Also, please note that during this conference call, we may discuss certain non-GAAP financial measures as we review the company's performance. One of these non-GAAP measures is EBITDA, which is defined as earnings before interests, taxes, depreciation and amortization. A second non-GAAP measure is adjusted EBITDA, which excludes charges related to store closures. We use these measurements as part of our evaluation of the performance of the company. In addition, we believe these measures provide useful information to investors. Please refer to the appendix within the Investor Relations presentation for a reconciliation of these non-GAAP measures to the most comparable GAAP financial measures. I will now turn the call over to Theo.Theophlius Killion Thank you, Roxane, and good morning, everyone, joining us on the call today as we report our fourth quarter and fiscal year 2012 results. If you're following along with the slide presentation posted on our website, please turn to Slide 3. I'll begin by providing some texture to our financial results for the quarter and for the fiscal year, and then I'll outline our strategic focus for 2013. Starting with our fourth quarter, we delivered an 8.3% comparable store sales increase on top of a 9.8% increase in the same period last year. Importantly, this was our seventh quarter in a row of positive comps and our third consecutive quarter of achieving a positive comp on top of a prior year positive comp. In the quarter, we accelerated our progress towards returning the business to profitability. Our gross margin improved by 30 basis points, and our operating margin improved by 450 basis points. And as we continue to grow our top line, we gained further leverage on SG&A expenses. Finally, as we announced last month, we significantly improved our capital structure by refinancing our debt. This increased our liquidity, modified our covenants and will substantially lower our annual interest expense. We believe that these results are a clear affirmation of our accomplishments over the past 2.5 years. Essentially the same constituents that evaluated our business in 2010, our bank group and Golden Gate Capital concluded that our business is now stronger, healthier and that we've made important progress towards returning the business to profitability.
Now turn to Slide 4. I'm now going to cover our fiscal year 2012 highlights. For the year, we achieved a 6.9% comparable sales increase on top of an 8.1% increase in the prior fiscal year. Our operating earnings for the year were $19 million, a $47 million improvement year-over-year and represented the first annual operating profit since fiscal year 2008. These financial accomplishments are a direct result of disciplined execution of our multiyear strategy. During 2012, we achieved significant progress in every area of that strategy. First, we continued our focus on the merchandise assortment, improving the core by thoughtfully layering in proprietary product. During fiscal 2012, our core product mix improved to over 85%, and we introduced Vera Wang LOVE and Persona, 2 proprietary collections that you can only get at the Diamond Store. Both collections have performed well and have been expanded. We focused on striking the right balance between the value our guest demands and taking price increases. We delivered on this promise by maintaining competitive offerings with opening price points, while managing the impact of commodity cost increases.Another key area of focus in 2012 was our marketing presence, which was designed to support our merchandising strategies while also elevating our brands. There was no better validation of our marketing than to have 600,000-plus people opting in to view our television commercial montage for YouTube last holiday. And because speaking to guests is no longer a one-dimensional conversation, we expanded our Omni-Channel business model across mobile and social media, web stores and traditional stores to provide access to our products, where and when our guests want it. An important part of that strategy is our web store business. eCommerce sales increased 16% in 2012 and over 40% in the past 2 years. Revenue from eCommerce sales is now about 5% of total revenue, which doesn't adequately represent the true value of the eCommerce guest. We believe that most guests initiate their shopping experience online, researching and comparing what's available before making their purchase in one of our traditional stores. Read the rest of this transcript for free on seekingalpha.com