Welcome to the Williams-Sonoma Incorporated fourth quarter and fiscal year 2009 earnings and fiscal year 2010 guidance conference call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session after the presentation. This conference is being recorded. I would now like to turn the call over to Steve Nelson, Director of Investor Relations, to discuss non-GAAP measures and forward-looking statements.

Good morning. This morning's conference call should be considered in conjunction with the press releases that we issued earlier today. Our press releases and this call contain non-GAAP financial measures that exclude the impact of unusual business events. These non-GAAP financial measures are provided to facilitate meaningful year-over-year comparisons, a reconciliation of these non-GAAP financial measures and the most directly comparable GAAP financial measures, and an explanation of why these non-GAAP financial measures are useful and are discussed in Exhibit 1 of the earnings press release. The forward-looking statements included in this morning’s call constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements address the financial condition, results of operations, business initiatives, guidance, growth plans, and prospects of the company in 2010 and beyond, and are subject to certain risks and uncertainties that could cause actual results to differ materially from such forward-looking statements. Please refer to the company's current press releases and SEC filings for more information on these risks and uncertainties. The company undertakes no obligation to update or revise any forward-looking statements to reflect events or circumstances that may arise after the date of this call. I will now turn the conference call over to Howard Lester, our Chairman and Chief Executive Officer.

Good morning and thank you for joining us. With me today is Laura Alber, our President and future CEO; Sharon McCollam, our Chief Operating and Chief Financial Officer; and Pat Connolly, our Chief Marketing Officer. I’d like to begin today with an overview of our fourth quarter and fiscal year 2009 results and our 2010 outlook. Then I'll turn the call over to Sharon and Laura for further details. While the industry growth in the home furnishings category continued to decline in the fourth quarter, we saw positive momentum in virtually every aspect of our business, including sales, margin and supply chain efficiency. Our cost containment and inventory management initiatives delivered benefits that were well beyond our expectations, and cash flow reached record levels. On revenue growth of 8%, we delivered non-GAAP diluted earnings per share of $0.86 versus $0.31 last year and continued to strengthen the balance sheet by reducing our inventories to their lowest level in five years. We ended the quarter with over $0.5 billion in cash. During the quarter, comparable store sales increased 7.6% and direct-to-customer sales increased 8.4%. On both the one and two-year basis, year-over-year growth trends once again sequentially improved, which validates for us the effectiveness of our merchandising and marketing strategies that were deployed during the year. Put this in perspective, two-year comparable store sales were negative 30% in Q1 versus negative 15% in Q4. In our core brands, sales trends improved in every concept, and we saw significant growth in new customer acquisition. In total, net revenues increased 7%. Williams-Sonoma increased 6%, Pottery Barn Kids increased 9%, and Pottery Barn increased 10%. I’m going to let Laura talk more about Pottery Barn and Pottery Barn Kids brands later in this morning’s call. In the Williams-Sonoma brand, we continued to see the…

Thank you, Howard. Good morning. Our fourth quarter results did substantially exceed our expectations, and we could not be more pleased or encouraged about what that says about our opportunity for 2010. During the quarter, the initiatives we set forth all year delivered greater benefits than we would have expected, and the consumer response to our new merchandising and marketing strategies is one of the strongest we have seen in many years. The P&L highlights for the fourth quarter were as follows. Net revenues increased 8% to $1.90 billion, with similar growth in both the retail and direct-to-customer channels. Internet revenues increased 15%. Non-GAAP gross margin increased 760 basis points to 41.5%, primarily driven by fewer markdowns, 130 basis points of occupancy leverage and benefits from our supply chain initiatives. Non-GAAP SG&A decreased 90 basis points to 27.9%, primarily driven by catalog circulation optimization strategy, partially offset by higher incentive compensation. Catalog circulated during the quarter decreased 12% and pages decreased 17%. And fourth quarter non-GAAP diluted earnings per share increased 177% to $0.86. This was $0.12 above the high end of guidance, driven by a 1% stronger than expected increase in net revenues and a 100 basis point greater than expected improvement in gross margin. Versus guidance, the improvement in gross margin was driven by fewer markdowns and earlier than expected financial benefits from our supply chain initiatives. For further details on the fourth quarter, please see this morning’s press release. Switching now to our full year financial highlights, fiscal year 2009 net revenues decreased 8% to $3.1 billion. Retail revenues decreased 4%, including a comparable store sales decline of 5.1%. Direct-to-customer revenues declined 12%, including Internet revenues, which were down only 9%. Non-GAAP gross margin increased 180 basis points to 35.7%, with similar drivers as the fourth quarter…

Thank you, Sharon. Good morning. I’ll start with the Pottery Barn brand. Net revenues in the fourth quarter increased a better than expected 10%, with similar growth in both the retail and direct-to-customer channels. Comparable store sales increased 11.5%. An authoritative cohesive assortment and compelling price points combined with a highly effective inventory management strategy drove these significantly improved results. From a merchandising perspective, all key categories, strictly furniture and textiles, celebrate positive growth. These results are encouraging because they demonstrate the breadth of newness and value in the merchandise assortment and the effectiveness of our marketing and promotional strategies across categories. From an operational perspective, gross margin dramatically rebounded as we strategically balanced inventory levels with full price selling and margin objective. Also driving the margin improvement was the cumulative benefit of the supply chain initiative that Howard discussed earlier in addition to the savings being generated and our company managed upholstered furniture operations. We also greatly appreciate the support we have received from our vendor partners in reducing costs, improving quality, and driving innovative product development. In direct marketing, the catalog circulation optimization strategy continued to contribute to our improved results on both the top and bottom lines, as we shifted our investment in marginal catalog circulation to e-marketing. Our new e-commerce platform also delivered significant benefits during the quarter, as we gained flexibility in site merchandising, optimized natural and paid search, and further engaged the brand in the world of social media. In 2010, we recognize that the home furnishing sector remains vulnerable to volatility, but also see great opportunities to take market share by capitalizing on the initiatives that have taken our performance to this level. As such, we will flex our inventories with sales trends, drive direct-to-customer innovation with breakthrough merchandising and customer contact strategies,…

Thank you. (Operator instructions) Our first question will come from Budd Bugatch with Raymond James. Budd Bugatch – Raymond James: Good morning, and congratulations on the quarter and the good luck on this year.

Thank you. Budd Bugatch – Raymond James: I guess, Sharon, my question goes to the gross margin and to that very informative conversation you had with us regarding the operating margin and where you can get to. If I look at the guidance for the year of 37.2% to 37.4%, that does not get you back to where you were a couple of years ago, which were significantly higher. Can you talk a little bit about that and maybe give us a roadmap of how long do you think it will take you to get back there and whether that’s still possible?

Budd, I’d be happy to. I would say that as we look at the guidance, we believe that this is going to come back gradually and incrementally. And I’m going to let Laura speak to the actual execution of improving the selling margins within the brands and the promotional strategies I have in place in order to do that. But just as you think about it, within this guidance this year, we are continuing to put out there in the guidance our trajectory of gradual incremental improvement. As we said, you are getting in that number about 50 to 100 basis points of occupancy leverage. The balance, of course, is coming between the selling margin and supply chain initiative. So as we look forward, I think there is tremendous opportunity there. It could come faster. It’s very front half loaded. We were more cautious. I think if you look at the guidance in total, you will see that we have put out some stronger guidance in the first half. And then in the back half, we are going to continue to be cautious, as we watch the economy and see where it goes. So obviously the opportunities in this fiscal year would be in the back half. But we feel that the guidance we have out there today, we are extremely confident in it. We have the plans in place and we see it happening. So that’s the great news. But Laura, do you want to speak to just the promotional strategies and how you see the margin progressing within the brands, please?

Sure. One of the key components of the margin improvement is our inventory management strategy. And I’d say we’ve really graduated into world-class inventory management. We are conservative in terms of future receipts and have worked through a process to chase inventory as we see trends happen. And the teams, everyday, are looking at adding receipts where we need them and subtracting them where we don’t. We are also really working to shift our mix away from furniture from where we have been historically back to -- or I should say, where we’ve been the last couple of years back to the historic dec-ac [ph] and textile percent of total, which is an important shift not just for margin but because new customers are often much more comfortable buying lower ticket and they come in more frequently to buy lower ticket than they do to buy the considered furniture pieces. And with that also comes higher margin because those categories tend to be higher margin from both the initial to the final selling and returns, all the way through the P&L. As far as costs go, we are continuing to look for ways to reduce costs in each and every one of our products. This doesn’t mean taking out quality. We actually are very invested in improving our quality and have made tremendous strides with our new agent overseas outlook and also the teams on the ground there to improve, in particular, the furniture quality. However, there were areas that we were over-building. So on beds, for example, we will look at places where it doesn’t matter whether we are building two stick [ph] of a wood or something that the customer didn’t see. And we are taking that out and investing it in where they do see and also driving the cost down. We also see tremendous opportunity to reduce our packaging costs. And we are undertaking a big initiative across the company to look at packaging where we have overbuilt it and where we can move it more efficiently through our supply chain. And then last but not least, another key component of margin is our direct-to-retail shift. And our direct business, because we have inventory in one place, allows us to keep our margins higher, because we don’t have to push at all the stores and therefore take markdowns store-by-store. And our focus on the Internet combined with opening fewer stores in the future is going to inherently drive the margin up.

And Budd, just to finish Laura’s part on the furniture mix issue, at the end of Q4, the trailing 12 months furniture percent of our total sales is 30%. That had gone up from 29%.

And we will move to our next question from Matt Nemer with Wells Fargo. Matt Nemer – Wells Fargo: Good morning. I was just wondering if you could comment on what’s implied in your guidance for Internet versus catalog growth this year out of the total direct change. And then could you -- just to follow up on that, could you also comment on the incremental profitability of a direct customer versus a retail customer, and how are you allocating costs? Thank you.

Matt, I’m going to let Pat discuss that. Pat, could you please take that?

Sure, I will. Thank you, Sharon. Matt, we see a lot of opportunity this coming year in our e-commerce business. We added about 1.8 million customers in total during the fourth quarter, about a 22% increase. At the same time, we had a 33% increase in new customers during the period derived from e-commerce. And as you know, new and active customers are the primary driver of future sales growth. As mentioned earlier, we’re very satisfied with the results we are seeing in both our SCO and SCM initiatives. But in this past year, we’ve really grown a number of digital marketing efforts, including retargeting, social retargeting, search remarketing, and display advertising. And what exciting about those is that they are all fairly new. They are not mature. So we see the opportunity to continue to drive traffic at pretty good rates compared to the prior year. The incremental profitability of a direct customer is very substantial. And it is why we are so excited about the e-commerce business overall.

And Matt, in the e-commerce growth -- in the DTC growth next year, e-commerce is 100% of the growth. We expect that to be the channel where we pick up incremental sales.

And our next question will come from Alan Rifkin with Bank of America. Alan Rifkin – Bank of America: Thank you. Sharon, it appears that the January comp was pretty close to 10% despite anniversarying the $20 million in revenues last year from the inventory clearance event. What did you see specifically in January and particularly in the last couple of weeks of the month resulted in the significant outperformance of comps?

The -- I’ll let Laura speak to the Pottery Barn brands. And I think we can just put a general statement out there. The consumer response to the spring assortment that we launched across all brands were substantially stronger than we expected. And I’ll let Laura speak to the specifics.

I think, Sharon, you answered it. We’re seeing great response across every category actually, and we were concerned about anniversarying those markdowns. We put in place some pretty strong marketing and took some promotions that drove the consumer response, and we are very pleased with the beginning of this year and see each one of these strategies incrementally come in and actually outperform what we expected.

Our next question comes from Matthew Fassler with Goldman Sachs. Matthew Fassler – Goldman Sachs: Thanks a lot, and good morning. I have a question about merchandise margin in the fourth quarter. You talked about where the annual margin stood versus historical levels. How did your fourth quarter merchandise margin compare to -- compared with prior fourth quarter peaks?

You still have a lot of opportunity, Matt, in the fourth quarter. When you go back to historical levels, you are still looking at to the peak, somewhere in the neighborhood of 200 basis points or more. Matthew Fassler – Goldman Sachs: And I know that this is covered --

This is for the peak. Your question is to historical peaks, how far do you have to go. ’05 would be that year, and I think we mentioned in my reconciliation of the ’05/’09 operating margins, there is 225 basis points of selling margin.

Our next question comes from Joe Feldman with Telsey Advisory Group. Joe Feldman – Telsey Advisory Group: Yes. Hi, guys, good morning. I had a question about cash, and you guys are doing an amazing job generating a lot of cash, getting efficiencies. And at $514 million on the balance sheet now, and I know there are $180 million to $200 million next year, I guess, just any new thoughts on capital allocation, especially given that store growth -- well, there is actually going to be some contraction this year in terms of storage.

Joe, we will plan to -- we obviously increased the dividend 8% this morning. That was our first step toward returning some of that cash to the investors. And I think we had said consistently that we think in this environment that it is critical versus our historical performance or our historical behavior that we retain more cash on the balance sheet going forward. Now that is to say that we will be assessing this as we progress throughout the year. I think Laura described it well in her prepared remarks when we said, “We believe that there was a vulnerability to volatility in this environment. As we get through Q1 and Q2 where you had the lowest consumer confidence numbers that you had all year last year, and then they started improving. And then you got into the back half. As we started seeing these trends be sustainable, then we will start talking about -- more about uses of cash in a more robust way. Right now, we are thrilled to have ended the year where we are. We have no financial dependence on the financial institutions, which is a great place to be. We got our revolver in place. Anything goes wrong with the financial markets, we are set. And we’ll keep talking about it.

Our next question comes from Chris Horvers with JPMorgan. Chris Horvers – JPMorgan: Thanks and good morning. I want to follow up on the selling margin question. Sharon, is that 225 basis points largely driven by your expansion of the credit card business. Can you talk about how much of that pressured margins in 2009 and how you’re thinking about 2010?

I would say the credit business definitely had an impact. But as a percentage of our total sales, that is not a huge number. And it would really be across all actions that we go into selling margin, we had to be more promotional, we had to take additional sitting promotions, we had the credit card in place, we have the 12-month same as cash. And so each and every one of them contributes to that. There is not any one, in particular, that I would say is more than 50% of the total. But it’s going to come from actions across the merchandising promotional strategies et cetera within the brands. Inventory management is huge. That is into the promotional strategies and markdowns that they have to take in order to clear. There has also been the impact of the introduction of the emerging brands. Williams-Sonoma Home has put particular pressure on that margin, which we -- as we said, we are working on that. So there are a lot of small things that contribute to that, which we love, because you can work on those and you can make small incremental progress across the board.

Our next question comes from Kate McShane with Citi Investment Research. Kate McShane – Citi Investment Research: Hi, good morning. Thank you. I was wondering if you could talk a little bit about your outlet business and what you are seeing there. Is it a lack of inventory that may be hurting that business and why comps haven’t recovered yet?

Laura, do you want to talk about the outlet business. I think, Kate, you’re probably referring to the negative 8 comp in Q4?

Yes, sure. We’ve been working very hard to improve our profitability in our outlet business. It’s really a strategy to recover costs for us and profit versus really a strategy of growth. And when we had inventories last year and the year prior, we pushed a lot of goods to the outlet. Frankly didn’t tell them that a process. And so the merchandising teams in the brands have actually been building merchandising strategies. So the experience for the consumer in the outlet is a strong one. And we have not had to push the low profit products into the stores, which is why your single lower -- the lower sales, but also the improving profitability.

Our next question comes from Colin McGranahan with Bernstein. Colin McGranahan – Bernstein: Good morning. I wanted to ask about supply chain, which Sharon, I think you said was 140 basis point positive delta, and obviously you’ve made a lot of great progress on in-sourcing and DC optimization et cetera. Can you talk about over fiscal ’10 and then maybe going forward how you think about better fuel costs versus last year, container shipping costs that are out, but obviously inventory now is going to be growing. So you’re just going to be running a few more trucks. How do you think about that 140 basis point delta and what’s your outlook for supply chain cost in 2010?

Well, in 2009, many of our supply chain initiatives were actually not fully rolled out until the back half of the year. So in 2010, we are going to still be receiving a lot of benefit from the initiatives that we had last year, which Howard went through in his prepared remarks, the distribution accuracy programs, the regionalizing of our large scale inventory, the in-sourcing of our furniture delivery hubs. We are also increasing the number of furniture delivery hubs that we will be in-sourcing next year. There is a substantial returns, replacements and damages reduction in that as well as oftentimes some delivery cost reductions that go along with it. The packaging initiative with Laura refer to we as a new initiative that we believe is going to gradually and incrementally improve cost of merchandise, which of course will be a nice offset to the fact that we do collectively believe that there will be commodity cost pressure this year. And in addition to that, we are also going to be implementing the first of the next phase of our consolidation strategy with our East Coast distribution center. We’re going to be moving in from two buildings into one building. And once we get over the initial moving cost, the efficiencies associated with operating in one large building versus multiple buildings is substantial. Not only did we get an excellent deal by moving, because of the commercial real estate market, we also have a significant number of labor opportunities as a result of this. And then Laura already spoke to it. I’m going to turn this over to Laura to talk about some of the things that they are doing and sourcing right now, particularly in Asia, to help offset the expectation that we have, the commodity costs are going to go up next year. Laura, would you speak to that, please?

Sure. Remember that last year we brought on a new agent outlook to help us with our quality in our furniture categories. And this is then a great strategy for us and that they have really helped us find the best vendor for each and every product and improved the costs in manufacturing. We continue to have opportunity in that area, as it was only really a full year that we have been underway with that strategy. So we've just gotten started and are already seeing great benefits there. In addition, our agent Connor [ph], who has been focusing on our dec-ac and textiles categories, has been doing a superior job in helping us in those categories to both find new products, but also as it relates to costs to find opportunities to reduce costs. And so I'm very excited about the future with our overseas cost control, even though we do know commodities are going up. Our vendors are so loyal to us and such great partners. They know that we can't raise retail prices, and so they are very serious about how do we together hold cost down so we can keep our retails down and keep the volume up in our business together. We also are sharing with you a lot of great opportunities we have in supply chain. It is really -- it is the mindset of continuous improvement. Dean Miller and his team, every single thing that they do, they look for what’s the opportunity and there are things that I'm sure they are working on this. They haven't even shared with us yet because they are so proactive in finding ways to take costs out of the system so that we can give our consumers the best price possible.

Our next question comes from Scot Ciccarelli with RBC Capital Markets. Scot Ciccarelli – RBC Capital Markets: Hi, guys, how are you?

Good. Scot Ciccarelli – RBC Capital Markets: Advertising spend and inventory levels are down sharply year-over-year and certainly from peak levels, and I know you guys are continuing to kind of shift your talent distribution. But is there a point where you think you need to ramp up advertising spend and/or inventory build to further drive sales growth?

Well, we’ve said consistently that the catalog circulation optimization strategy was just that. It was the manifestation of a tremendous amount of systems work that have been done and the ability for us to be able to optimize our catalog circulation based on data that we had added to our files. Where we are today is an advertising cost rate that we feel very good about, and I would like Pat to speak to that so he can explain a little more about what we are doing in catalog advertising and how we are shifting that over to paid search. Pat, would you like to speak to that?

Sure, Sharon. I think one of the things that we are doing is every month we have a catalog investment meeting, and for each brand, we go through and look at the current performance almost day-to-day and make the decisions about how we spend the last part of our advertising cost. What we have seen is that for existing customers the catalog is a very, very effective advertising vehicle. Last year we began to introduce some new specialized formats, particularly in Pottery Barn Kids that are very exciting because they are in incremental. They are not taking the place of catalogs we are already mailing. So even though we've optimized, the catalog teams are continuing to find ways to market through the catalog at very low cost. At the same time, we are seeing that the Internet, our digital marketing efforts are very effective in acquiring new customers. And combined with the social aspects of pushing our brands further into the web, it further increases the effectiveness of our digital marketing efforts. So across the board, we see the opportunity to save -- to basically keep our ad cost rate at the levels we have, but maximize the sales against those rates.

Our next question comes from Michael Lasser with Barclays Capital. Michael Lasser – Barclays Capital: Good morning. Thanks a lot for taking my question. You recently indicated that about half of the sales from the closed doors are flowing through to either other locations or the direct business. How does that trend out? Is it an immediate impact or does it happen over time? And then secondly, can you talk about the performance of various categories across all brands in opening price points versus higher end price point items?

Absolutely. Michael, on the trajectory of retaining sales on store closings, the analysis that was done that you are referring to was based on stores that have been closed for more than one year. So obviously the store closings that we just did, the 23 stores that we closed in 2009, of course we are going to be watching those. Well, we are not going to wait for those results. We feel very confident in the fact that as a multi-channel retailer, we are going to retain more sales in store closings in multi-store markets. Remember that those results are in highly dense multi-store markets. So where we are closing stores in those markets, we are able to not only shift those sales into other stores in the market, but also to be able to use our direct marketing capabilities to bring those customers into the brand through direct. So that is the opportunity that we have, that we believe other retailers are missing today. As far as the performance of our merchandising categories, I would like Laura to speak to that because it was the home furnishing trends where you have the greatest impact from the introduction of entry price points.

Sure. The focus last year was to introduce more entry price points, as we had plenty of high-level price points. We didn't need to introduce as many products there if at all in the brands. And so as a result, it is the combination of both the newness and the appealing nature of the opening price points that really drove this category, and it is the opening price points where we have the growth and it is where we are going to continue to focus this year.

Our next question comes from Laura Champine with Cowen & Company. Laura Champine – Cowen & Company:

Laura, I will take that one first. I think some of it is certainly a change in the trend, but we have had a lot of success from these digital marketing initiatives that we’ve put forth. And as I said, we still think there is a lot more opportunity. We are increasing the percentage of our total advertising spend as a percentage of the total into e-commerce, and that is what is driving it. Very effective for acquiring new customers.

And then to your question on West Elm store closing, and then I want Laura to talk about the West Elm growth strategy from a retail point of view, the locations in West Elm that we closed in 2009 were not in multi-store markets. However, many of those leases were opportunities where we had a co-tenancy failure situation or a situation where the mall or the area we went into, we did not believe was going to support the West Elm brand because of the change in the economy. And to the extent that we could reposition the real estate in those markets in the future, we felt that to seize that opportunity was the right thing to do. The stores we are closing in 2010, we are not prepared to speak to. We have a lot of announcements that would have to be made associated with that, as you can understand. So we are not going to be speaking to those. Laura, do you want to talk about the growth strategy at retail for West Elm?

Sure. We are very excited about West Elm, as I said earlier, and are underway working on the models, the retail model and the direct model, to improve it not just from profit levels but sales volume because we know that we need much -- we need a lot more sales in each and every one of our stores. And so we are looking at broadening these (inaudible) as I said earlier, really remixing it, remerchandising it, and repricing it. We are not looking at opening any new stores until we see great success in the existing stores. And when we do, we will be back to you with a rollout strategy.

Our next question will come from Neely Tamminga with Piper Jaffray. Neely Tamminga – Piper Jaffray: Great. And fantabulous, guys -- fabulous here.

Thank you, Neely. Neely Tamminga – Piper Jaffray: So, hey, Laura, for you on the merchandising front, can you give us a little sneak peek around the corner with respect to where the opportunities may be particularly at Pottery Barn, and maybe just talk more hypothetically about, you know, is outdoor a three-week season or is it going to be a three-month season? Thanks.

Thank you. We have so many great opportunities this year. We are seeing the customer respond again to seasonal holidays, which is great. We love the seasonal holidays. We have tremendous marketing behind them through the balance of this year and see that as an opportunity. Outdoor, in many ways is a seasonal holiday. And I don't think people bought a lot of it last year. I think there is pent-up demand to buy outdoor furniture, and certainly there are fewer competitors, as we saw. Unfortunately, Smith and Hawken go out of business, it’s great for us. And we’ve really built our assortment knowing that we would have that opportunity. So you are going to see a beautifully assorted catalog; incredible, direct e-commerce marketing; and the in-store set I think is probably the best that we have seen yet. New price points are for new materials, new colors. So we should have a great outdoor season, so off to a good start here, and it is pretty early in the year. So I'm optimistic about outdoor. And then beyond that, we have really -- in every one of our brand, we are very focused on product launches through the back half of the year and beyond and how do we do them in a bigger way. We have new tools to use with e-commerce. We have partnerships that we have developed that we have never had before, and we are so excited for the launch of new products into the back half and beyond.

Our next question comes from Christian Buss with Thomas Weisel. Christian Buss – Thomas Weisel: Yes, hi, congrats on the nice quarter.

Thank you. Christian Buss – Thomas Weisel: I was wondering if you could talk a little bit about incremental incentive compensation expense in 2010 and how to think about that?

We do not expect to see an increase in compensation expense in 2010. We have inhered in the guidance there is no increase in compensation expense. Where we do have increases, however, in SG&A dollars is from a merit incentive that we did. We did a merit increase this year. As you know, for several years we had held our salary levels, and this year we felt we needed to do a merit increase for our associates. They have added so much value to the company, and competitively, it was very important. And it was important that we reward them for their contributions. So we did do a merit increase this year. It was a small, low-single digit increase, but that is unrelated to incentive compensation.

We will go now go to Mike Baker with Deutsche Bank. Mike Baker – Deutsche Bank: Thanks. So I just want to ask a quick question on the direct-to-customer business, I think it was -- if I look at the November, December versus the full year it, I think if my math is right, does speak to little bit of a slowdown in January, whereas the retail accelerated. So I was wondering if you could address that.

Pat, would you like to speak to the trends that you saw in e-commerce this year?

Sure. We saw in e-commerce, in particular, we had increasing trends throughout the year actually. In January, we had a mid-double digit increase -- mid-teen double-digit increase in e-commerce demand during the month of January.

And due to the time, that will be the last question for today. I would like to turn the call back over to Mr. Lester for any final and closing remarks.

Well, just thank you for joining us today. We appreciate your time and support, and we will talk to you next quarter. Have a great day.

And once again, this does conclude today's call. We thank you for your participation.