Good morning, Good afternoon. My name is Jennifer, and I will be your conference operator today. At this time, I would like to welcome everyone to the Kohl's Quarter One 2010 Earnings Release Conference Call. [Operator Instructions] Statements made on this call, including projected financial results are forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected in such forward-looking statements. Such risks and uncertainties include those that are described in Item 1A in Kohl's annual report on Form 10-K and as may be supplemented from time to time in Kohl's other filings with the SEC, all of which are expressly incorporated herein by reference. Also, please note that replays of this call will be available for 30 days, but this recording will not be updated. So if you're listening after June 14, it is possible that the information discussed is no longer current. At this time, I would like to turn the call over to your host, Mr. Wes McDonald.

Thank you. With me today is Kevin Mansell, Chairman, CEO and President. I'll talk about our financial performance, and then Kevin will walk through our progress in merchandising, marketing, inventory management and the in-store experience. And then, I'll follow-up with our earnings guidance detail for both the second quarter and the fiscal year. Total sales for the first quarter were approximately $4 billion, up 10.9% from last year. Comp sales for the quarter increased 7.4%, driven by an 8.8% increase in transactions per store. Unit per transaction increased 0.4% but were up more than offset by a 1.8% decrease in average unit retail. All regions and all lines of business reported positive comp sales results for the quarter led by the South East and West regions, and the Footwear and Home businesses. Our E-commerce business also generated significant growth, achieving a 50% increase in sales for the quarter and contributing 110 basis points to our comp sales. Our credit share was 47.7 for the quarter, an increase of approximately 270 basis points over the first quarter of 2009. Our gross margin rate for the quarter was 38.1%, up 48 basis points from last year. We improved our gross margin through strong inventory management and successful private and exclusive brand strategies. We would expect gross margin to increase 20 to 40 basis points for the second quarter. Moving onto SG&A. SG&A increased 7.3% for the quarter, in line with our increase in sales over our previous expectations. Store payroll, advertising and corporate expenses leveraged for the quarter. Distribution centers did not leverage due to initial expenses related to the purchase of our second E-commerce fulfillment center and higher-than-expected E-commerce sales. Credit expenses did not leverage for the quarter due to cost incurred to prepare the portfolio for additional legislative changes effective…

Thanks, Wes. As Wes mentioned, comparable store sales increased 7.4% for the quarter. All lines of business were positive for the quarter. Footwear and Home both achieved double-digit comparable sales increases. Footwear had broad-based strength led by athletic shoes. All areas of the Home achieved positive comps led by seasonal, electrics and bedding. The remaining businesses achieved comps between 5% and 7% with Women's being the strongest overall business. Areas of strength within Women's were special sizes in both updated and classic sportswear, which all posted double-digit comparable sales increases. Men's were strongest in basics, tailored clothing and young men's. Accessories was strongest in fashion jewelry, watches and sterling silver and Children's best performing categories were small sizes and toys. From a regional perspective, the South East and West region both performed better than the company. The remaining regions had comparable store sales increases to the mid-single-digit range. Total E-commerce revenues increased 50% to approximately $128 million in the first quarter, well ahead of our plan. We continue to see the type of growth in this area that supports our decision to make major new investments in capital and infrastructure in our E-commerce business to fuel our future growth. We expect an increase in comparable store sales for the second quarter in the 2% to 4% range with May being below the quarter; June, above the quarter; and July, with the quarter. The difference in expectation for May and June involve shifts in the Memorial Day and Fourth of July holidays. On a merchandising standpoint, we announced at the end of April that we were expanding our very successful ELLE-branded lifestyle collection into the Home category, with an ELLE DECOR line of contemporary home furnishings. ELLE DECOR will be available only at Kohl's in approximately 350 stores and at Kohls.com…

Thanks, Kevin. Let me share with you our initial guidance for the second quarter and I'll update to the guidance for the fiscal year. For the second quarter, we've expect that total sales increase of 5% to 7%, comp sales of 2% to 4% and gross margin increase of 20 to 40 basis points over last year. As mentioned earlier, we'd expect the SG&A to increase 10% to 11%. This will result in earnings per diluted share of $0.70 to $0.75 for the second quarter. Our updated guidance for the year is $3.57 to $3.75 per diluted share, reflecting the following assumptions for the year, which also bakes in, obviously, the first quarter actual performance. Total sales growth of 6.5% to 8%, comparable sales growth of 3.5% to 5% for the year, gross margin of 20 to 40 basis points for the year and SG&A growth of 6% to 7% for the year. This guidance does not reflect any additional share repurchases in fiscal 2010. With that, we'd be happy to take some questions.

[Operator Instructions] Your first question comes from the line of Charles Grom. [JPMorgan Chase] Charles Grom - JP Morgan Chase & Co: Just on the 2Q SG&A outlook. Can you help us a little bit in terms of if we were to exclude the fulfillment, the IT, some of the increase in the -- I assume some of the credit reserves and for the late fees, I guess what the pace of SG&A growth would look like if you were to back those costs out? And then also what would you anticipate the growth or the pace of growth to look like on SG&A in the latter two quarters of the year?

Well, I think you can back in to your last question from the guidance for the year of 5% to 7%. If you look at that, we're looking at SG&A growth in the back half of around 4.5% to 5%, if you do the math. So I guess basically, that answers your first question, which is of the extraordinary investments, in terms of E-comm, some of the credit card costs and notify folks when the late fee legislation gets finalized, if we would backed that out, we'd be pretty much with that run rate. Charles Grom - JP Morgan Chase & Co: Okay. So it's roughly about $50 million, is that about right?

It might be a little less than that. But it's somewhere between $40 million and $50 million when you throw it all together, yes. And obviously, the timing on the E-comm, we have to finish all of our investment before the fourth quarter because that's when we need everything to be ready. Charles Grom - JP Morgan Chase & Co: When are all the kiosks going to be in the stores?

The kiosks will be in all stores by the third quarter, by the -- certainly, by the end of the third quarter. Actually, quite a little bit before that, yes. Charles Grom - JP Morgan Chase & Co: And then my second question is regards to sales productivity. Obviously, that's accelerating -- that continues to be a priority for you guys, and there's some big opportunities in the South East and the South West. Just wondered if you could give us a little bit of sense for how far below those regions are relative to the total company average?

The percentage of I guess average store, which is sort of how we look at it, runs anywhere between 10% and 15% less. Now to be fair, right, those markets have significantly more new stores that are still maturing. But there's a clear GAAP between the performance in those markets and our average market that we are working really hard to make up. And as you heard from the first quarter and I think if you know Chuck, from last year, we're making up ground pretty quickly. Charles Grom - JP Morgan Chase & Co: On the credit deal, Wes, with Chase or with the other banks you're talking to, is the Board actually requiring a new deal be in place signed and delivered before? Do you guys re-up [ph] your share buyback program? Or is that you guys just being conservative and wanting just to save the cash in case the deal doesn't get done?

Well, I think right now, we still have multiple partners involved. I don't think the Board will require us to have a deal. Let's say we switched from Chase to someone else, they wouldn't require us, I don't think, to have that transfer occur. We would just need to have an agreement with someone. Obviously, it's much easier if we end up choosing Chase because there's no change there. So I don't think we have to wait for any kind of deal to be signed. We just have to know who the partner is, and then we could go forward with deploying the excess cash. And as I mentioned in my comments, we would expect to have identified a partner in early fall, so some time in the third quarter and we'd be talking to you about uses of excess cash at that time.

Your next question comes from Jeff Klinefelter with Piper Jaffray.

One is on inventory. Wes, I guess Wes and Kevin, what would you anticipate given the efficiencies from all the system implementations that you would be able to run inventory relative to comp sales growth? I mean can you maintain an inventory level on a per store basis, multiple points below your planned comp? Or how do you look at that now given the systems that you have in place?

Well, I think the way I would characterize it, Jeff, it's Kevin, is that we have an opportunity to improve inventory turnovers. So I think there's consensus on that here within the organization. So what that implies is that we would expect sales to run faster than inventory. To put a number on that, I think that's difficult to do on a quarter-by-quarter basis, but we do have an objective that our inventory is going to work harder for us. So we're hoping to continue to have quarters like the last one where we had 7% more sales per store and only 3% more inventory.

Yes. I mean, I would say with 1,067 stores, you can look at an average $15 million store and still get a wide variety of average inventory. So we have a lot of opportunities once you get down into the weeds on a store-by-store basis to improve. So I would suspect for the foreseeable future, we'll always plan our sales plan higher than our inventory growth just there's that much more opportunity still remaining.

Maybe you said it another way Kevin, you shared an in-stock improvement this morning, I guess three-percentage point increase in in-stock.

Yes.

What would be without sort of sharing, maybe you don't want to share an overall, today, current in-stock rate, but, I mean, how do you look at that in terms of potential improvement? How close are you to what you'd consider serving optimal in-stock level?

Well, we're a long way from an optimal in-stock level. I think the way Wes characterize it is the right way to do it. It's really about the store portfolio and then within the store portfolio, the individual businesses. So we're getting more improvement naturally in areas in which size optimization is taking hold and we're getting the benefit of that. We're getting naturally less improvement in other areas where it's not employed yet. So I think our biggest opportunity we know continues to be maximizing inventory turnover in average to below-average volume stores because they naturally turn slower.

Lastly, sourcing, do you expect anything baked into your 20 to 40 basis point gross margin improvement on sourcing changes for the second half?

Not really. I mean, I think, we've talked about the tight shift that we are seeing, moderating price deflation, and we're expecting for the fourth quarter, prices to be pretty flat to last year. In a couple of categories, maybe a little less. But there's other categories like Home or Footwear where prices are actually higher already. So that pricing is all baked into the guidance that we gave you on the margin.

Your next question comes from the line of Adrianne Shapira with Goldman Sachs.

Kevin or Wes, maybe help us think about the size optimization potential? It sounds as if you're talking about significant benefits, yet we really didn't see any change to the gross margin, the 20 to 40 basis points for the second quarter or for the year. So help us think about that as you expect to roll that out by year end?

Well, our original guidance was 20 to 30, and we've just achieved 48. So we did do a little better than what we told you to be fair. The size optimization is really going to benefit on the sales line. We'll get residual benefits because when you go to the clearance rack, hopefully there'll be more uniformly distributed in size. But we're really looking at sales opportunity, not a margin opportunity.

I think Adrianne that Wes nailed it. This is a sales strategy, not a merchandise margin strategy. It's definitely a sales strategy.

So in terms of the 3.5% for the year, the slightly upwardly revised comps, there is some lift related to the size optimization there?

Well, we don't -- I mean, we don't go through and to be honest, we don't go through in item by item, trying to identify the relative weight of various initiatives. It's more the composite weight that we're looking at. And I think all what we're kind of saying is that our own performance in the first quarter and last year, combined with the knowledge that we're getting lift on size optimization where we have it and that it's expanding, gives us the confidence level to say, that's raised our guidance for the remainder of the year. And then as always, we're going to work hard to do better than that. But I think that that's kind of what's in our thinking.

And then on the new initiatives, it sounds pretty exciting this new electronic signage. Could you give us a sense in terms of what you would need to see to greenlight the pilot? And then also, as you think about the full cost savings potential in terms of labor hours or signage, how we should think about what that could mean as you roll that out potentially, chain-wide?

The purpose of the pilot naturally is to look at impact on the customer and impact on the business and to ensure that the technology is consistent and serviceable and no issues of any kind. So from that perspective, that's really what we'll be examining is we have a testing motto, we have a testing process that we go through on all these things just electronic signs and another element. And as long as we check all the boxes on that, we would give the green light to move forward. On the SG&A side, I'll let Wes talk about that.

I mean the hard part of the test will be evaluating how the customer feels about it and make sure there's no effect on sales. The SG&A part is pretty easy when you -- I mean we know exactly how much it takes to set an ad. We know how exactly how much the paper signs cost. That will be the easy portion of the analysis. So we'll take out the amount of savings required to earn a return on that investment. We're not looking for an extraordinary return. We're going to take the excess savings, which I expect there would be some of those, and reinvest it in store payroll to better improve the customer experience.

Kevin, just talking about e-commerce, it sounds as if clearly you're seeing a pretty tremendous growth, a clear opportunity to invest there, ahead of this holiday season. Maybe spend some time in terms of how you think about the potential as you continue to see strong penetration, maybe some metrics you're willing to share with us in terms of the multichannel customer and what you're seeing in terms of spend, what you think this could evolve to in terms of representing a part of your business over time.

We haven't gone any further in terms of sharing numbers on e-comm than this year, I think we've kind of broadly said last year, we did about $0.5 million and we have a plan to increase that by roughly 40% or so this year. So that would imply $700 million, I guess. We actually ran 50% ahead in the first quarter so we exceeded that. So I think from the perspective of confidence, we've got a high degree of confidence. We have a lot of opportunity. When we examine our business level compared to a pretty broad array of other precautions as you all saw [ph] can come to the conclusion Kohl's probably has more opportunity than others just given the scale of our business to date. A lot of the metrics that we see in e-commerce, I think Adrianne, are things that you would hear very broadly. They're often our best customer, we do get opportunities to reach customers in markets where we don't have stores in our markets, we don't have many stores so that's always a nice thing that customers get to reach into Kohl's that way. We think the kiosk implementation has an opportunity to lift our trend in e-commerce, because it gives customers another reason to choose Kohl's if they do get disappointed in the store experience. So from that perspective, I think a lot of the other metrics, they're not going to be earth shattering to you. You would hear about them from other retailers. I think the base case is just -- honestly, we have a relatively small business with a huge opportunity to grow and we wouldn't have put $100 million of our capital this year if we didn't think we were going to get it.

As you see the opportunity to penetrate markets that perhaps don't have a Kohl's store, are you at the point where you're thinking about the growth of e-commerce changes, the way you think about store potential over time?

Not really. No. I mean the way we think about it is another element of customer service, right? It's a choice. The customers got another choice to make and originally, she could shop at brick and mortar stores then she could shop at brick and mortar stores or on our online store from her home. And now she can shop at brick and mortar stores, our online store from her home or our online store from one of our own stores. So it's just choices, that's all. It's just we want to give the customers the broadest choice to give us the biggest opportunity for share gain.

Wes, quick, can you quantify the Memorial Day shift for us, in May?

In May, it's probably 150 to 200 basis points and, obviously a little bit less than that positive. It's a negative effect in May and a little bit less than that positive to June because June's a bigger month.

Your next question comes from the line of Deborah Weinswig with Citigroup.

So in terms of same-store sales guidance, I know that Wes doesn't really believe in the tier stacks, I'll address the question to Kevin. So if we look at the midpoint of your second quarter guidance, it would indicate a slowdown of the tier stack from first quarter. Is there anything we should read into that other than conservatism?

No, I think we've tried to be pretty clear on how we look at guidance. I mean we try to take the ends of our trend runs over a six-month to year basis and say, "Hey, broadly those are kind of the low and high end that we feel confident achieving." We've tried to and I think shown a pretty good pattern of achieving those, so we're always going to probably say that our guidance might be more conservative than you might like but we just think particularly in a continued uncertain environment just is a rational way to approach things and you don't want to get ahead of yourself. So I mean we did take guidance up to be honest then I think that's because we ran a little better in the first quarter.

And then with regard to the kiosk, and I know it's still early days, but what trends are you seeing with customers who are shopping in the kiosks?

Again, I think they're kind of broadly not surprising. They're core customers, right, because they're in our stores to begin with. Our customer -- is the kiosk is easy as it is to use, it's even easier if you have a Kohl's credit card because it populates the information for shipping and billing for you with your card so naturally Kohl's cardholders are disproportionately using the kiosk right now. I think we're looking at the kiosk results knowing that since it's in a relatively small pilot, we haven't had an opportunity to market this to consumers. So I think for us to give you a better indication, we'd be able to do it after the fall when we have it everywhere, and our marketing team gets the chance to kind of include it in our differentiators with consumers, that will probably be a time for us to be able to give you a better answer to that question.

With regards to the Online business, again, it's a two-part question, what do you think is driving the above planned results? And then secondly, from a CapEx perspective, as it relates to online, when do you think we should think about you needing to build another DC?

What's driving the results frankly is we have an under-penetrated business vis-à-vis our other brick and mortar retailers. So we have more opportunity to grow than they do by default. And then secondly, it's really customer choice, right? I think you're broadly continuing to see most brick and mortar retailers enjoy more success online in growth than they are in their own stores and ours is just a much, much greater degree because of the scale of our brick and mortar business to our current online business.

And the rule of thumb is kind of how we're looking at is every $500 million, we need another DC. So I guess when we start to approach $1 billion is when we'll have to start looking to another DC. If you ask me, I think it's going to be another couple or three years. If you ask the guy right in e-comm, it might be next year. So he's a little bit more aggressive than I am. So that's kind of the rule of thumb.

Your next question comes from the line of Bob Drbul with Barclays Capital.

I guess the first question I have is can you talk about the comp performance of California in the first quarter and what the compare is that you're going up against in the second quarter?

I think we grew California in the Western region. That ran a high single-digit of which California was a part of. So it pretty much continued the trend we saw from the fall. The only difference is the rest of the country did better. So we're starting to come up against a little bit tougher comparisons. I would still suspect that the Western region would be better than the company. The GAAP may be slightly lower. And I think we talked about this at the end of last year or in February when we kicked off the year. We would expect the Southeast to continue to lead the region all year long because of what we've done there from a marketing perspective, taking the tactics that worked for us in the Western region in 2009 and putting them in the Southeast region in 2010. We've seen dramatic results in Florida. We're running strong double-digit comps down there. So I suspect you'll be hearing us talk a lot about the Southeast this year.

And, Wes, on the credit card, can you talk a little bit about -- can you talk about some of the legislative changes on the mailings that you have to send out? Can you talk a little bit about how the new legislation is going to impact the profitability of that business for you?

I think that's really an unknown at this point. It's all revolves around the late fees, and if the late fees remain sort of in the status quo area, I don't think there would be a material impact on our business. What we saw in the first quarter from late fees was really just a reduction in the number of people who were paying late. That's a short-term issue for us but longer term, we expect to get some of that back in the back half or into 2011 as you should. That should lead hopefully to lower bad debt expense. We are seeing improvement across all buckets of our delinquencies so I haven't been able to say that for a quarter in a long time. So hopefully that trend will continue, and we'll start to see some of that benefit in the back half but it's really, at this point, more of a timing issue than anything else.

Kevin, just to have a couple of product questions for you. I think you talked about the Helix piece, I think those looked really good in the stores but I was wondering if you can comment on the sales of Girlfriend jeans and maybe talk about the Sienna Ricchi handbags that also seem to be doing pretty well.

Broadly, denim I would say is really strong across the store. The first quarter benefited from warmer weather so seasonal categories like shorts particularly outperformed. From a handbag perspective, accessories was one of our strong performing businesses that had a I think mid towards the high-end single-digit comp performance and handbags was exceptionally strong within there. I think, Bob, that that's an area in which we think we have a lot of share opportunity, our share in accessories particularly in the handbag category is not what we think it ought to be given our share women's apparel. So I would suspect whether it's that brand or brands like ELLE or some of our exclusive brands like Vera Wang and Dana Buchman. You're going to see performance that outpaces the store.

Your next question comes from the line of Michelle Clark with Morgan Stanley.

First question is on your gross margin guidance for the second quarter, looking for an increase of only 20 to 40 basis points. Yet in the second quarter, you're going up against a much easier compare relative to the first quarter. So just wondering, is there anything you're seeing in terms of the competitive environment, you need to get more aggressive on pricing or you just view that as a degree of conservatism?

I wouldn't call it conservatism. I think it's just basically at the beginning of the year, I think we said, west 20 to 30 basis points. We did 48 so I think we felt like we'd look at the rest of the year and said there's probably a little more opportunity...

Yes, and we're also looking at how the merchants plan the quarter so sometimes that's a little different. They may be getting in and out of a business different than last year so it's something that you guys want to be able to use comparisons from L. Y. on. There isn't anything special though in that picture.

You had mentioned you obviously expect the credit card deal to get announced in the early fall. We'd love to hear your thoughts on share repurchase versus dividend or potentially both?

I think you'll hear our thoughts on that after we meet with the board in August during our annual review of the five-year plan. We have a fairly significant turnover on the board from last time we started doing a share repurchase. So I suspect that will be part of the discussion, dividend will be part of the discussion. We've been soliciting our shareholders' feelings on that. Like anything else, there's some on the repurchase camp, and some on the dividend camp and we'll talk to the board and make the best decision we can for the majority of the shareholders.

And then last question on the remodeled stores, it sounds like a very positive early reads there. Any metrics you can share with us in terms of lift in sales productivity margins, et cetera?

It's early to tell because obviously, we had a pretty consistent drop. We've been able to mitigate that down to about between a 1% and 2% drop the last couple of weeks. We obviously get a big bump from re-grand openings. So for me to quote you a number now, it would be way too high. We really have to see how we do through the rest of the year but I guess I'll tell you that we were very happy with our last wave of remodels and the marketing we associated with that from last year and seen a lift there. We took those learnings and are applying to 2010 remodels. But I'm not going to tell you it's going to be a huge lift because we're not really changing the mix of what we sell, like some of the guys like Target that put in P-Fresh and things like that. They're going to get a bigger lift than we will. We're doing this partly as a cost of doing business and partly as a differentiating factor, any sales lift would be a bonus for us.

Your next question comes from Lorraine Hutchinson of Bank of America.

When you think about your inventory purchases, I know you spoke about flat pricing in the fourth quarter. If we do see inflation start to creep in early 2011, are there any things that you can do to try to offset that or will you have to try to take some price to offset it and keep your margins stable?

I don't think there's any question we're going to see some inflation and 2011 as I mentioned in the call there's already been inflation in some categories, categories like Home have already experienced that over to some extent as well. So the way I would characterize, Lorraine, is just like when prices were coming down rapidly, which they have over the last few years, as prices start to moderate upwardly, it's our challenge to mitigate that to the consumer. And I think the team did a really good job of mitigating the downward impact of deflation over the last few years. I mean our average unit retailers have actually held up really well. We've been up in this kind of environment and I suspect they'll do a good job the other way. I mean there are things that can be done certainly selectively committing earlier for fabric, certainly looking from a percentage of business standpoint mixed in lower wage markets to a greater degree, markets like Vietnam or Indonesia. Season duty-free markets where we can, markets like Jordan would be a good example will probably accelerate the use of reverse auction. We use reverse auction now but I suspect we'll accelerate it in an environment where prices are going up. Reengineering is always an opportunity though I would emphasize to you, we won't downgrade quality. So there are clearly strategies that can be employed that are contemplated and they're in impact right now.

Your next question comes from the line of Richard Jaffe of Stifel, Nicolaus. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: I'm wondering if there's changes we should anticipate in terms of marketing to a direct channel, you think we should watch for in terms of reduction of mailing or perhaps increase in other ways to reach a direct customer. I wondering what your thoughts are there both in terms of dollars and venues.

Clearly, we're spending more money broadly on digital marketing. It's different depending upon the particular area of digital. But digital marketing as a category of investment is way up this year and it will continue to be way up for the rest of the year. Some of that is just the trends in consumer use of media, right? People are using digital more than they use to and we're just responding to that and some of it is to support the online environment as well. I mean we think generally, Richard, the way I would think about it is we just see this all as choice for consumers, and so we really have kind of one marketing message and we're highly focused on productivity. And so we're going to put more and more dollars behind the things that are growing in importance and giving us better productivity rates and less dollars in the things that aren't and hopefully get a better result because of that. But it's kind of one big effort. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: Just a quick question for Wes. Given remodels, how many stores are less to do or how many stores have been remodeled in the last three years or new in the last three years.

If you take the combination, I think the way we've account [ph] for it is over the last five years over 50% of our stores have been either opened in the last five years or have been remodeled. So that's the kind of way we would look at it. If you want to go back, we did 51 last year. I think we did 29 the year before that, '06 we didn't really do any, so we probably were in the 20s to 30s for '07 and '08. And then last year with 51, this year 85. I would suspect going forward, we'd probably remodel about 100 stores a year. That will keep us on a path of having a store remodeled every nine to 10 years. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: And is there any significant cost attached to electronic signage, electronic price signage?

There's a capital investment naturally from both primarily hardware but also software development. But as I said for this year, we had contemplated the pilot 100 stores and the guidance that Wes gave at the beginning of the year. So there's nothing new to tell you on that. We would still have the same guidance in capital as we had before. For future years, of course, it's going to have all to do with how pilot does. We're excited about it but we'll see how the pilot does. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: And then benefit, there's really two phones, obviously, less labor to change price of their signage but also perhaps in ability to maximize gross margin dollars to get the price is just right?

I think if the benefit is really on the expense side, it's definitely ad set, no question we don't have to send people around the store to change all the ad signs several times a week...

In paper.

Paper is not a big deal. The customer service benefit, of course, would always be the confidence that they have that the price that they see on the sign is the price that they're going to get at the registers since it's driven by the same technology. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: And the margin side of things?

Well, I don't know that you can really say there's any margin impact right now. We're not changing by employing electronic signs, we're really not changing the way we do business. We're just changing the way we communicate what we do to customers. Richard Jaffe - Stifel, Nicolaus & Co., Inc.: I guess some nimbleness, maybe ability to react more quickly, that's all.

Yes, to be honest, right? If you think about the way we've driven our business through marketing and I think we're pretty nimble in marketing, but we're not that nimble that we could use e-sign marketing to change dramatically. I would expect that there will be cases particularly in the heat of the season like holiday that if the e-sign works well, then it will give us the opportunity to rewrite or change prices within the context of ranges that we might be doing. But that's not really a driver here.

Yes, we're not going to change the price of shorts when it's hotter or anything like that.

Your next question comes from Dan Binder with Jefferies. Daniel Binder - Jefferies & Company, Inc.: My question is regarding private brand and exclusive brand penetration, you guys have just done a tremendous job taking that higher. Any thoughts on how high is high and maybe just limiting that to the next two years or so, where you can get that? And then similarly on credit share, it's been marching higher, do you see a ceiling on that?

It's Kevin, Dan. On the private and exclusive brands, I think there's just no question that if we deliver the right product, the penetration is going to continue to march higher over the foreseeable future. Just the weight of the growth and the classifications we're selling, many of these private exclusive brands is driving that. And then of course, we continue to have new brands, like this spring, we have three huge new brands that weren't in our assortments last year that will help it. We also, to be honest, looking at our performance in the last couple of years, some of our really big private brands, SONOMA, Croft & Barrow particularly, have not enjoyed the success that we would have expected. We are starting to get that now. I think I mentioned those brands actually ran on double-digit comp in the first quarter, which was pretty exciting. So that will probably help. There's probably some limit in private brands, we want to continue to be about brands people know and recognize so highly focused on national brands but that doesn't preclude us from continuing to add national brands that are exclusive for Kohl's. So the next couple of years are going to be positive I believe on the credit card...

Yes, on the credit side, I mean the credit share 47 7, I guess it was this quarter. We talked about regions externally. We have regions that are in the mid-50s, so I guess that's kind of a ceiling but I still expect them to get some growth within the market being in the mid-50s. We have some that are close to 60. And we also have regions that are newer, that are in the low-30s. So as we continue to get share, mind and get the marketing message of the value that the Kohl's charge card provides, I think we can continue to grow share indefinitely. Daniel Binder - Jefferies & Company, Inc.: Can you give us any color on the economics of that credit transaction and what it was in terms of average ticket multiple of what you would see off-credit and EBIT dollar on average transaction versus an off-credit investment.

The average Delta between a charge card transaction and a bank card is about $10. So you're talking about a transaction that's in the 60s in the bank cards, kind of in the low 50s. That's very similar to debit and obviously cash and check are very low kind of in the 20s. So it's a combination not only ticket but frequency. Obviously, your Kohl's cardholder is more loyal and it's going to come more frequently than a bank card holder. Daniel Binder - Jefferies & Company, Inc.: And then from a competitive standpoint, do you envision the environment getting any more competitive than what we've seen in the last quarter? Are you anticipating that at these in your marketing plan?

I think more of the same is the way we're thinking about it. It's still an environment where if you compare it with what people are spending now to what they spent on other categories two, three or four years ago. There's substantially less dollars being spent and so the fight for share is intense but I wouldn't call it any more intense or any less intense. I think it's just kind of more of the same.

Your next question comes from Erika Maschmeyer with Robert W. Baird. Erika Maschmeyer - Robert W. Baird & Co. Incorporated: Just a follow-up on the e-commerce investments. Do you expect to have anything up and running for back-to-school in terms of the new platform, is that necessarily from a volume perspective? And then do you anticipate e-commerce and credit investments to continue into Q3 at all and then how much would that be kind of relative to Q2?

I would say a lot of the investments will be done in e-comm in the second quarter but we'll have more done in the third quarter. Though we basically lock our systems down in October and don't make any changes going into the fourth quarter, so everything has to be done by then. In terms of a split, we're obviously going to try to get as much as we can on the second quarter so I don't want to start projecting the third quarter. I have a much better idea once we get through this quarter but I think I gave you guys SG&A guidance kind of implicitly for the fall season that you can use to model out the year. In terms of credit, I hope this would be the last modification of our customers regarding legislative changes. So I don't expect to have any of that in the third quarter. Any additional revenue pressure from a credit perspective, we'll have to evaluate after the results of the late fee legislation come out and what we think will be kind of late June or early July. Erika Maschmeyer - Robert W. Baird & Co. Incorporated: And from a longer-term perspective, could you talk about other areas where you think you could see benefits on SG&A going forward like advertising, distribution center and payroll?

I think broadly and maybe Wes can give a couple of specific answers [ph] but broadly, the areas we're focused on naturally are the big areas and the two big areas we have that are variable are advertising and store payroll. Wes talked earlier about one of the things that we're -- one of the reasons we're so strongly looking at electronic signing is that it could have positive benefits for us on store payroll, which we will probably reinvest into better customer service but we give a better result because of that. And on advertising, it's really all about productivity. It's just making our dollars work harder. I think the best analogy I would give you Erika, think about it as it relates to how we've approached the inventory management. Use technology to drive better productivity to get better results. That's how we're thinking about advertising.

Yes, at the end of the day, I think we've talked about this many times and in a lot of cases, it's all about market share and growing sales because a lot of our costs are fixed so we talk about it every call. We probably bore you guys to death talking about it, but that's the way we're going to get to where we want to be from a sales per square foot perspective and also that obviously would flow through to operating margin and then return on investment. So we don't have a lot of areas that need a lot of slashing. We have a very efficient distribution centers. We have a pretty lean corporate culture. I think we run our credit card portfolio pretty lean as well. So it's really going to be about those two big areas Kevin mentioned, but more importantly, just getting sales productivity back to where it should be. Erika Maschmeyer - Robert W. Baird & Co. Incorporated: Can you remind us, do you have any costs that you took out last year that you would expect to come back this year?

No, we tried to be smart last year and not do anything that was one time that would have to come back so I don't have anything I can think off the top of my head, other than the one time that's coming back.

And your last question comes from the line of David Glick with Buckingham Group.

Just a follow up on Dan's question on the private and exclusive, what areas in terms of categories are you really focused on for additional private and exclusive, Men's really hasn't seen anything particularly new in a while. And then secondly, we've seen really strong retail sales trends in the month of March and into early April, and that seems to have kind of cooled off literally and figuratively as the second half of April unfolded and just curious, your thoughts on that as it just kind of the ebb and flow of the weather and the business that you see at this time of the year and if you can give us some sense of what you saw over the Mother's Day period would be helpful.

On the private and exclusive, I mean the way I would characterize that is that our probably main focus is on taking the really broad array of brands we've rolled out in the last two to three years and ensuring that we maximized the scale of those brands within the areas we've launched them in. And more importantly, in areas in which they have opportunity. So a really good example would be ELLE has been incredibly strong. In apparel, we added it into accessories and handbag. It's been incredibly strong as well. And the ELLE Decor expansion into Home, we think is going to be more of the same. So there's lots of examples of that. So that I would say is our main focus, David. In terms of categories, Men's is probably got more opportunity maybe than others but there's nothing to report there and our Men's business continues to be good. And the exclusive and private brands that we have, they are doing really, really well. Sales, we don't comment on sales during the month. The guidance that we gave you contemplates all of the things we think about always which is year-over-year weather patterns and particularly holiday changes with us, because we do drive our business via advertising. But beyond that, there's nothing to comment on in May.

Thanks, everybody.

Thank you for joining today's Kohl's Quarter One 2010 Earnings Release Conference. You may now disconnect.