Good day and welcome to the Coach conference call. Today's call is being recorded. At this time for opening remarks and introductions, I would like to turn the call over to Global Head of Investor Relations and Corporate Communications at Coach, Andrea Shaw Resnick. Andrea Shaw Resnick - Global Head-IR & Corporate Communications: Good morning and thank you for joining us. With me today to discuss our quarterly results are Victor Luis, Coach's Chief Executive Officer; and Jane Nielsen, Coach's CFO. Andre Cohen, President, North America is also joining us. Before we begin, we must point out that this conference call will involve certain forward-looking statements including projections for our business in the current or future quarters or fiscal years. These statements are based upon a number of continuing assumptions. Future results may differ materially from our current expectations based upon a number of important factors, including risks and uncertainties such as expected economic trends, or our ability to anticipate consumer preferences, controlled costs, successfully execute our transformation initiatives and growth strategies, or our ability to achieve intended benefits, cost savings and synergies from the Stuart Weitzman acquisition. Please refer to our latest Annual Report on Form 10-K, and our other filings with the Securities and Exchange Commission for a complete list of risks and important factors. Please note that historical trends may not be indicative of future performance. Also, certain financial information and metrics that will be discussed today will be presented on a non-GAAP basis, which you may identify by the terms non-GAAP, constant currency, or excluding charges associated with financing, short-term purchase accounting adjustments, and contingent payments and integration costs. You may find the corresponding GAAP financial information or metric, as well as the related reconciliation, on our website, www.coach.com/investors and then viewing the earnings release posted…

Thanks, Victor. As you read in our release, for the quarter, our total Coach brand sales in North America were down 11% as reported and 10% in constant currency. Our direct business excluding wholesale was down 12% as reported and 11% in constant currency. For the quarter in aggregate and as planned, our total store comp improved sequentially led by retail. It was down 8% with high ticket offset by a decline in traffic which was hurt in part by the overall weak mall trends as well as lower conversion. Our total comp was pressured an additional 1.5 points by eOS as we pulled back from about one flash sale event a week in last year's first quarter or 13 in total to about two events a month or seven in total, two in July, three in August and two in September, in line with the second half of FY 2015 and our plan. Looking at results sequentially, both conversion and traffic comp improved from fourth quarter levels driving the comp uptick in our bricks and mortar stores as elevated fashion and compelling novelty styles drove improved handbag performance. And even as we've anniversaried the arrival of Stuart's elevated product in retail, we continued to see strength in the channel through October. This further underscores our confidence in building to a positive North American comp by the fourth quarter, again led by the improvement in our retail stores with the most significant driver being conversion. Now turning to our retail performance and the metrics we traditionally share on product. The above-$400 price bracket held in penetration, saw another positive comp on a unit basis and represented nearly 30% of handbag sales matching last year. The below-$300 price bracket also grew in penetration and posted a positive comp benefiting from our…

Thanks, Victor. Victor and Andre have just taken you through the highlights and strategies. Let me now take you through some of the important financial details of our first fiscal quarter results for the consolidated business of Coach, Inc., as well as the Coach brand and Stuart Weitzman ending with our outlook for FY 2016. Please note, the comments I'm about to make are based on non-GAAP results. Corresponding GAAP results, as well as the related reconciliation can be found in the earnings release posted on our website today. Overall, our first quarter performance was consistent with our expectations. Starting with Coach, Inc., on a consolidated basis, net sales totaled $1.03 billion for the first fiscal quarter compared with $1.04 billion reported in the same period of the prior year, a decrease of 1%. On a constant currency basis, total sales increased 3% for the period. Gross profit totaled $697 million versus $719 million a year ago, while gross margin was 67.7% versus 69.3%. SG&A expenses of $532 million compared to $503 million in the prior year, an increase of 6%. As a percentage of net sales, SG&A totaled 51.7% compared to 48.4% in the year ago quarter. Operating income for the quarter totaled $165 million compared to $217 million in the prior year, while operating margin was 16% versus 20.9%. Net interest expense was $7 million in the quarter as compared to net interest income of $1 million in the year ago period. Net income for the quarter totaled $113 million with earnings per diluted share of $0.41. This included a contribution of $11 million or $0.04 per share from Stuart Weitzman. This compared to net income in the first quarter of FY 2015 of $146 million with earnings per diluted share of $0.53. Now drilling down to performance…

Thank you. We will now begin the question-and-answer session. And our first question comes from Bob Drbul with Nomura Securities. You may ask your question.

Hi. Good morning.

Good morning, Bob. Victor Luis - Chief Executive Officer & Director: Good morning, Bob.

I just have a couple quick question. The first one is when you look at the Chinese sales globally, it appears that many luxury brands are seeing declines in their business to the Chinese globally. However, you noted yours was up. What do you think is driving that? And second quick question if I could is within the outlet business, can you just talk about – are you driving the outlet business with a higher discount rate or what's the trend in full price product in there, and just maybe talk a little bit more about the success you're having there? Victor Luis - Chief Executive Officer & Director: Good morning, Bob. I'll take the first one, and then pass on to Andre for the second one on outlet. In terms of China, as you mentioned, we're really pleased to be bucking the trends that many of our traditional competitors are reporting. I have just had the pleasure of spending a week with our teams in Shanghai, in Hong Kong, visited our renovated flagship stores first on Canton Road and then at Hong Kong Plaza in Shanghai, as well as IFC in Hong Kong, and was really pleased and proud of the work that the team is doing on the ground. All of those locations are being incredibly well received and our team is managing our brand incredibly well in what is of course a very turbulent environment, not only with the exchange rate fluctuations and the impact on traffic into Hong Kong and Macau, but also the domestic stock market gyrations which are now very well-publicized. As to the mainland itself, as we noted, our revenue has held at double-digit growth with positive comps and this is very much similar levels to what we saw in the fourth quarter. We continue to see the slowdown in Hong Kong and Macau with the Chinese as well, of course, as in South Korea with the impact of MERS and some slowdown here in North America due to currency fluctuations, but we have seen PRC growth in the mainland, of course, and in Japan and Europe more than make up for those drops in the specific locations mentioned. In the medium-term, I think we can expect the MERS impact to lessen in South Korea. In fact, we are already, as we head into this quarter, beginning to see that which is great news. And over the medium term we also expect a better Hong Kong, Macau trend, especially in Q4, as we anniversary the slowdown there. I just think it really speaks to the great work of our teams and increasingly our transformation taking hold. I'll now pass on to Andre for your question on outlet.

Hello, Bob. For outlet, well, first in general, we've been pleased with the sequential improvements of the business there from the last quarter to this one. Discount rates are actually slightly lower than they were last quarter, so we're making progress there with more elevated product and a high share of Stuart Vevers designed product. And in terms of your question on full-price product in outlet, actually the proportions remained similar to what it's been historically, actually slightly lower, so there's slightly more made-for-outlet product selling through at the moment.

Great. Thank you very much.

Thank you. Our next question comes from Joan Payson with Barclays. You may ask your question.

Hi. Good morning, everyone.

Good morning, Joan. Andrea Shaw Resnick - Global Head-IR & Corporate Communications: Good morning, Joan.

I think you talked a little bit about the under $300 handbag comping positively now, and I was wondering if you could just give a little more detail in terms of what percentage of the business that segment is, when the last time it was that it comped positive? And then in hand with that, you also mentioned that Logo was still down year-over-year. So just when you expect that piece of the business to stabilize?

Sure. So essentially our above $400 business, as I mentioned in my prepared remarks, was up in units. We've seen a very good growth between $400 and $600, a significant comp growth there, above $600 assortments being a little lighter than it was last year, so there we saw a drop actually, which resulted in a drop in AUR about $400 and that's an opportunity we see in the future for 1941 as we launch that label. Now below $300, we've actually filled gaps in the assortment, so there we've seen a significant increase and we think that bodes really well actually for the holidays where we had gaps as we know last year.

And just in terms of the Logo business as well?

The Logo business has continued decline, as we focused on leather, capitalizing on a trend in the market that's moving more towards non-Logo products. So it's down this quarter. I don't see that trend changing significantly over the next couple of quarters.

Okay, great. Thank you.

Thank you. Our next question comes from Anna Andreeva from Oppenheimer. You may ask your question. Anna Andreeva - Oppenheimer & Co., Inc. (Broker): Great. Thanks so much. Good morning, and congrats on seeing nice progress.

Thank you.

Thank you. Anna Andreeva - Oppenheimer & Co., Inc. (Broker): I guess a question on the comp improvement. Is that being driven more by outlet versus full-price or should we think both channels are performing about equally right now? And as we think to the positive comp inflection in the fourth quarter of 2016, should one channel lead the other? Thanks so much.

Sure. So we've seen improvements in terms of comps sequentially in both channels. It has been led by retail where there we've seen good trends in both conversion and traffic improving sequentially. ADT average transactions have remained positive in retail. We've seen a similar trend in outlet but a bit more muted than in retail.

Thank you. Our next question comes from Ike Boruchow with Wells Fargo. You may ask your question.

Hi. Good morning, everyone. Thanks for taking my question.

Good morning, Ike.

I just wanted to quickly talk about the North America comp, specifically the eOS impact, just 1.5% this quarter, well below last quarter's impact. I would've thought there would've been a larger drag this quarter. Maybe, Victor, can you comment if anything changed during the quarter, meaning did you expect a greater negative impact before the quarter started and maybe pull back less for some reason? And any color would be helpful. Victor Luis - Chief Executive Officer & Director: No. Very much per our plan, Ike. Last year this time we had 13 events. We've been very much planning about two per month and that's very much what we did this quarter as you heard in Andre's prepared remarks with seven events. So very much per our expectations, nothing different.

And, Ike, for Q2 you'll recall we're overlapping ten events in the prior-year fiscal quarter, so we called out that we'd expect the impact to be slightly less in Q2.

Got it. Thank you.

Thank you. Our next question comes from Michael Binetti with UBS. You may ask your question.

Hey, guys. Good morning. You guys have a really heavy mix of your annual earnings that happen during the holiday. So obviously the stock takes a lot of cues from trends in the second quarter. You've obviously been very clear about guiding us to the biggest sequential improvement of the year happening in the second quarter in the comps for North America. Obviously, you've talked a few times about identifying a few gaps in the assortment with the bags under $300, but can you give us a little bit more of how you're thinking of – how you build up your plan to get to that bigger step-up, because I think it will be pretty meaningful for the path of the stock from here.

Sure. So it's really about the three pillars that we've been talking about for the past two quarters coming together, so products, marketing obviously and distribution. In terms of product, as I mentioned earlier, we have filled gaps in the below $300 bracket, which I think were an opportunity last holiday season. So a lot more in both channels, frankly, retail and outlets, a lot more of an offering in the below $300 bracket. We've also added I think a lot more emotion and elevation at the same time in our stores, a big focus on gifting, I mentioned shearling, metallics, glitter, et cetera, in full price and outlet. The other thing in outlet is we had a gap we know, an opportunity last year in gift sets below $100. We tripled our investment in that area. So I think we're positioned much better in terms of product, certainly, than we were a year ago. We're also building on the momentum of all the marketing activities that started with the runway show. That continues to gather momentum and obviously we're continuing to see strength in our modern luxury renovations. So we think the three pillars are going to be slowly coming together this quarter. Also I should note that the momentum that we saw in Q1 has continued into October, so that we think bodes well for the holiday.

If I could follow up with one quickly. The comment that we still expect comps to go positive by fourth quarter, can you talk about, with the outlet driving so much of the North America comp, what do you need to happen between today and the fourth quarter at the outlets? You said they're still negative but improving sequentially at a slower pace than retail. What do you think – which of maybe the components' traffic conversion need to accelerate the most to get to the overall North America comp positive by fourth quarter?

Sure. We think the conversion is the metric that's going to be improving the most. We've maintained positive ADTs. We see that continuing, but conversion is the metric that we're expecting to improve sequentially in both channels the most.

Thank you.

Thank you. Our next question comes from Oliver Chen with Cowen and Company. You may ask your question.

Hi. Thanks for the comments and the product is looking really sequentially improved. Regarding... Victor Luis - Chief Executive Officer & Director: Thank you, Oliver.

Thank you.

Sure. The outlet side, we're just curious about the progress on the renovations and learnings that you've had on your earlier renovations versus the ones you're doing going forward and any changes you're making kind of to the store experience there and how you assort Stuart's and lay out Stuart's new product.

Yes. So we've seen on the outlet front first in product an increasing share of Stuart designed product and that's been impacting performance obviously. The modern luxury renovations that we've completed so far have been outperforming the rest of the chain, so that's given us confidence to continue to deploy that plan. The one learning I'd say is in the men's renovations, men's modern luxury renovations in outlet where we've seen less of an impact candidly and I think that comes from the fact that the men's doors are more recent doors. The modern luxury doesn't look as different as it does from the core doors, so our focus is going to be more on our core outlet doors in terms of renovations.

Yes, Oliver, we talked about it last quarter, but one of the learnings that we did call out last quarter was just that our lighter touch renovations were not yielding the improvement that we had expected, and so we've moved away from essentially the paint and carpet, if you will, to actually doing a little heavier renovation, which gets us the lift as we replace fixturing. The good news is that our overall cost of renovations through bulk purchasing and procurement activities has gone down, so we're able to accommodate that shift, while lowering our total capital cost expectations for our fleet renovation.

And on the outlet side, you're pleased with the renovations and kind of how the customer has been shopping the newer stores there.

Very much so, Oliver, and I would say globally.

Okay. Thank you. Best regards.

Thank you.

Thank you.

Thank you. Your next question comes from Randy Konik with Jefferies. You may ask your question.

Yes. Thanks a lot. Quick question on the outlets again. So I think you talked about the Logo penetration in full-price down to about 5%, but I think you said 30% in outlets. So is that Logo penetration, is that still a headwind then in the outlet division? And strategically, how do you think about where you want the Logo penetration to be in outlets versus where they are in full-price? And if I could just add one more, are you seeing any differences in product trends in the wholesale channel from what you're seeing in the retail channel at current time? Thanks.

So the Logo penetration has dropped in outlet. It's at about 30% now versus roughly 40% a year ago. It's an integral part of the business. It's obviously become smaller than it was a few years and quarters ago. We see that continuing to decline slowly, while leather has been comping positive in outlet, and that's something that I think is very consistent with Coach's core equities. We stand really for leather, so. The wholesale question I may let Victor on. Victor Luis - Chief Executive Officer & Director: I didn't get the question.

I'm just curious if you're seeing any differences in product trends or product perception or what people are buying in your wholesale channel distribution relative to the retail channel distribution. Just curious there. Victor Luis - Chief Executive Officer & Director: No, not dramatically. Of course, we're seeing a slightly higher promotional cadence within the wholesale channel in general, a little bit more price competition which is leading to the below $300 bucket having a higher penetration overall, but in general I would say no really dramatic differences.

Helpful. Thank you. Victor Luis - Chief Executive Officer & Director: Thank you.

Thanks. Your next question comes from Brian Tunick with Royal Bank of Canada. You may ask your question.

Thanks. Good morning, everyone. Victor Luis - Chief Executive Officer & Director: Good morning, Brian.

I guess two questions. I know you guys do a lot of customer surveys out there. So with the category growing low-single digits, just curious, I mean, what are you hearing from your customers regarding where their spending is? Are their closets full of handbags already or they're just waiting for more newness? And then on the store closing side, can you talk about maybe what kind of transfer rate you're seeing or maybe the web shopper? What are you watching to see what the right footprint may be is for your full-price business? Thanks very much. Victor Luis - Chief Executive Officer & Director: I'll take the first question and then pass on to Andre in terms of the store closings here specifically in North America, Brian. In terms of the consumer survey, it's very much as you mentioned, we see consumers a little bit on the sidelines. Obviously there's a lot of macro and currency and other issues that are impacting global trends today. But as we've mentioned over the last call and, again, I think are seeing in our most recent quarterly survey, consumers are looking to be inspired and they're looking for newness and innovation. Our transformation is very focused on that and we're incredibly excited, of course, by the progress that we're seeing, especially through our full-price channel. Andre, maybe on the...

Sure. So we've seen very minimal transfer of sales from closed doors. The doors we closed were primarily smaller doors that had limited material impact on the rest of the chain. And look, we'll continue to evaluate and optimize our fleet. As leases come up, we'll make decisions on continuing on closures so that's an ongoing process. We are closing about 22 doors this year, as Jane mentioned, so that's in the plans.

Thank you. Our final question comes from Erinn Murphy with Piper Jaffray. You may ask your questions. Erinn E. Murphy - Piper Jaffray & Co (Broker): Great. Thanks. Good morning and congrats on the progress. Victor Luis - Chief Executive Officer & Director: Thank you, Erinn. Erinn E. Murphy - Piper Jaffray & Co (Broker): I was hoping you guys could clarify the October trends. I mean you mentioned in North America improving quarter-to-date. What have you seen in China just given that October encompassed Golden Week? And then I guess the follow up on the wholesale side of the business, I would just love to hear how department stores are managing their open-to-buy dollars in the handbag category overall. And then there's a lot of concern on traffic in department stores broadly, both apparel, footwear (1:00:34). Did that vary much for you throughout the quarter? Thanks. Andrea Shaw Resnick - Global Head-IR & Corporate Communications: Thanks, Erinn, for your 42 questions. I'll pass that over to Victor. Victor Luis - Chief Executive Officer & Director: And I would say we haven't seen any change from the previous quarter to this quarter in any one of those areas. Very consistent really. PRC has continued along the same lines as we saw last quarter and I would say that in the department store it's very consistent as well. Erinn E. Murphy - Piper Jaffray & Co (Broker): Okay. Thank you, guys. Victor Luis - Chief Executive Officer & Director: Thank you. Andrea Shaw Resnick - Global Head-IR & Corporate Communications: Thank you all. That concludes our Q&A. It is now 9:30 AM. The market is opening. I will now turn it over to Victor Luis for some concluding remarks. Victor? Victor Luis - Chief Executive Officer & Director: Thank you all for listening. I just want to close by thanking and congratulating our Coach teams globally. Thanks to their hard work, their perseverance and, of course, their excellence in execution, our transformation remains very much on plan. We're pleased with the progress that we're seeing here in North America, of course, with the sequential improvement in our business which has been led, as we have always expected, by our full-price channel where we have put the greatest investments and focus. In what is a rather turbulent global environment for the category, our balanced and strong franchise in Asia as well as our greenfield opportunity in Europe is serving us well. And lastly, I'm excited by the emerging trends that we've seen at the Stuart Weitzman brand, not only thanks to the very strong product foundation that they have but also thanks to the very strong and growing momentum that we're seeing with them in Asia. So all bodes well for us for the rest of the fiscal year. Thank you.