Good morning, and thank you for calling Ralph Lauren's Fourth Quarter Fiscal 2013 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 Fourth Quarter and Full Year Fiscal '13 Conference Call. The agenda for this morning's call includes Roger Farah, our President and Chief Operating Officer, who will give you an overview of the year and comment on our broader strategic initiatives; Jacki Nemerov, our Executive Vice President, will provide some merchandising highlights; and Chris Peterson, our Chief Financial Officer, will provide operational and financial perspective on the fourth quarter, in addition to reviewing our initial expectations for fiscal 2014. After that, we will open up the call for your questions, which we ask that you please limit to 1 per caller. Today's call -- on today's call, we'll 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 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. Now, I'd like to turn the call over to Roger.

Thank you, Jim, and good morning, everyone. We're reporting excellent fourth quarter and full year fiscal '13 results today. The 42% earnings per share growth that was achieved for the fourth quarter and the 14% increase for the full year, excluding the Rugby-related charges, were a function of strong product acceptance and exceptional profit flow-through on sales. The double-digit earnings growth was a continuation of a multiyear trend that highlights the extraordinary creativity and operational excellence that characterizes our company. It also showcases the powerful diversity of our operating model across merchandise categories, channels and regions. This is particularly true for fiscal 2013 as our global teams successfully manage through a challenging macroeconomic environment during the year. Fiscal '13 was a year of important progress on each of our long-term strategic growth objectives. With respect to our direct-to-customer efforts, retail segment sales increased high single digits in constant currency and that growth was mostly comp driven led by e-commerce. During the year, we commenced an exciting multiyear initiative to grow our brand presence in Asia, with a particular focus on Greater China. We also significantly enhanced our global e-commerce capabilities. We have built a talented team with global oversight, supported by 3 strong regional teams. In addition, we extended our reach in Western Europe, launched our first Asia site in Japan and launched Club Monaco e-commerce capabilities in the United States and Canada. We are also in the final months of doubling the size of our customer fulfillment center in North Carolina. E-commerce will remain a critical area of focus and investment for us over the next several years. Retail now accounts for 52% of our consolidated revenues, up from approximately 40% 5 years ago, and we expect much of our future growth to be direct-to-customer led. Our second major…

Thank you, Roger, and good morning, everyone. I'd like to expand on 2 of the themes Roger touched on in his opening remarks, the first being the operational excellence that is a defining characteristic of our company; and the second being the incredible market share gains of our North American wholesale business. The operational expertise of our global supply chain organization is one of the company's most significant competitive advantages. Over the years, our sourcing and logistics team have navigated through not only the growing scope of our global operations across regions, channels and product categories, but also dynamic changes in input costs, all while meeting the company's high standards of innovation and quality. Their ability to consistently execute with excellence, delivering exquisite, high-quality product while still achieving cost savings and other efficiencies, has been an important driver of our sales and profit growth. Much of the organization's success is the result of the steady investment in talent and capital we've made to develop these world-class capabilities as our business has evolved. In fiscal 2014, our supply chain organization will ensure the seamless integration of Chaps men's sportswear and our Australia and New Zealand operations, the doubling in size of our U.S. distribution center for RalphLauren.com and our organic business expansion. I know that many of you have an interest in input cost dynamics, so I'll offer some perspective on our input costs for this year. Fall '13 costing is expected to be modestly below the prior year period. This is a function of lower raw material costs that are mostly offset by higher wages and our own plans to invest back into the product, whether through materials and trim or construction details, in order to deliver the most compelling product to the consumer. As we look even farther ahead…

Thank you, Jacki, and good morning, everyone. As you've seen in this morning's press release, we're reporting strong fourth quarter profit results today. Let me start with a brief recap of the quarter. Consolidated net revenues rose 1% to $1.6 billion, reflecting retail segment growth that was partially offset by a decline in wholesale shipments. Excluding the impact of foreign exchange and strategic decisions to discontinue American Living and close certain stores in Greater China, revenues increased 4% in the fourth quarter. The revenue results were below the expectations we articulated in February due to unseasonably cold weather that hurt early spring merchandise sales and foreign exchange. For the full year fiscal 2013 period, net revenues grew 1% to $6.9 billion and were up 5%, excluding the impact of the strategic decisions and foreign exchange. Gross profit margin of 59.3% was 220 basis points greater than the prior year period. The improvement in gross profit margin is primarily attributable to lower input costs, beneficial channel and product mix and operational discipline. Operating expenses of $792 million were in line with the prior year, as we were able to offset higher investment in our growth initiatives and approximately $15 million of impairment and restructuring charges with operating expense savings through productivity gains. Operating expense rate of 48.2% reflects 50 basis points of leverage compared to the prior year, which was better than our expectations due to disciplined expense management across the organization. Operating income rose an impressive 33% to $182 million in the fourth quarter, and operating margin improved 270 basis points to 11.1%. Strong profit flow-through was a function of the extraordinary operational discipline of our global teams. For the full year fiscal 2013 period, operating income increased 8% to $1.1 billion, and operating margin improved 100 basis points to…

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

Hoping to focus a little bit on the revenue line in the quarter. I know you guys had guided to something like a mid-single-digit increase in the fourth quarter. Obviously, it came in a little bit below that. I assume the yen was part of the factor there. Could you talk through some of the other factors that led to the slight revenue disappointment? Are there macro things going on out there? Is it weather related? Is it broad-based? Is it focused in certain areas? And then as you think about the guidance -- the revenue guidance and the top line kind of profile for this company for '14 and above, where do you think the kind of key factors are and the opportunities, or do you still see just a kind of very broad-based growth across geographies and categories and channels?

Okay, I'll -- thanks, Omar. Let me start with the revenue underperformance versus our guidance. So when we provided the guidance at the beginning of February, we were coming off a month of January where we had a very strong revenue growth, and we were expecting February and March to be somewhat comparable conditions to the prior year. There were really 2 things that happened during the months of February and March that led to the revenue being slightly below our previous guidance. The first was we had an incredible weather pattern this year, with much colder conditions in both North America and Europe, as well as Northeast Asia, that led to a tough February and March for seasonal spring product. The second was, to your point, on foreign exchange was foreign exchange. The yen continued to devalue during the quarter and Japan, for perspective, is our second largest country from a revenue standpoint. So those were really the 2 factors that drove the revenue versus guidance in the quarter.

I'll take the second part. So Omar, in terms of the go forward, I think we would identify the following as the key growth engines that would provide the distortion. Obviously, e-commerce and retail, we've talked about it, others have, customers making a clear choice to shop online, whether that's through our wholesale partners where we're experiencing strong growth with our wholesale partners online or whether it's in our own direct-to-consumer, whether it's Ralph Lauren or Club Monaco. We've seen an extraordinary response to the Club Monaco website in the first 9 months it's been open. And so on and on and on around the world, the customer is indicating to us they're comfortable shopping or getting product information, buying in the stores. And a lot of that interest is shifting to mobile. So the growth in mobile that you're seeing in the industry in general continues for us. I would say, the other headline is the Asia Pac region, with all the puts and takes, should provide distorted growth over the next couple of years. The bolt-on of Australia is relatively small, but it completes the region for us in terms of owned territories plugged into our shared service hub network through a lot of the infrastructure. I think it will be a nice positive addition. And then I think the new product categories that we danced through quickly in the script that we brought back in-house over the last 3 or 4 years, that have gone through some form of rehab, are now beginning to show their future potential, whether it's Denim & Supply, which Jacki talked about, or some of the accessory categories, or even some of the changes we've made in the Home business. And we think those will provide future growth. I think we're viewing Europe cautiously. The trends there continue, with strength in the northern part of Europe and then softer in the southern part. I think our team did an outstanding job managing through that to deliver a top line and even a better bottom line performance in the year. But I think we're planning that a little more cautiously going forward.

And next, we'll move on to Kate McShane with Citi Research.

In your guidance, you highlighted it was a tale of 2 halves with the operating margin. However, can you give a little bit more detail around the cadence of spend throughout the year, and how we should think about gross margins for the year as well?

Yes. So I think on that, I would say the investments in the strategic growth initiatives are really going to be spread relatively evenly throughout the year. But if you look at the licensed businesses that we're taking back in Chaps, in Australia and New Zealand, we're spending a disproportionate amount of money transitioning those businesses to be wholly owned in the first half of the year and we expect them to be significantly more profitable in the second half of the year. We also -- FX is relatively evenly spread throughout the period. And so I think it's really a function of the take back of the licensed businesses that result in the operating margin improvement in the back half versus the front half.

I guess the other thing I would add to what Chris said is that there are certain subjects like the Fifth Avenue store that we've talked about that we're planning to open next fall, September or October, that are very expensive and carry a lot of rent and we'll be carrying that for over a year without the benefit of any sales. So there are some of these big projects in Asia, here in New York on Fifth Avenue, that we think are extraordinary opportunities for us long term, will establish the brand, Asia will be Ralph Lauren, here will be Polo, and there's a cost of carrying those for 12 months until they come online with sales. So that's feathered in. I remember this time last year, we talked about fiscal '13 being a tale of 2 halves and I think there was some concern that we had anticipated more of the profit to come in the back half of the year. We're pleased to have delivered on that. And for different reasons, we're facing a similar situation, as really our profit profile is being rebalanced more to a 50/50 split than what it had been for many years, which was a heavier orientation on first and second quarter and a little bit lighter in the third and fourth quarter. Some of that's also coming from the growing retail business, where we get some distortion in the back half of the year versus the first half.

Next, we'll move to Liz Dunn with Macquarie.

I guess my question was regarding the Polo stores. Can you [indiscernible]

Yes, we'll move on to the next question. Ms. Dunn, your line, they cannot hear you. We'll move to Christian Buss with Credit Suisse. Christian Buss - Crédit Suisse AG, Research Division: I was wondering if you could provide some perspective on what's embedded in your expectations for the European business for fiscal '14. And if you could provide some color on when we start lapping the distribution closures or some of the trimming of distribution.

Sure. So I think, as Roger mentioned in the prepared remarks, the underlying business in Europe this year was up low single digits on a comparable basis. We're expecting that to actually accelerate a little bit as we get into next year, from low single digits to a little bit faster than that, mid-single digits type of range. Part of the reason for that is because we have a plan to enter some of the under-penetrated geographies of Central and Eastern Europe and the Middle East that we expect to contribute to the sales. Relative to the proactive reduction in shipments that we've made in the wholesale channel in Southern Europe, which you saw generate strong profit results in the European numbers that we just reported, we'll largely be through that from an annualization standpoint after the end of this first quarter of fiscal '14. So when we get to the second quarter, we feel like we will have appropriately rebased that business.

Next we'll move to David Glick with Buckingham Research Group.

Just 2 questions. One, Chris, if you could help us understand what the constant currency direct-to-consumer comp guidance is for FY '14. And then secondly, Roger, any early learnings from your new store openings in China? And it sounds like you're potentially accelerating some of those openings, talking about a flagship, which obviously is an important investment and presence for you in China. So some of your early learnings and the pace of expansion in China.

Yes, I guess we've shied away from giving, as I mentioned, I think, on the last call or the call before, constant currency comp guidance. But what I would point you to on the first question is our guidance for the year is 4% to 7% revenue growth. Within that, there's 150 basis points of negative foreign exchange. So that would get you to 5.5% to 8.5% sort of all-in growth. And included in that is this 350 basis point improvement from the result of the Chaps and Australia business. So I think you can sort of back into the range that we're shooting for, for the year, which is sort of an underlying growth rate in the mid-single digits type of range.

And I would respond to the second part of your question as follows. We've had a very interesting year learning about the Chinese consumer. And while the first profile is how do they perform in China, they're obviously a big part of the shopping trends in Korea, other parts of Southeast Asia, Europe and the United States. So we're learning about that customer through the really global footprint we have. But fundamentally, and I think Jacki touched on this, the best products sell worldwide. And so with our orientation towards apparel, we have to be mindful of the geographic and climate range in China. The northern part of China is almost similar to the coast of Maine in terms of its weather and it goes all the way down...

[Technical Difficulty] Mr. Hurley, please go ahead.

In case nobody heard it, we were up 42% in EPS. I don't know if that got through. Maybe I'll start again. I was talking about China. I'll quickly summarize. We've learned a lot about the Chinese business. We've gotten a lot of feedback from the customers both in China, in Southeast Asia, in Europe and the United States. The good news is they are gravitating towards the same looks and categories and items. They clearly want luxury. We've created some unique products that respond to that market and they've really bought that well. And so every day, we're learning. We know we have a long way to go to tell the Ralph Lauren story in that market. We are investing and committing to key flagships, but in the key cities. I think one of the things we'll try to avoid is chasing the second- and third-tier cities too early on in our development of that market. I think we have to be important in Hong Kong, in Beijing, in Shanghai and some of the key markets before we start going out to the second- and third-tier cities. I also expanded my answer to include Denim & Supply, and in fact, the Polo stores. Because while we're in the early stages there, we think those are key high growth, brand-specific, high-margin stores. And the early reads on a more classified approach in East Hampton has been very strong, with color multipliers selling. Denim & Supply stores that we've opened internationally, about a dozen, 1, and today, 2 in the U.S. are really selling denim. And the key to that customer is getting a fit on the denim bottoms that resonates with them and then you can build the top business. The early trends there are reflecting a 30% penetration of denim bottoms, which is very high in that world. So I think the direct-to-customer business, whether it's flagships in Asia or more classified smaller locations, we're beginning to feel confident about the path we're on.

Next, we'll move to Erinn Murphy with Piper Jaffrey.

I appreciate the detail, Chris, on kind of the key investment areas for this year. I wanted to focus just on the SAP in the second phase. So I appreciate the kind of key detail on the investments for the year, and I wanted to focus on the second phase of the SAP implementation. I guess, just given the global complexity of your business model, once this phase has been tested and implemented, could you just maybe provide a little more context on some of the key applications of this kind of second phase of this system, and how we should think about kind of the meaningful margin leverage going forward in the model as we kind of exit fiscal '14 and get into fiscal '15?

Sure. So the phase of the SAP implementation that we're in right now really focuses on the global product procurement and the North America wholesale order-to-cash, which is a significant part of our global systems infrastructure. And as background, just to step back, because in the history of the company, the company started by licensing a lot of the geographies and a lot of the product categories, as the company brought those businesses back in, those businesses came back in with each on a different legacy system. And so the company's starting point from a systems infrastructure is a large number of systems that are not integrated and not as connected as they could be. And so we believe the implementation of SAP will allow us to get to an integrated global system that will drive significant productivity because, for example, we'll be able to put in a style once and that style will be consistent around the world, whereas today we have to do that multiple times around the world with multiple different codings and with manual interfaces from one system to the next. That process will all become automated. The second thing is that we'll increase our visibility to data. So today, where it's very difficult to understand, for example, how many of a specific item we're selling around the world, once we get to common nomenclature and common system, that will become much easier and we believe we will be able to leverage that information to drive procurement savings. The other point I would make on this is that, because it's a fairly significant endeavor, we've broken up the implementation into 3 waves because we didn't want to go with an approach where we tried to implement everything at once. And so the first wave, as I mentioned in my prepared remarks, will be a wave that tests the majority of the functionality, but on a limited percent of the revenue from a branding standpoint. And then we'll go to a second wave and a third wave. We expect most of this implementation to be completed during fiscal '14, and we expect the benefits to start to really kick in starting in fiscal '15.

And our last question, we'll hear from Barbara Wyckoff with CLSA. Barbara Wyckoff - Credit Agricole Securities (USA) Inc., Research Division: I guess, for Roger and Jacki, can you talk about efforts to modernize the Blue Label in Lauren? Women's product, obviously, staying within the brand aesthetic. And then secondly, can you talk about your plans to accelerate growth and penetration of key accessories? I know it's been growing, but there've been -- such categories as handbags and footwear have been so strong across the industry, how are you going to be accelerating that growth?

We've put a lot of focus on the development and the continued modernization of our Lauren brand. And we've had a very successful fall holiday season, followed by what is a great beginning of spring into summer. Whereas the women's business, over the last few years, had been very challenging, we are finding over this past year, with a lot of increased efforts from our design team to excite the customer and from our merchandising team to focus on the right strength of the line and the presentation of products, as I said, the results of that have been fantastic. In the most recent NPD, of course, Lauren stands ahead. We're 12% above plan, against last year, for the season. And the results of that keep us in that #1 position, distanced way above our competition. We have then, as we have the focus of our Lauren brand, we have a Lauren footwear and accessories business that we see very, very nice momentum in. And then of course, our luxury accessory business is also moving along nicely. We have our leather goods business there, our shoe business. And as the penetration to our company, we're moving into the mid- to high single-digit range at this point in our revenues. It's a higher percentage of our business in the Ralph Lauren stores, where we have beautiful and dedicated space to present our merchandise. And certainly, our longer-term growth plans and goals for accessories is for it to be a more substantial part of our business over time. We have introduced a bag, which we called the Soft Ricky and it's a new interpretation of our most iconic bag and it's been very strong worldwide. And we're in the middle of a big rollout for that bag, which we believe will have tremendous results within the fall season. And as you know, the accessory business tends to be an item business. Focused on the centerpiece of the Ricky, we believe we can develop a very strong accessory business with that as our centerpiece going forward.

Okay. With that, I'll thank you, all, for your listening and your patience with the audio communication. Appreciate your support. We look forward to talking to you in August.

And that will conclude today's call. We thank you for your participation.