Good day, everyone, and welcome to the lululemon athletica third quarter earnings results conference call. This call is being recorded. At this time, for opening remarks and introductions, I'd like to turn the conference over to Jean Fontana of ICR. Please go ahead, ma'am.

Thank you. Good morning. Thank you for joining lululemon athletica's conference call to discuss third quarter results for fiscal 2008. A copy of today's press release is available in the Investor Relations section of the company's website at www.lululemon.com or, alternatively, as furnished on Form 8-K with the Securities and Exchange Commission and available on the Commission's website at www.SEC.gov. Today's call is being recorded and will be available for replay for 30 days shortly after the call on the Investor Relations section of the company's website. Hosting today's call is Chip Wilson, Founder and Chief Product Officer, Christine Day, the company's President and Chief Executive Officer, and John Currie, the company's Chief Financial Officer. Before we get started, I'd like to remind you of the company's safe harbor language. The statements contained in this conference call which are not historical facts may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual future results might differ materially from those projected in such statements due to a number of risks and uncertainties, all of which are described in the company's filings with the SEC. And now I would like to turn the call over to Chip Wilson, lululemon athletica's Founder and Chief Product Officer.

Good morning. Christine and John will review the details of the third quarter results, but I just wanted to say a few things about the current environment. We're definitely operating under conditions that we haven't seen before, but I really believe in the resiliency of our people, the entrepreneurial spirit, and really our training program, that allows us to continue to recreate ourselves every day. We have a great team in place and we're definitely executing on all our initiatives in our strategic plan, and I think we're going to come out the other end of this as the market leader in our industry. And on that, then, I'd like to pass it on to our wonderful Christine Day, CEO.

Good morning. Thank you, Chip. Good morning, everyone, and thank you for joining us to discuss our third quarter. Following my opening remarks, I will turn the call over to John, who will go through the financial details of the quarter. Our third quarter earnings met our plan that we laid out for you on our last conference call, and our results included a positive same-store sales comparison constant currency within each month of the quarter, without material changes to our promotional strategy to drive sales. We were able to effectively manage costs and grow earnings from continuing operations by 12% versus a year ago. Before I discuss our views of the go forward macro environment, I want to also quickly point out that we have basically completed our infrastructure upgrades for the year, we have filled key roles, such as the head of allocations, opened two temporary outlets, refined our real estate strategy, set ecommerce in motion, implemented system upgrades, and rolled out JDA's advanced allocation system. So in total, we are on track with the efficiency initiatives that we talked about earlier this year. Like most retailers, we have experienced decelerating trends beginning in October that continued through November and are expected to persist. Our comps turned negative in November, proving we are not immune to the squeeze on consumer spending and heavy promotional environment today. So how are positioned and how do we respond in order to limit the downside risk for our shareholders while also protecting our brand for the long term? First, I'm happy to say that our inventory was in good shape at the end of the third quarter, down 1% in total from the third quarter last year. Looking ahead, while we did not buy the fourth quarter and spring 2009 inventory in…

Thanks, Christine. I'll begin by reviewing the details of our third quarter 2008 results. I'll then update our guidance for the fourth quarter, which reflects the impact of the new macroeconomic landscape and the impact of foreign currency fluctuations, and I'll close with a brief comment on fiscal 2009. Third quarter total net revenue increased 34% to $87 million as compared to $64.9 million in the third quarter of 2007. This increase was driven by a combination of 37 net new corporate stores opened since the third quarter of 2007, increasing 16 new stores during this third quarter of 2008, coupled with a comparable store sales increase of 4% on a constant dollar basis. The weaker Canadian dollar compared to Q3 of '07 offset this increase by reducing reported revenue from comparable stores by 6%. As of the end of Q3, there were 55 stores in our comp store base, 35 of those in Canada and 20 in the United States. Our corporate-owned store sales represented 89% of total sales or $77.6 million versus 91% last year. Franchise and other revenues, which include wholesale, phone sales, show rooms and outlets, totaled $9.5 million and represented the other 11% of total revenue in the third quarter. During the quarter we bought back three additional franchise stores and closed our final corporate-owned location in Japan. We therefore ended the quarter with 107 total stores versus 70 a year ago, 98 of which we own and 9 franchise stores, including the four operating in Australia. Gross profit for the third quarter increased $6.4 million or 18% to $41.9 million. Gross margin decreased as a percent of revenue by 660 basis points to 48.1%. Higher occupancy and depreciation expenses contributed 320 basis points of this decrease. As anticipated, we opened a greater number of…

(Operator Instructions) Your first question comes from Lorraine Maikis - Merrill Lynch.

I just wanted to get a little bit more information on the inventory balance, how you were planning that going into the fourth quarter and if you could tell us a little bit more about this module structure and how you expect that to play out in the stores?

I think we talked a little bit about this last quarter. We started anticipating both for upside and for downside to buy some of our inventory in [cyclical] modules that we could move throughout the year to reduce our inventory risk. So that's what we did going into the fourth quarter. And that's really about as much as I'd like to say about it from a competitive point of view, but we do believe that the strategies we have in place for an inventory level will help us get through this period that's coming up.

And then just to clarify the comment on ecommerce business, are you expecting to use that to clear product or you just think that you'll be able to put some of the excess product online?

We believe we'll be able to grow our business with ecommerce, and that is our first strategy. We don't really believe at this point we have an inventory problem, so I think sales growth is actually our larger focus at this point in time. So we're comfortable with our inventory levels and really just optimistic about the growth that we'll get from ecommerce.

Your next question comes from Richard Jaffe - Stifel Nicolaus & Company, Inc. Richard Jaffe - Stifel Nicolaus & Company, Inc.: Thanks very much. A quick question regarding CapEx of $36 million and what seems to be a much more cautious outlook for new stores. Should new store growth come in below the original plan of roughly 35 stores, shouldn't we anticipate a similar contraction in CapEx or are you not willing to sort of anticipate that yet?

Well certainly, even in 2008, the bulk of our CapEx related to new store growth. Of course, the other elements are refurbishing existing stores. Richard Jaffe - Stifel Nicolaus & Company, Inc.: I'm sorry. I was referring to 2009.

I'm just starting with 2008. So there was, in effect, a high IT capital spend in 2008. That would be lower next year anyway. But my point is, yes, with lower store growth you'd expect capital spent on new stores to be down proportionately. Richard Jaffe - Stifel Nicolaus & Company, Inc.: Just a quick follow on question. The store in Atlanta, the Highland store, was closed on Black Friday surprisingly. Help me understand the thinking behind that. Is that simply a showroom and I misunderstood it as a full retail store?

Yes. That's simply a showroom in the Highland. And that usually only operates three days a week, but we did open a little bit more during the holiday season. Richard Jaffe - Stifel Nicolaus & Company, Inc.: Yes. Obviously, I was disappointed for my own reasons, but customers were surprised as well.

And we did react to that, and we have extended the opening hours at that location through the rest of the holiday season. Richard Jaffe - Stifel Nicolaus & Company, Inc.: Yes. It's kind of more of a retail positioning. You mentioned store leadership and having the autonomy to adjust to this environment. Could you give us some more detail on how store managers or store executives can react, what kind of autonomy they have to manage their businesses?

We have always had a more entrepreneurial store manager, particularly on the side of community, and we really do let the store manager work to set community events. What you won't see us do in a promotional strategy is put 60% off sale tags in our window. That's really what we've tried to stay away from, from the beginning of the conception of the brand even through these challenging times, and now our strategy is much more localized community events driven by the store manager. And we feel that that has done well for us, even in the current environment, and we'll continue to pursue that strategy along with our other traditional methods. Richard Jaffe - Stifel Nicolaus & Company, Inc.: And in terms of cost savings, that really comes from the home office, both pricing on product and headcount in stores, that sort of thing?

Headcount in stores, we've trained all of our managers and we recently held sessions with each one of them reviewing all of their schedules, making sure that they put their staff against the peak sales opportunities, because it's really a two-tiered strategy. One is be more effective with your tasks and your hours and your headcount, but the other is really also make sure that you're staffing against your business. And so we make sure that we emphasize both when working with our teams, and so we have just completed a review in the last 60 days and continue to monitor that. And we've seen the business respond, both on the comp side and the upside positively from that. Richard Jaffe - Stifel Nicolaus & Company, Inc.: Just one last question. I was in a couple of the fairly new stores in the Northeast, Roosevelt Field and Garden State, and wondering what kind of feedback you're getting from the customers and from your store people regarding the store design. Both are fairly unusual, different from the Natick Mall and different from the other stores in the mall. I'm wondering what your thoughts are - obviously, it's still early in their development - but what your thoughts are about those locations?

Well, I imagine it's different for everyone who looks at it. I think the number one thing that we want to do is we're trying not to look like a chain store and be more relevant to the local markets and surprise and delight our customers. So that's our goal. Hopefully, we came through on that.

So are you commenting about the Buddha at Garden State? Richard Jaffe - Stifel Nicolaus & Company, Inc.: Well, the Buddha in Garden State, the glass front in Natick, the closed feel to the front of both Roosevelt Field and Garden State, and wondering, you know, what are you learning from these sort of different motifs? I mean, does Buddha sell more yoga wear or is it a hindrance, you're better off with a glass front and people watching other people do yoga? I don't know. I'm really just asking what you guys are seeing. The store designs are obviously very different and wondering, based on what you've learned, what should we look for going forward?

I think you'll continue to see unique designs with each storefront, particularly in mall environments, where we like to differentiate ourselves. And we've actually had very positive response to the one particularly at Garden State because it's very unusual and interesting. Natick is a little bit more traditional, which we actually honestly struggle with a little bit more, differentiating ourselves in that mall. And Roosevelt Field, the store will be [fine] as branded wear. And, as Long Island grows, I think branded wear - and this is more the challenge than anything with the storefronts in that particular store - because it's still very early for us to have entered Long Island, especially when our original plan was to [pass leap] three stores in New York City but, due to some delays, we didn't have that at the time we opened. But now that we have more stores in the city, we are seeing Roosevelt Field grow.

Your next question comes from Paul Lejuez - Credit Suisse.

Did you mention how many stores you had signed already for '09?

We have 5 deals signed for '09, and we have basically put everything else on hold temporarily and are actively renegotiating with landlords so we get down to a level that we feel comfortable with that can be sustained in a difficult environment for the first - you know, we anticipate at least the first 6 to 12 months of next year and maybe into the next year will be difficult. So we view this as an opportunity to really deleverage the rent infrastructure, and we're going to continue to focus on that.

What's your hope, though, for '09? What's an ideal number for you just given the infrastructure that you have, the overhead, the real estate teams? What's the ideal number for you to have open in '09?

Paul, as we've said, we're planning conservatively. Our cost structure at the SOC is scaled to a level that we're comfortable if it's 5 stores. And beyond that, we'll look opportunistically, but it wouldn't be realistic to pick a number at this point.

And just on that point, I would like to point out we made the move right after I joined last year to outsource everything from construction design, except for some of the base layouts that we do internally here ourselves, so we actually have a highly flexible real estate store development system.

And inventory in units, can you share that number with us?

We don't break it out by units.

Just in terms of percentage change year-over-year?

Percentage change year-over-year, I mean, our pricing hasn't changed much in our - I mean, inventories compared to a year ago are, as you've seen, slightly down, so that's reflecting the cleansing of our older inventory that we did earlier in the year. But, I mean, generally our inventory's in pretty good shape at Q3.

And could you just reiterate what you said about your inventory plans? I think you said that you didn't buy to the current sales trend for the fourth quarter or first quarter. Am I correct? Did I hear that right? And what are you planning inventories down as you think about how you want to exit the first half of '09?

As you'd expect, we do buy inventory several months in advance and therefore, for Q3 and Q1, our buy was based on a more positive sales outlook than what we're seeing and what we've guided to for Q4. Therefore, you'd expect some inventory build. Fortunately, we're heading into Q4 in a very healthy inventory position, so the inventory level will come up and we'll focus on strategies to clear that, whether it's releasing to the stores in modules or the other strategies we're using. Even with that buy versus sales trend, I expect inventory at the end of this year to be no higher on a per square foot basis than you saw last year.

Your next question comes from Dana Telsey - Telsey Advisory Group.

Can you please talk a little bit about, if you think about next year in your planning, the focus, it seems like, is certainly on execution. As you think about your growth initiatives and your products, whether it's price points, is that being adjusted? What are you seeing regionally? And lastly, you mentioned store execution system efficiencies and supply chain leverage. Where do you see the biggest amount of change next year in terms of the focus on execution and bringing it in line with the current top line environment?

I think the one are that regionally breaks out for us - and I think it's a combination of the macro environment and the number of new stores that we've opened - is the New York. We went from 1 store to 9 stores in the general area in a very short period of time, which affects disproportionately, the comp sales at our Lincoln Center store, but obviously a very positive growth story overall. So we definitely feel like we did the right thing in the marketplace, but that did affect our comps. So that would be from a regional perspective the strongest story and some of the reasons that we think that happened there. In terms of going forward into next year and our execution strategy, I think a breather, in some ways, from growth is always a healthy thing, particularly for the stores, allowing them to focus. And we're shifting less resources into opening more new stores so we can focus more on growing the business within each store. I'll always take an opportunity to do that and focus on execution when we can, so we actually view that as a positive outcome in this market and, as we've implemented a lot of new systems, the opportunity to continue to focus on those internally, so that we can get the efficiency from our merchandise systems. In terms of big opportunities for next year, we already have begun negotiations with our supply base and have seen fairly positive responses from the factories that we work with who've obviously suffered tremendous loss of business. So we have very strong partnerships there and we're working closely with each one of those suppliers. We are seeing some of the other ancillary costs and logistics dropping. So we are actively renegotiating almost every…

Your next question comes from Sharon Zackfia - William Blair & Company, LLC. Sharon Zackfia - William Blair & Company, LLC: John, I was pretty impressed by your ability to leverage SG&A on the comps you put up in the third quarter, particularly. I think in the past you had told us you kind of needed high single-digit comps to leverage SG&A, so clearly there's a lot of work being done internally which I think is good work as we go into '09. I guess I'm wondering, as you slow growth and as these initiatives play out, what's a good ballpark for a breakeven comp on SG&A next year?

You know, in this environment, when I'm guiding to negative comps in Q4, that's a tough question, Sharon. I really don't have a new answer beyond what I've said in the past other than top line outlook is lower than it's been. And as I also said, if the economic condition continues, we're likely to see overall deleverage. Having said that, as you commented about Q3, our cost structure we're working on all the time; it's in line, and we'll continue to do that. I wish I could give you more clarity into '09, but that's tough at this point. Sharon Zackfia - William Blair & Company, LLC: Maybe secondarily, I appreciate your commentary on sales trends in October and November, and I don't think they're terribly out of keeping with what a lot of folks are seeing, but you do have more exposure to Canada than most of the retailers we follow. Is there any divergence happening in Canada versus the U.S. in terms of sales trends?

I think it's fair to say that, again, Canada didn't have the extreme housing bubble situation, so I'd say the Canadian economy has been more resilient, was slower to feel the effects, but is feeling the effects. So our guidance reflects Canada is now in recession as well as the U.S. Sharon Zackfia - William Blair & Company, LLC: Are Canada and the U.S. comping about the same?

They were not during Q2. As I said, Canada was more resilient. But now it's getting closer. The Canadian comp is still a bit stronger than the U.S., but we're anticipating that they'll both be similar going forward. Sharon Zackfia - William Blair & Company, LLC: And then maybe lastly, I'll put in a plea for the investment community. Last year your reported your fourth quarter pretty late, and I guess I'm wondering if there will be any opportunity for you to at least give us a sales number earlier than what we got last year, after you get through the holidays, if there's any thought of that from the Board level?

I do remember that very, very long period where we weren't able to really talk much. I share your desire to be able to talk about our results sooner than - I think it was late March. So I hear you and we'll hopefully deliver something on that.

Your next question comes from Michelle Tan - Goldman Sachs.

I was wondering if you could help us, give us some more quantification, maybe, of the new store productivity if you took out the franchise stores that you brought back and the timing issue that you had in the third quarter. Roughly where are you tracking with the new stores?

The new stores that entered the comp base in Q3 - and I think I commented similarly in Q2. And the stores that entered the comp base in Q2 came in, you know, finished their first year significant above the benchmark that we use of $750 a foot. In Q3, that was a bit weaker, but still somewhere close to that $750 a foot on average. It's hard to comment on stores that are not open a year and just entering their first holiday season, but as you'd expect, they're tracking [inaudible] expections, as are our comp-based stores.

And then also any update on your thoughts towards hedging? Have you thought about hedging your product costs go forward from here or any new update on that?

Yes. Again, as I commented, there are three elements of foreign exchange that impact our income statement. I think it's important to realize that the biggest impact that you saw in Q3 and more so in Q4 comes from translation, which is simply - it's not margin, it's just taking the Canadian results and translating to U.S. dollars. And as I've said before, I would not consider hedging our Canadian entities' profit. So, as you say, hedging the U.S. dollar purchases for the Canadian company is something we constantly look at. There is some offset in our margins because our G&A is almost fully Canadian dollars, even though a growing amount of our revenue is U.S. dollars. So we're not looking at hedging the Canadian dollar at $0.80 because there's a thought that it's oversold relative to the U.S. dollar. Having said that, it's something we look at all the time.

And then just one last one. Any thought on giving us a sense of profitability in the U.S. versus Canada? I know you haven't before, but if there's any kind of order of magnitude that you could offer, that would be great.

No. Again, we don't break out Canada and the U.S. really.

Your next question comes from Suzanne Price - Thinkpanmure LLC.

First, on the 5 stores that you do have signed for next year, should we assume those are opening in the first quarter?

I think there is a couple or 1 of them is - at least 2 of them are new construction, so the timing of those will be a little later in the year. So there are 3 that we anticipate. And there are more stores under negotiation, but the farther that we delay that negotiation to sign those deals, then it just obviously from the construction cycle, etc. - gets a little harder to open them in the third quarter, which is when we'd ideally like to do it. So honestly, that would be the biggest barrier for us getting as many stores open in the year as we would like to have open, but we believe that it's absolutely the right thing to do, to be really tough in the real estate market right now to deleverage those real estate costs.

Yes, it seems like a lot of stores are closing. You should get a lot of great opportunities. The other question is on gross margins. Thanks for giving some clarity on that. Could we maybe talk a little more in detail about what the different things were that affected it and maybe what part of those you see as ongoing and what part should stay stable or not get worse if things stay the same?

In my comments I broke up the two large areas being product margin and occupancy. Occupancy in Q3 was significantly impacted by the new store timing, which you commented on, so you'll see less of that in Q4. And with the lower store growth model in the near term, that will be less of a factor. So that would be expected to cause less deleverage. Product margins, again, it's pretty tough to be precise but, as we commented on, we do have some excess inventory, so we'll have some strategies to clear that which could involve short term additional markdowns of one sort or another.

But would you say product margin, the issue is mostly on markdowns and outlets and not on actually manufacturing costs or currency?

We've actually managed our production costs very well, so I think there's a little bit of shift. We have the temporary outlets; we've kept them open. It's actually worked really well to keep the product fresh in the U.S., keep our costs low. While you see it maybe in margin because we have such low cost in the outlet stores, we make up a little bit of that in operating margin. So it's actually been a very sound strategy for us to pursue to continue to clear goods. Between that and the markdowns, we anticipate being able to keep pace, as well as we're more focused on loyalty promotional events. We don't see, even in the current environment, us having to do anything that says 60% - 80% off to keep inventory moving our sales at a healthy volume. So we're optimistic, given the environment, that we're actually pretty poised with a strong gross margin to do better than most in the current environment.

The final piece that I do want to comment on is currency. In Q3, the Canadian dollar was running around $0.95 for the first part of the quarter and then dropped down late in the quarter, primarily October. So the currency impact on margin was fairly minor in Q3. With the dollar running at about $0.80 versus at par a year ago, you will see more of an impact on gross margin in Q4 than you saw in Q3.

Your next question comes from Howard Tubin - RBC Capital Markets.

Have you re-thought the number of stores you think you can potentially have in the U.S. just based on what's going on in the current environment? Are you still thinking that you'll slow square footage down next year, but you can still have 300 some odd stores in the U.S.?

Yes, we still have a very active list of about - you know, even in this environment, we've identified at least 165 on our target list that we are working toward. And we've really spent a lot of time re-sequencing all of the markets, so it's not only the lift of what stores we want to be in, it's also when and in what sequence in each market. So we feel very good about the real estate strategy. And now, you know, our job is really to be opportunistic and to negotiate those costs down so that we have a very healthy portfolio regardless of what economic conditions we see.

And then just one follow up on the stores and promotions going forward. Just maybe a general sense of we walk into stores over the next couple of months, December and January, what should we expect to see? Should we expect to see one sales rack per store or two sales racks per store or will it vary? And maybe, other than price-related promotions, anything more specific you can tell us there?

You know, I think it really depends, honestly. Again, I want to stress we don't really believe at this point in time we have an inventory issue. What we're going to be sensitive to is keeping our stores vibrant and busy and the sales flowing through at an appropriate level. And I think that our strategy and the execution will really end up more with where we see the consumer over the next six month. And I think the holiday season, the next 6 weeks, will be quite telling, and then, honestly, when you get into January, we're very cognizant we'll be competing in a very discount environment for quite a period of time. And so we don't want to be on one end saying we'll never discount, but we know we need to do it in a way that's consistent with the brand, and we believe that we can have a healthy balance. More of our focus will be on - if you're a loyal customer, which I know you are, Howard will be loyalty based programs with our guests helping our partnership with the yoga studios. And so there'll be opportunities for co-promotions with yoga studios where guests might get value with their purchase. So we have a lot of activities that will look more like that than pure discounting.

Your next question comes from Liz Dunn - Thomas Weisel Partners.

The negative low double-digit constant currency comp expectation for the fourth quarter, first of all, what are you expecting inclusive of the currency impact? And then second, is that what you are currently running?

Yes, that's what we're currently running. That's the basis of the guidance. And, as I said, we're forecasting on the assumption that the Canadian dollar's at $0.80 whereas it was at par in Q4 last year. So our Canadian sales, that's a 20% additional decline. But again, it's not a reflection of the strength of the business. It's just the translation impact.

And what percent of the sales are currently Canadian?

Roughly two-thirds.

And then in terms of the comps, can you give us some sense of transaction value versus the number of transactions? I'm trying to get a sense of, you know, has traffic fallen off or are people just buying less when they visit the stores?

We have not seen any impact yet on ticket, which, as I talked about, even though we're a premium product, we have tremendous value and we do have price points that are in the $40 range for the tank to the $60s, so we do still have something for everyone. But even with that, we really are seeing a constant in the average transaction. It's definitely been traffic down, particularly in the mall environment stores, and historically our growth has been all transaction growth, so it's really been in transactions overall. Our conversion rates are still quite good.

I just want to clarify. I'm not talking about the average unit. I'm talking about I come in the store and buy three units last year and this year I just decide to buy two because I'm on a tighter budget. Have you seen that happen?

No.

Units per transaction are pretty similar.

Pretty constant. So that's why I said our conversion rate - so both the average sales ticket and the bundle - is still very similar. It's just overall traffic being down.

And then just one more if I may. Any thoughts on different categories - outerwear, running versus yoga? I've noticed dance has been pulled out of some stores. Can you just talk through that?

We are integrating yoga and dance a little bit more together, so you'll just see a shift in the new line that comes out. And we're just really staying focused on the opportunities that we see. Our running line has been so well received, we can't keep it in stock, so that's really going to be a big focus for us next year. We're very excited. We just saw some of the line for the fall and for next year, and we have a great, great running line coming up.

Your next question comes from Janet Kloppenburg - JJK Research.

Did you guys indicate what your comp inventory levels are right now on a comp store basis, Christine?

No, we didn't give that. Overall inventory levels are down, both at the store and through the system. So had sales held constant, we would have even recorded a strong inventory story or a reduction in our ability to flow the goods.

Is it fair to say that they're in line with the comp sales decline?

We did buy to - in the quarter coming up - to a stronger comp, but we also planned for contingency planning purposes to be able to move some of that inventory to other times of the year, should we need to. So we actually, as I said earlier, we feel very good about where our inventory position is for both Q4 and the beginning of the year.

So you were able then to push back receipts with your vendors?

We did a little bit of that into next year and a little bit of smoothing. But like I said earlier, we have so much more flexibility with our inventory and our buys compared to a fashion retailer because we don't have Christmas sweaters, we don't have highly seasonal goods, and the category that is a little bit more seasonal is outerwear and we're through that by the end of Q4 anyway.

And then I'm wondering on the cost side, we're hearing from a lot of other retailers that they've been able to significantly reduce store payroll, and I know that's an area that is sort of your signature, that you have great and well-trained help on the floors. I'm wondering what your positioning is there for the fourth quarter and going forward?

As I said earlier, what we made sure we did was with every single store, the senior team reviewed their scheduling all the way through the holiday. And we do review that on a weekly basis to make sure that we're optimizing where we're putting the hours against sales growth and all of the tasks that you have to do to run a business. We have actually been able to manage our hours down in response to the situation, but still keeping a very healthy sales staff targeted for the guest experience. So we feel very good about where we are with that and have been able to gain leverage on that line.

And Christine, you mentioned warehouse sales as one of the detriments to gross margin. Were these incremental to last year? I had thought you only did them in January - maybe I was wrong on that - and is this something that you'll be doing more of as we go through these tough economic periods?

No. I mean, the one that we did - which was targeted for July but ended up being like that first week of August, so it just was a timing issue; it shifted into Q3, which we talked about in the last conference call - so there was nothing additional beyond that one. We have two actually planned in January, as we traditionally do, and we might even just take that to one. So that's all that we have planned other than the two temporary outlets, one in Sawgrass and one in Mount Vernon, which is how we really clear the goods in the U.S., and that's pretty much all we're doing in that regard.

And when should we expect the ecommerce business to launch?

We still are right now committed obviously to our original date, but we are working hard to see if we can pull that forward.

And the original date was?

It was basically fall or Q3 of next year.

And that concludes the question-and-answer portion of the conference today. I'll turn the conference back over to Christine Day for additional or closing remarks.

Well, thank you all for joining our call today. Just to summarize, in this new environment we will stay true to the lululemon brand and focus on doing the right things for the long-term health of the business, while also capturing as much business as we can. I am confident that our company's entrepreneurial spirit, our ability to act swiftly, and our efforts to keep our stores vibrant through our relentless focus on community will help us through these difficult times. We want to thank everyone for their interest in lululemon and wish you a happy holiday. Thank you.

That concludes today's conference. You may disconnect at this time. We do appreciate your participation.