"While we're well positioned for the holiday season, we arehowever concerned with recent traffic trends in our North Americanretail stores," said Lew Frankfort, chairman and CEO, during aconference call. The traffic "pressure," he told analysts, occurredprimarily in the Northeast; parts of the South, particularlyFlorida, and parts of California."

Improvements in conversions "offset weak traffic trends," hesaid, adding, "we believe it's prudent to be more conservative." Healso reiterated the company's "overall continuing positive outlook,including the delivery of a 20% revenue gain in this holidayquarter.

"Our new retail store volumes continue to surpass our initialprojections both in existing markets, such as Glendale, AZ, and innew markets, such as Rochester, MN," said Frankfort. He projectedlow single-digit comp-store sales for the North American retailstores and comps of "at least the mid-teens" for its factory outletstores.