Operator: Greetings and welcome to the JCPenney Second Quarter 2012 Earnings Conference Call.
Ron Johnson - CEO: Good morning, everybody. Thank you for coming. Welcome. We've got a really nice update today. We're going to start with the financial update on the current quarter. We'll talk about technology trends as we promise. We'll talk about our new store design and we’ll then take some questions at the end, but let me thank you for coming on a interesting Friday at New York weather-wise. But before we get started the financial update, I thought I'd just share sort of my perspective on the first six months of leading JCPenney in the first period here of our transformation.
The first and most encouraging thing to me is I am completely convinced that our transformation is on track. We are making extraordinary progress in everything we’re doing. The teams are working hard and I can’t express more appreciation to tour team members, our vendors about the commitment they are making to our future, but our transformation is on track. But it’s very clear that withdrawing from our promotional model to a more everyday model has been harder than we anticipated, but it doesn't change our conviction that the promotional model had run its course and that we have a far better path forward and we’re committed to getting there.
As I mentioned we made extraordinary progress in so many areas, but in the past six months we've also made some mistakes and I’d like to talk about two of those in particular before we get started, and those relate to our pricing and our marketing efforts. When we started last January here, we talked about how in 2011 our company ran 590 unique promotions and the average item had 20 to 30 prices – different prices during the year, and so I figured going to three types of prices will be a lot simpler. A great everyday price, some items at a month long better value, and then clearance, which we call best price, but after going through 3 to 4 months of trying to communicate that to the customer it was clear it was confusing and what we wanted to deliver was great everyday value that the customer trust and understand and it's very clear that the three types of prices was confusing people, hence we got to fix that. The second thing on our marketing as much as it got a lot of attention and made people rethink JCPenney, in many ways it overreached our core customer and didn't do the hard work we needed to do. People find it entertaining, but it wasn't doing what it needed to do in the first six months to build our business, and in many ways we're trying to build the brand ahead of its time when we really needed to build the business, and we spent our marketing money in the wrong way, too much TV, not enough print and that had an impact on the business. So, we made some mistakes.
In mid-June I had one of these moments where I had to make a decision and it was a difficult one, but I decided that we were in an essence going to go dark on our marketing until we got it right. Sometimes we're not quite sure what to do. What I've learned in my career it's important to look at kind of what not to do, and I made the decision that we want to stop confusing our customer until we figure out exactly how to communicate our value message and who JCPenney is for the next decade in the right way. So, we made a tough decision.