Good morning, and thank you for calling the Ralph Lauren's Third Quarter Fiscal 2012 Earnings Conference Call. As a reminder, today's conference is being recorded. [Operator Instructions] Now for opening remarks and introductions, I will turn the conference over to Mr. James Hurley. Please go ahead, sir.

Good morning, and thank you for joining us on Ralph Lauren's Third Quarter Fiscal 2012 Conference Call. The agenda for today's call includes Roger Farah, our President and Chief Operating Officer, who will comment on our broader strategic initiatives; Jacki Nemerov, our Executive Vice President, will provide some product commentary; and Tracey Travis, our Chief Financial Officer, will provide operational and financial highlights from the third quarter, in addition to reviewing our expectations for fiscal 2012. After that, we will open the call up for your questions, which we please ask that you limit to one per caller. During today's call, we will be making some forward-looking statements within the meaning of the federal securities laws, including our financial outlook. Forward-looking statements are not guarantees, and our actual results may differ materially from those expressed or implied in the forward-looking statements. Our expectations also contain many risks and uncertainties. The principal risks and uncertainties that could cause our results to differ materially from our current expectations are detailed in our SEC filings. And now I'd like to turn the call over to Roger.

Thank you, Jim, and good morning, everyone. We're reporting strong, better-than-expected third quarter and year-to-date results today. Our performance was supported by sustained focus on our global brand-elevation efforts and our strategic merchandise initiatives. Around the world, customers clearly recognize Ralph Lauren for its extraordinary cachet, quality and craftsmanship. We achieved double-digit revenue growth in all key geographies in the quarter and year-to-date. We also delivered excellent profit flow-through despite unprecedented cost of goods inflation and considerable economic turmoil in Europe and a holiday season that was promotional for apparel. Worldwide revenue growth was well balanced across core apparel offerings. Emerging categories such as handbags, Denim & Supply and dresses were also important contributors to our growth. Our sales and profit plans for the holiday and fall seasons were aggressive to begin with, so to have exceeded those goals is a real testament to the vitality of the Ralph Lauren brand, the strength of our products and the operational discipline of our global teams. Our continued focus on our key growth initiatives, which include: Expanding our international presence, extending our direct-to-customer reach and new merchandising innovations have resulted in a more profitable mix of business compared to the prior year. Year-to-date, our international revenues have increased approximately 40%, more than the mid-teens expansion in our U.S. sales. We continue to make important investments in our long-term growth aspirations in Europe, such as e-commerce and several new stores of our own or our licensing partners. Our new merchandising introductions include the expansion of Lauren apparel, the launch of handbags, footwear and Club Monaco, all of which have been well received throughout the continent. And despite considerable near-term headwinds in Europe, we believe we are poised for meaningful growth over the next several years. We also achieved great progress throughout Asia in…

Thank you, Roger, and good morning, everyone. As you heard earlier, our strong third quarter and year-to-date performance was a function of broad-based momentum across several of our core and emerging merchandise categories. As the Ralph Lauren brand continues to captivate more and more consumers around the world, we are simultaneously driving substantial market share and productivity gains with our existing customers. Design-driven product innovation results in highly desirable merchandise that is equal part iconic and novel, which has always been an appealing combination for the Ralph Lauren customer. We showcase these wonderful products with focused merchandising initiatives, so when the customer sees the products in our dedicated best-in-class shop environment, the message comes to life in a uniquely powerful way. We had excellent fall and holiday seasons, as evidenced by the double-digit revenue gains across channels and regions. Our core gift strategies were presented across all key merchandise categories, and the customer responded with enthusiasm. The performance of our men's and Childrenswear merchandise was particularly strong, which was consistent with the trend we experienced throughout the year. These are categories where we enjoyed powerful leadership positions, and yet, are still gaining market share, even in the most developed markets. The multigenerational appeal of our men's product and the broad reach of our children's product from layette to infant and toddler to boys and girls continue to provide opportunities for these well-developed categories. We also experienced solid women's trends during the quarter. The esthetic of our Blue Label line resonated globally and was particularly strong in international markets. We continue to evolve our Lauren assortments to address the ever-changing needs of the modern woman. Our well-developed core Sportswear is now complemented with strong denim, active and dress assortments. Club Monaco, it's distinctive contemporary sensibility resonates strongly with both new and…

Thank you, Jacki, and good morning, everyone. As you've seen in this morning's press release, our third quarter and year-to-date performance reflects strong top line momentum, which has driven better-than-expected results. We've managed through extraordinary cost of goods inflation in a thoughtful manner, and we've achieved leverage in our operating expenses, even as we continue to fund our growth objectives throughout the year. In the third quarter, consolidated net revenues were $1.8 billion, a 17% increase from the prior year period, with double-digit growth in both our wholesale and retail segments. The increase in revenues was better than our low-teens expectation for the quarter, with outperformance in both our retail and wholesale segments. Across channels, revenue growth was supported by strong gains in our men's and children's apparel, as Jacki indicated. We also benefited from the incremental contribution of certain formally licensed operations, such as South Korea and home textile, which collectively contributed to our reported revenue growth by approximately 5%. The net impact of foreign currency translation was negligible for the third quarter. The gross profit rate of 57.1% in the third quarter was 150 basis points below prior year, which was essentially in line with our expectations, and reflects the full impact of the peak cost of goods inflation we experienced for the fall and holiday seasons. This gross margin pressure was partially mitigated by selective price increases, greater retail segment penetration, which is largely driven by our growing international retail network and accelerated e-commerce growth. Operating expenses of $761 million were 15% above prior year. And we achieved approximately 50 basis points of operating expense leverage in the third quarter, which was meaningfully better than the deleverage we had initially anticipated. The increase in operating expense dollars, primarily reflects overall business expansion, including strong retail segment growth…

[Operator Instructions] And our first question will come from Omar Saad with ISI Group.

I guess, my one question would be -- and I know you spend a lot of time talking about this quarter and previous quarters, the global opportunity. But I thought it might be an interesting chance, Roger, for you to give an update on your view on the U.S. landscape, especially in light of some of the changes going on, like one of your bigger customers, jcpenney, new management there. It seems like they're taking a new approach to the department store format. Would appreciate any of your views on that.

Okay, Omar. Where to begin? We talked in the prepared remarks about the extraordinary overall growth of our business. And clearly, the international year-to-date trends in the 40s has led the charge, but we've been surprised by the incredible resilience and strength of our domestic business. And as I said, that's come to our own direct-to-customer initiatives, as well as our wholesale. The results you've heard about third quarter from the wholesale landscape are sort of a mixed bag of strong to medium to more challenging. And I think the mid-tier channel had a more challenging third quarter. We've met with Ron Johnson and his team several times, Ralph and Jacki and I. So we've been very interested and excited to learn about his strategy and his revolution. It's an interesting time for Penneys, as they try to lead that organization in new direction, and we're very excited as everybody else is to see how that plays out. But we were at the end of a 5-year commitment to American Living, and I think upon reflection, we decided mutually to move away from that business after the spring/summer shipments. We have a lot in our plate that is very exciting and challenging, and we want to make sure our efforts and energies are aligned with the opportunities. I think, Penneys has a lot of change and transformation going on, and in some cases, that's going to take time to play out. So we've left the door open to further dialogue for the relationships, but at this point, we're going to spend our time and energy building and controlling our brands the best way we know how. It has a de minimis impact on our financial results to upon the completion of spring/summer really will be in a much smaller mode with that. Our domestic wholesale efforts focused on our existing customers, particularly with Chaps being the #1 brand at Kohl's. We think we have that channel well covered.

Our next question comes from Kate McShane with Citi Investment Research.

On your last conference call, you had mentioned, I believe that you had, 3 flagships earmarked in China. And just with the announcement today about the 95 points of closure, can you update us on -- or your view on flagships in China and the timing of those buildouts?

Sure. The 95 points of distribution is a slightly larger number than we talked about earlier in the year. As we looked at our strategies in that part of the world, we became convinced that the customer there would respond to our elevated assortments. So when we built a store in The Peninsula in Hong Kong, and one in Shanghai and saw the extraordinary reaction to our luxury products, we decided to get more aggressive about closing the B and C locations formally selected by our licensing partner. So we are continuing to look and negotiate in Beijing and Shanghai and Hong Kong for flagships. But at the same time, we're looking for additional locations throughout China and have a exploratory list that's quite long. How many of them will come to fruition at fiscal '13 versus '14 or '15 is still up in the air, and we'll keep you informed. But the flagships statements we've made in the New York or Paris or in Omotesando in Japan, we think, are critical for the brand expression. And we need to build awareness of our luxury profile in Japan. We needed to build it in Paris, and we certainly need to do it in China, not only for the customer shopping in China but for those travelers, because they shop in Seoul, Korea. They shop in the United States. They shop in Europe. And our ability to tell our story is best expressed through flagships. And so at the moment, we're hard at work looking in those 3 markets.

Our next question comes from Adrianne Shapira with Goldman Sachs.

Roger, just if we could talk a little bit about the share gains. Obviously, very impressive, but what's even more impressive is in margin opportunity, as you talk about capitalizing on growth across more compelling and more accretive geographies, categories and channels. Maybe if you could help us think about the margin's potential, those in the near-term, as I think, in the call you talked about relief in fall '12 shipments, given cost of goods but also the long-term, as you capitalize on these share opportunities across an even healthier margin platform?

Okay, Adrianne. Let me break my answer into 2 pieces. The cost of goods discussion, which has been well dialogued among the industry, we took the position, when that began to occur, that we thought it would be a period of time of extraordinary inflation in raw materials and in labor, but believed it would not sustain. So a lot of the action that Jacki talked about and decisions that we made, we think it played well to our customers. We maintained quality. We did not change, make or raw material or trim or fit. And I think we've picked up market share, because the customer has come to expect that from Ralph Lauren. We passed along certain of the price increases, and that did affect, in the end, some of our margin. But we're all seeing now fall '12 and beyond raw materials, but particularly cotton coming back to a more appropriate level. And we think our margins will begin to rise in the fall '12 and beyond period. So we think we made the right decision there. And that's playing out around all product categories, particularly those that are dominated by cotton. Separately, we are seeing a mix change that's helping our margins. One, the retail margins are higher in rate than wholesale. And as you've seen this quarter, particularly, we're getting extraordinary growth out of our direct-to-consumer business around the globe. Second, the international markets actually have higher margins than the domestic markets. And so as that growth continues and the penetration rises, that will help margins. And then in certain other product categories, as they continue to grow, including accessories and others, those should be, over time, margin-rich categories. So the mix is working to our advantage as it plays out over the next 2 or 3 years, in addition to what we think is more normalized and predictable cost of goods changes. That's the end of my answer.

And next, we'll hear from Michael Binetti with UBS.

I have just 2 quick questions. One is if you could give us a little bit of a comment on, I believe, you said there was going to be a shift to some operating expenses from third quarter into fourth quarter. If you could help us understand what that is, and perhaps what the size of that is? Obviously, it's in the guidance, but just maybe a little bit more detail. And then my question is, really, just if you could give some more conversation on Europe. I think everybody’s seeing the volatility there. In last conference call, you spoke to it. And it's -- I believe, that market's about 70% wholesale for you. So you do have good visibility from your retail partners there and what the orders will look like. Maybe we can just -- walk us from last quarter to this quarter, as far as what you're seeing in the backlog there in Europe and what the latest trends are there. And I guess, I'll just end up by give my congratulations on what I thought was a very good result in Europe for the quarter for you guys, considering the volatility over there.

Well, I'll take that first part of that question, even though that was 2 questions. And then Roger will take the second part, as it relates to Europe. In terms of the expense shift that we saw from the third quarter and into the fourth quarter, it was a combination of corporate expense areas, advertising, some e-commerce investment, some headcount expenses that shifted into the fourth quarter that we had initially anticipated in the third quarter. And also, we talked about the fact that we will have restructuring and impairment charges in the fourth quarter. So that is the bulk of the incremental expenses that shifted from third quarter into fourth quarter. Magnitude of that is somewhere in the $15 million to $18 million range.

The European environment is volatile, as you know. And having just been there recently, you actually feel it even more so in the different markets, because it's daily headlines. So with that, as a backdrop, and with no attempt to be an economist or a federal officer in terms of fiscal policy, I think there is a sense of uncertainty among the local customers about how the debt crisis, the euro crisis will be resolved and a question about whether or not the fix for some of these unbalanced country budgets will be either higher taxes or cut back in services in a way that will make for a longer-term recovery. But with that as a backdrop, our wholesale bookings, which at this point through early February are really mostly men's because we haven't really fully booked spring/fall products for women's. But the early reads by the products we have booked are up, and we’re getting market share, albeit with most retailers in Europe operating cautiously. I think they're taking a cautious view about inventory. I think they're taking a cautious view about capital, but within that, as they look to pay their resources and invest in the brands that they feel the strongest about, we feel good about our position and our opportunity. The second piece of what will happen over time in Europe is a lot of the small specialty stores are being squeezed by these conditions, particularly in markets like Italy and some of the southern parts of Western Europe. And so over time, we will be looking to build up what we call monobrand or Ralph Lauren branded stores throughout Europe, whether owned or licensed, we will go more direct to the customer. And we also are seeing customers making choice about shopping Internet. While the Internet, in general, in Europe is trailing the United States, our early reads on England, France and Germany have been encouraging. So we think we'll be taking our message more directly to the customer online through our own stores and then through taking share out of the key department store accounts in the other markets. So maybe not as buoyant as what we've reported to date, but we still think there's growth opportunities in Europe.

Next we hear from John Kernan with Cowen and Company.

Wanted to focus onto what seems to be expanding initiatives for you guys, specifically Denim & Supply and Club Monaco. I think Jacki talked about 100 doors of distribution for Denim & Supply right now, and then you talked about e-commerce launch for Club Monaco. And certainly that brand is growing in Europe. How do you look at the global potential for both of these initiatives going forward?

Well, I think Jacki said hundreds, more than 100, because for us, it's an international launch, Europe, Asia and the United States. Here in the United States, it's really closer to 200 through Macy's, and then there's the incremental doors outside of the U.S. So we're actually very bullish on that brand, into full lifestyle offering in men's and women's and accessories. And the early reads, which we are hoping, were particularly good for the denim part. A lot of times when you read about denim businesses, they're more about the sportswear and less about the denim. But in this case Ralph and the team have come up with a spectacular balance, and so we're getting at both Men's and Women's. Club Monaco, which I think you've all seen, has experienced significant comp store growth, compounded quarter-after-quarter, has really led, what we think, is a women's offering that is now being accepted globally. Here, in the United States, we distributed through our own stores, soon-to-be e-commerce in Asia. We do it through license partners and our growing our footprint and being well received in Asia. It's a look and a style that the customer there is enjoying. And in Europe, we've recently launched through shop-in-shops and department stores and are studying whether or not freestanding stores in key markets are a opportunity as well. So we're really seeing the worldwide acceptance of Club Monaco and really believe we're on a unique track there in a market where women's has not been particularly strong for a lot of competitors. So we think we're getting at that opportunity globally, and we think the brand has tremendous potential.

Next we hear from Christian Buss with Credit Suisse. Christian Buss - Crédit Suisse AG, Research Division: I have a little more thematic question regarding the up positioning of the brands in your key regions. Can you talk about how much of your assortment is at the desired price value points in the U.S., Europe and Asia?

Well, I'm going to give you a response that may not get exactly what you're asking. So if not, you'll ask me again. We think we give good price value at all ranges from Collection through Chaps. We think the product and the price value is a fair one and represents fair value for the consumer. We put a lot into the product, and I think that consistent approach to high quality has served as well. But I'm not sure how to answer that by brand or by channel beyond what I've just said. Christian Buss - Crédit Suisse AG, Research Division: I guess, if I could get some more color about what you mean by the up positioning of the brand and how we should think about that going forward?

The up positioning? Christian Buss - Crédit Suisse AG, Research Division: Yes. I guess, I'll take the question offline.

Okay. Sorry, Christian. Do you have another question? Christian Buss - Crédit Suisse AG, Research Division: That's good for me.

And our final question will come from David Glick with Buckingham Research Group.

I was wondering if you could comment, Roger, on the importance of your new hire for the head of -- you created a new position over International, Daniel Lalonde, if I pronounced that correctly. And the thought process behind creating the position, what you think he will add to the strategy and whether or not this may be a clue in terms of succession planning at the company?

Well, let me -- I'm going to broaden my answer a little bit. Daniel has been hard at work now for 2 days. So we are putting him through a crash orientation course. But I got to know Daniel over the last year through a variety of discussions. And I think he's a unique talent that's chosen to join us at a very opportunistic time. His background is steeped in running luxury businesses. It's steeped in the accessory world, both LV watches and is steeped in international customers. Every one of those subjects are high priorities for this company. To date, we had International reporting to Jacki in Asia and to me in Europe, and our desire was to make sure that the International voice is well represented holistically. And while Jacki and I want to take some credits for oversight, we also have new talent in Europe in John Hooks who joined us in the fall and Mark Daley in Asia, who joined us about this time last year. So we think we've built an incredibly talented experienced group of people now with the ability to take us to the next step. And then under them, we are cascading down through the ranks, looking to upgrade our talent in this critical subject. We set out a desire to make our business 2/3 international at some point, and we're making extraordinary progress. The only problem is the U.S. keeps growing quickly as well. So our timetable gets pushed back. The other thing I'd also comment on is we've made some other key hires over the last couple of months in product categories like home. We hired was Ian Sears, who's come in to run our home business and several other key strategic talents. We have a long-standing commitment to talent,…

Thanks very much.

And we have no further questions. Ladies and gentlemen, thank you for your participation. And that does conclude today's conference call.