let me pick the outlet question up here. We've gone slow into this space. Frankly the reason we've gone there is that's where the customer is, and we've got to go where the customer is right now. The whole outlet business has continued to morph over the last decade. It used to be a business that was highly physically isolated relative to the specialty business, and obviously there's been a collision going on where outlets get closer to specialty, and the suburbs have spread out to where the outlet malls were built. And the online channel is another extension of that at the end of the day. That's where our customer is, and we felt a need to have a presence there. It's early days right now, we are in our early days of having this channel. It's very difficult to identify anything that is cannibalizing anything frankly, versus the fact that it is complementary to the existing outlet channel. But we are watching it very carefully, and we are trying to understand how it interacts number one, with our outlet stores, because that's critical, but then number two,…

Great. Thanks so much, guys. Jack Calandra - SVP-Corporate Finance & Investor Relations: I'd like to thank everyone for joining us on the call today. As a reminder, the press release, which is available on gapinc.com, contains a full recap of our fourth quarter results as well as the forward-looking guidance included in our prepared remarks. As always, the Investor Relations team will be available after the call for further questions. Thank you.

Thank you. That does conclude our conference. You may now disconnect.