Good morning and welcome to the Third Quarter 2016 Crocs Inc. Earnings Conference Call. My name is Brendan and I'll be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Please note this conference is being recorded. And I will now turn it over to Brendon Frey. You may begin, sir.

Thank you. And thank you, everyone, for joining us today for the Crocs' third quarter 2016 earnings conference call. This morning, we announced our third quarter 2016 financial results. A copy of the press release can be found on our website at Crocs.com. We would like to remind everyone that some information provided in this call will be forward-looking and accordingly, are subject to Safe Harbor provisions of the federal securities law. These statements include, but are not limited to, statements regarding future revenue and earnings, prospects and product pipeline. We caution you that these statements are subject to a number of risks and uncertainties described in the Risk Factors section on the company's 2015 report on Form 10-K filed on February 29, 2016 with the Securities and Exchange Commission. Accordingly, all actual results could differ materially from those described on this call. Those listening to the call are advised to refer to Crocs' Annual Report on Form 10-K, as well as other documents filed with the SEC for additional discussions of these risk factors. Crocs is not obligated to update these forward-looking statements to reflect the impact of future events. The company may refer to certain non-GAAP metrics on this call. Explanation of these metrics can be found on the earnings release filed earlier today and on our investor website, once again at Crocs.com. Joining on the call today are Gregg Ribatt, Chief Executive Officer; Andrew Rees, President; and Carrie Teffner, Executive Vice President and Chief Financial Officer. Following their prepared remarks, we will open the call for your questions. I'll now turn the call over to Gregg.

Thank you, Brendon, and good morning, everyone. This morning, we announced our third quarter 2016 financial results. Revenues were $245.9 million, in line with our guidance. And net loss attributable to common shareholders was $5.4 million. While sales reflected generally tepid consumer environment for non-athletic footwear and corresponding retailer caution, our financial results demonstrate the more strategic management and resulting improvements of our business. Our adjusted gross margin was approximately 700 basis points above last year; and approximately 200 basis points above our guidance as we focused our business on higher margin molded product and reduced our promotional activities. In addition, we managed our inventories down $21 million, or 11% from last year. Over the past two years, we've elevated the capabilities of the team and successfully implemented a more strategic and stable operating platform. Specifically, we've narrowed our product line, reduced our inventory levels, reduced our retail store footprint, created a product development engine focused on delivering stronger gross margins, achieved top quartile customer service levels for on-time and in-full deliveries, completed the transition of parts of our China business from challenged distributors and increased our focus and simplified our business model by converting subscale markets to distributors. Despite this progress, we are anticipating the retail environment to remain challenging. Having restructured our business and tightened our operating practices over the past two years, we believe we can gain market share and deliver profitable revenue growth over time. We're planning our business cautiously, including accelerating the pace of improvements in our cost structure. These efforts are primarily focused in three areas: first, reducing SG&A as part of our increased focus and simplification efforts; second, driving efficiency through business process improvements as we leverage our more mature SAP implementation; and third, optimizing our distribution logistics costs through more effective supply and inventory planning and execution. Our product line for fall holiday 2016 and spring/summer 2017 continues to improve from a consumer perspective as we leverage learnings from each season which will better position us for the future. In the quarter, we unveiled our collaboration with leading designer Christopher Kane, which drew a great deal of positive media attention. And in the near future, we will announce exciting enhancements to our marketing campaign for spring/summer 2017. I'm pleased that we continue to be more strategic in managing our business and executing at a higher level than we have previously. We're focused on driving quality revenue growth in this challenging environment and I'm confident that we will do so. Now, Andrew will provide some additional thoughts on the quarter and future direction.

Thank you, Gregg. The global environment continues to be challenging. In the U.S., the consumer remains cautious within the non-athletic footwear category. In Europe economic growth remains tepid and security concerns have affected tourism and shopping in key markets. And in Asia, growth has moderated driven predominately by the economic slowdown in China. Against this backdrop, global wholesale revenues declined 17.9% with declines reflected in all regions. Carrie will cover the regional performance shortly, but before she does, I want to put our third quarter global wholesale revenue performance into perspective. Wholesale revenues were impacted by three key items. Firstly, a planned reduction in sales to discount channels. This was primarily in Europe and the Americas where we deliberately chose to reduce revenue in this channel as we work to elevate the brand. Secondly, a planned reduction in sales to distributors. This was primarily in Asia, where we still have some distributors with excess inventory and we've been conservative in shipping them in order to help them right-size those positions. And finally, at-once orders came in lower than planned as retailers continue to be cautious with the open-to-buy dollars and are focused on reducing inventories. In terms of direct-to-consumer revenue, while year-to-date DTC comps are up 2.4%, our DTC comps for the quarter were down 2.6%. In the quarter, retail comps declined 2.8% in the Americas, 5.8% in Asia and 0.9% in Europe. High single-digit traffic declines across all regions were partially offset by improved conversion and UPTs. In addition, retail gross margin improved approximately 70 basis points versus expectations, through a higher mix of molded product and more careful management of promotions. Given our retail performance, we are being extremely disciplined in managing our store portfolio, trimming store count selectively in the U.S. and Europe, while opening a limited…

Thank you, Andrew. Revenue in the third quarter was $245.9 million, down 10.3% from a year ago on an as-reported basis. Wholesale revenue was down $23.8 million and DTC revenue was down $4.4 million, reflecting DTC comps of negative 2.6%. We ended the quarter with 554 stores, three fewer stores as compared to Q3 last year. Currency had a 1% or $3.5 million positive impact in the quarter and the sale of South Africa, which we've discussed on previous calls, reduced revenue by $2.6 million in the quarter. Given the minor impact of currency in the quarter, all the revenue results which follow are quoted as-reported. In the Americas, revenue was $114.7 million, down 8% versus prior year. Wholesale revenue was down 15.3%, driven by lower at-once and reduced discount channel sales. Retail sales in the Americas declined 4.8%, reflecting a negative 2.8% comp, and seven fewer stores as compared to the same period last year. E-commerce revenues were up 2.1%, resulting in Americas DTC comps of negative 1.7%. In Asia, revenue was $90.9 million, down 8% versus prior year. Wholesale revenue was down 14.7%, as we deliberately reduced shipments to several distributors in an effort to help them reduce their on-hand inventory levels. Retail sales in Asia declined 2.9%, reflecting a negative 5.8% comp and increase of eight stores in the quarter compared to last year, primarily in China. E-commerce sales in Asia rose 14.1% resulting in Asia DTC comps of negative 2.4%. In Europe, revenue was $40.0 million, down 20.1% versus prior year. Wholesale revenue declined 27.6%, due primarily to less discount channel business as compared to Q3 last year. Retail sales in Europe declined 4.5%, reflecting negative 0.9% comps and four fewer stores in the quarter compared to last year. E-commerce sales in Europe declined 18.4% due…

Thanks Carrie. The third quarter proved as challenging as we had expected in terms of revenues. At the same time, we continue to make significant improvements in the way we run the business. In the near-term, we expect a difficult retail environment to continue. We must do a better job of driving quality-revenue growth and improving our profitability by continuing to enhance our gross margin and more aggressively reducing our costs. The work we've done to simplify our business model and improve our processes will continue, enabling us to improve our bottom-line. I continue to believe that we are on the right-track and while it is taking longer than we would like, I'm confident that we will drive growth, profitability and shareholder value in the future. Now, operator, we'll open the call up for questions.

Thank you, sir. And from Robert W. Baird, we have Jonathan Komp on line. Please go ahead. Jonathan R. Komp - Robert W. Baird & Co., Inc. (Broker): Yeah, hi, thank you. I'd like to just ask a few questions about the Americas wholesale performance and maybe just starting with a bigger picture question. Gregg, I'm wondering if you could maybe help parse out what gives you comfort that some of the pressure you're seeing is more externally driven versus any sign that the brand and the marketing direction are resonating like you thought it would?

Sure. So at the end of the last quarter, we got into a revenue range of $245 million to $255 million. And we are obviously in the bottom end of that range. And that guidance included planned reductions of the discount channel sales in the Americas and in Europe and reduced sales to distributors in Asia with a focus on really trying to help address some excess inventory we had in that channel. So relative to guidance, we were disappointed with kind of at-once and some of our DTC comp performance. But we've seen our business stabilize in a number of areas. And we think we've made significant progress in areas like the improvement we showed in gross margin, kind of where we are from an inventory standpoint, marketing work and some of the kind of recent brand study work that we've done. And we are focused on driving quality revenue growth. We think that we are better positioned today to do that and that we continue to see signs that give us confidence in the future.

Yeah. And, Jonathan, clearly, you see major retailers trying to manage their business close to market. They are trying to work down their inventories and so we think that was kind of some of the primary impact on our at-once in the quarter. Jonathan R. Komp - Robert W. Baird & Co., Inc. (Broker): And just following up, is there any color you can provide on different areas or channels or even geographic areas where you're seeing outsized weakness or strengths from a wholesale perspective?

Sure, we continue to see solid sell-throughs in the channels that have been core channels for us, our key strategic channels, such as eTail, family and sporting goods and sporting goods include DICK'S and Academy. And we've been talking about those channels for a while, and we feel very good about them in terms of what our performance has been and the role that they played for us going forward. We did see some challenging performance in department stores in the U.S., and frankly, as we've talked about in the past, that's our smallest channel of those channels and least strategic in terms of our focus in terms of how we're going to drive growth going forward. So from a channel perspective, we feel pretty good overall about what our sell-throughs are and how that sets us up for the future.

Yeah. And I think on the other side, as we look around the other side of the world, we really feel like we've drawn a line into China. We've completed the transition from our challenged distributors. We've talked about that in the script in terms of opening 19 stores, transitioning 24 stores to existing distributors. And I think we grew that market at mid-single digits on a constant currency basis, and we feel like we're in a really solid place to grow there in the future. Jonathan R. Komp - Robert W. Baird & Co., Inc. (Broker): Okay. And then maybe just one last one on the wholesale business, I understand visibility may not be all that great sitting here today. But just given what you see forward-looking in terms of the spring, summer and the fall product line for next year and the marketing plans, any help just trying to dimensionalize what do you think the wholesale business might get back to growth again, how long you might think that could take to happen?

Yeah. So I think we continue to get – we've been obviously in front of our key accounts with our Spring/Summer 2017 line now for a couple of months. We've been getting very positive feedback on the line and we're excited about the prospects for that. But it does remain a challenging retail environment. Retailers have been very cautious with their open-to-buy dollars. So on one side I think we're getting positive feedback on the progress that the brand is making, the progress the product is making, but they're being cautious with their open-to-buy dollars. We can't say too much about our marketing programs. I think Gregg highlighted in the script, we will be in the coming weeks unveiling a significant investment in marketing and a key strategic shift that we're making there. We're super-excited about that and we have been talking to some of our key relationships under NDA for that. Jonathan R. Komp - Robert W. Baird & Co., Inc. (Broker): Okay. Thanks for the perspective.

Thank you.

From Piper Jaffray, we have Erinn Murphy. Please go ahead. Erinn E. Murphy - Piper Jaffray & Co.: Great. Thanks. Good morning. I guess just following up on some of the questions on wholesale. Can you just talk a little bit about how retailers are thinking about big picture like Spring/Summer 2017 from an initial order perspective, particularly if weather – I know it's not as sensitive to you guys in the season as others, but if weather really doesn't cool, does that push out maybe the timing of your Spring/Summer 2017 line hitting wholesale or even the initial upfront that a retailer is willing to take?

Yes. I think the way I'd answer that, Erinn, is a portion of our business is pre-book and placing those orders that are obviously scheduled for delivery on specific dates that actually start in November and December of this year. We've got a limited amount of Spring/Summer delivery in the back portion of this year for major retailers that have hot doors where they take that merchandise in. It's scheduled for delivery through the first quarter of next year. As you get into the quarter, do they start to try and push some of those dates a few weeks? Maybe. But we don't think that's likely. I think as they come out of fall holiday and I think they're in their best interest to liquidate their fall goods and shift to Spring/Summer and be season-right. But they've been excited about the product line. We feel good about where the product is, but at the same time they're trying to manage their business close to market and being a little cautious with their open-to-buy.

And Erinn, I'd add that we're trying to plan our business cautiously given the overall environment and we feel we're in a very good place to do that in terms of how we're managing the business, the team we have in place, the visibility we have in terms of how we're operating. So we are definitely taking all that into consideration as we think about the future. Erinn E. Murphy - Piper Jaffray & Co.: Okay so then, just said simply, any kind of caution that retailers have right now in terms of the initial conservativeness of the pre-book that's already reflected in how you're thinking about the fourth quarter? I guess I just wanted to make sure that I'm understanding that. And then how much of your fourth quarter revenue would you consider would be reorders or dependent on the retailers coming back and replenishing?

Yes. If we look at last fourth quarter, so as a guide, about just over 70% of the business is pre-booked in the fourth quarter. So the remainder is wholesale, the wholesale business. So the remainder is at once. But also, as a reminder, the fourth quarter is a high DTC quarter where we have about – just under half of the business is wholesale, the rest of it DTC. Erinn E. Murphy - Piper Jaffray & Co.: Got it. That's helpful. And then maybe just on the SG&A side, you talked in your opening remarks about some of the opportunities to better manage costs. Can you flesh out some of those buckets, and how meaningful could that be as we get into next year? And then obviously offsetting that, it sounds like – and I know you can't share a lot of details now, but it does sound like you will have a decent uptick in marketing. So just trying to understand the opportunity from a P&L perspective next year on the SG&A line in aggregate.

Sure. Erinn, as we mentioned on the call, we've obviously done a lot of work over the last couple of years kind of getting the business in a good shape with a narrow product line, improving our deliveries, reducing inventory levels. What we talked about on the call in terms of additional areas where we expect we can drive efficiency and help drive lower cost is really in the area of how we simplify our business. And examples of that would be the South Africa move, the Taiwan letter of intent that we talked about. Also, now that we've had a year, almost two years now on our SAP platform, we now have the opportunity to drive more efficiency and better utilize that system now that we're more stable on that platform. And then finally the other area is really around distributional logistics and how we can optimize that network to help drive costs as well. What we talked about on the call is, we're doing a lot of work in this area now and so we'll talk more about this on the next quarter call in terms of what we think the impact will be and the timing of that in 2017 and beyond.

Yeah, and Erinn, one way to think about certainly the last two points, leveraging the SAP environment and optimizing distributional logistics, we had to get SAP up and running and we had to get our deliveries solid and stable before we could start driving efficiencies out of either of these areas. So we certainly have felt that coming into 2017 that was going to be the opportunity to really transition from getting stable to starting to drive efficiencies, and that really is how we're thinking about it and how we're trying to transition in our approach to these two areas. Erinn E. Murphy - Piper Jaffray & Co.: Got it. Thank you, guys. I'll let someone else hop in.

Okay. Thanks, Erinn.

Thanks, Erinn.

From Susquehanna, we have Sam Poser online. Please go ahead.

Good morning. Thank you for taking my questions. A couple things; number one, can you walk through China in a little more detail as to where you are now? It sounds like you're much more confident for how it's set up, and then maybe some of the stuff you still need to do there?

Yes, Sam, certainly. So if you remember, our key challenge in China was a group of distributors who were no longer growing the business and who we had a significant amount of bad debt that we wrote off with. Those distributors are completely out of the business at this point. Our relationship is terminated. We're no longer doing business with them. And then what's really important is the retail stores that they operate or some portion of the retail stores they operated, we've opened 19 stores which are directly managed; that brings our overall store count to just over 50 stores, and we now run those. And then we also transitioned an additional 24 stores that they operated to existing distributors who are operating those stores. So we feel like the business has stabilized. How do we grow it in the future? There's a couple things; we're looking for new representation in some territories where we don't believe that we're adequately represented, that a new party could continue to grow the business and could drive the brand. And we're seeing very positive results in our DTC business both retail and e-commerce with high-double-digit comps in our Chinese store base. And as you know, coming into the fourth quarter we are looking at some key festivals 11/11 and 12/12 which are huge e-commerce events in China. So in Q3 we grew the business at mid-single digits in constant currency terms and we feel like this is a really solid foundation for the future.

Thank you. And then, Carrie, can you just repeat what you said about the fourth quarter SG&A? Were you saying it's in line as a percent or in line in dollars with last year?

Yeah, great. Thanks and good point to clarify. We've indicated it's really going to be slightly down in terms of dollars as compared to last year, and that is a little bit up as compared to where we had guided at the end of the Q2 call. And the reasons for that is really we've got some additional expenses planned in the quarter – the fourth quarter, associated with our efforts around lowering our cost base for 2017 and beyond. So that's really the driver of the increase that you see in the absolute dollars.

So I mean last year you said $121 million. Are we talking about – I guess can you give us like a range of where you're thinking in absolute dollars?

Yeah. So when I say slightly below, we're talking about $1 million, $2 million below last year's level.

And then when we think about next year, some of that falls away I would assume...

Yeah.

...what you're doing to set up for next year. So a good chunk of that would fall away because you had – the SG&A was $10 million below last year in the quarter. Or are we looking at about $120 million a quarter as a good run rate or in that ballpark?

Yeah. I would say, the key thing to think about relative to 2017 from an SG&A standpoint is we are working diligently to continue to take out costs and ultimately leverage our SG&A as a percentage of sales. That said going into 2017, a headwind that we do have is that we do need to reset our variable comp for next year. But we're taking that into consideration and working against that as well. So as we think about next year, and we'll guide more specifically when we get to our Q4 earnings call, but the takeaway I want you to have is that we're diligently focused on improving our SG&A cost structure.

Okay. From Buckingham Research, we have Scott Krasik on the line. Please go ahead.

Yeah. Hey, everyone. Thanks. So if I just look at the roughly $7.5 million decreases in Americas wholesale and I guess Europe a little more than that, can you quantify how much of that was reduced sales to the off-price channel? And then are you going to take that same approach in spring 2017 and roughly how big a business was that in spring 2016? And I have a follow-up.

I'll start and then maybe Gregg will jump in. So as we think about Q3 and Q4 last year, I think it's important to remember that we did do a lot more in terms of discounting and promotion and sale of end-of-life products, as we tried to clean up our inventory base heading into Spring/Summer 2016. So we are lapping that more so in the back half of the year than the first half type thing to think about for Spring/Summer 2017. As we think about Europe and the wholesale decline in Europe, what I would say there is the majority of that decline in Europe in wholesale is directly related to our deliberate choice to sell less product to the discount channel there. And then the Americas it's a combination of both less discount channel sales as well as less promotional deals in the quarter.

Yeah. And this is something we've been focused on, Scott, throughout the year. So while it continues to be a focus going forward, so we are focused on quality revenue growth, as Carrie mentioned, it was a larger issue in the back half of the year.

Okay. So while you're expressing some caution or conservatism around bookings and the pace of growth in Spring/Summer 2017, the pullback in discount sales is not going to be a primary contributor to that.

Yeah. And I would say, Scott, we are planning the business cautiously and I think that's absolutely given the overall retail environment. And I think, at the same time, we are focused on quality revenue growth. And so I would think about those side-by-side, and it's a real – we believe it's the right strategy for the business. And look, our gross margins, the effect that this had on gross margins in Q3 is a real positive, and that combined with where our inventory is, we feel we're well positioned to execute this and really drive shareholder value going forward.

And then just thinking is returning to a 50% gross margin is that still the goal?

Yes. So we actually do think that the gross margin rates in the low 50%s is actually feasible, and we think we're on schedule to be able to deliver that by 2018. So we definitely feel like we've put all the foundational elements in place and we're doing the right thing from a product and brand standpoint to make that happen.

And then, just sort of, Gregg, if you think about – your goal is to return to profitable top-line growth, if that happens because it feels like that's probably not going to play out maybe in the first half of the year, at least the initial look is that. What category or what region do you think will really drive that? What should be the markers that we would look for that you are ready to reaccelerate the business?

Yeah. Look, we have seen very positive feedback and reaction in many of our core categories. So clogs, sandals, areas of the business that we've had a strong heritage and areas of the business that we've invested in to kind of innovate and freshen-up to drive kind of newness and excitement. So we feel really good about that. We also think the work we've done around stabilizing the business sets us up that we can operate differently and the work we've done in China frankly positions us to drive growth there. So I think, from a regionality standpoint, we feel good about Asia, as kind of being a critical area of growth for us. But we feel confident in terms of the direction we're heading. We're talking about being cautious is, it's a different retail environment. We've got to drive kind of the gross margin improvements, we've got to manage our expenses aggressively, and then we've got to drive quality revenue growth.

Okay. Thanks, and good luck.

Thank you.

From B. Riley, we have Mitch Kummetz online. Please go ahead. Mitch Kummetz - B. Riley & Co. LLC: Yeah, thanks. I've got a few questions. So, Gregg, I think it was you or maybe it was Andrew who made the comment about Classic clogs being up double-digits in the U.S., I just was hoping for some additional sort of context around that. I mean first of all, did I hear that correctly and if I did, can you elaborate on that like what percent of the U.S. is that? And if that was up double-digits, then I'm guess something else, was it very strong and can you talk a little about it as well?

Yeah. So, I think, Mitch, if you take this all the way back and one of our initial strategies was to reinvest from an innovation perspective in our core clogs business. For a reminder, overall clogs, not just Classic, but overall clogs, there are many other clogs we make, are about half the business. And a couple of elements of that strategy in terms of product where one is narrowing our breadth of assortment within clogs into the key franchises and platforms. Those key franchises are number one, Classic; number two Crocband and then there are couple others that are important. The second was driving both color, seasonal color and print innovation into those franchises so there's more reason to purchase in season. And so we think that's been very successful and the double-digit we referenced in North America was a combination of our retail sell-through and our wholesale sell-in where we've seen double-digit growth in our sell-in and sell-through of the Classic clogs. Mitch Kummetz - B. Riley & Co. LLC: Okay. And then on the Q4 guidance, particularly, on the revenue side, the range that you've provided, particularly if you kind of look at the midpoint of the range, I mean, that's a pretty big haircut from where you guys were previously indicating. I mean if I do my math right, I'm thinking like maybe like a $25 million haircut from the prior guide. And I'm just trying to understand, I know that you're more cautious on the environment, but I mean is that the entire reason for that big of a haircut?

I would say it's a couple of things. We're comping a pretty decent DTC comp in Q4 last year that was really driven primarily by again that end-of-life high promotional environment that we are operating in, so we're taking that into consideration. I would say the other thing is, while we are seeing bigger bookings related to Spring/Summer 2017 in Q4 as we had expected that increase is being partially offset by lower discount sales again as we deliberately tried to reduce that business to improve the quality of the product that's out there in the market and raise the perspective of the brand. And both of that's been factored into our guidance. So I would say that combined with, again, the cautious retail environment that both Gregg and Andrew have already mentioned...

Yeah.

...is what we've taken into consideration relative to Q4.

Yeah, I wanted to also remind you that, as we talked about it, the margin we're anticipating in Q4 is over 1,000 basis points higher than last year. So yes, the sales are lower than last year, but the quality of sales are dramatically improved in a very different perspective. Mitch Kummetz - B. Riley & Co. LLC: Okay. And then maybe last, Gregg, kind of a bigger picture question. I mean ultimately – I think you said that you're hoping to take market share, but I think a couple times in your script you also referenced a tough non-athletic environment. And it seems like kind of your core family channel on the wholesale side, it seems like those guys are continuing to move more and more into athletic, which I've got to believe is a bit of a headwind for you guys in terms of ultimately taking share. Can you just talk a little bit about that? I mean is that an issue as we go forward?

Yeah. So that is absolutely built into that cautious environment that we speak about. I mean clearly athletic, even though it's slowed down overall, is gaining share from a market perspective. And we're focused on gaining market share in the categories in which we compete. But those categories absolutely have some headwinds internally within the retailers based on kind of the shifts that they have going on internally. We feel we're well positioned to do that. That's what I will say. I think we have strong relationships with our accounts. I think those are something we constantly we work on, but we built that and we feel that are product engine and kind of our marketing plans will put us in position to do that very effectively. So we feel we're well positioned to do that, but it is absolutely a headwind. Mitch Kummetz - B. Riley & Co. LLC: Got it. All right, thanks guys.

Thank you.

And from C.L. King & Associates, we have Steve Marotta online. Please go ahead. Steven L. Marotta - C.L. King & Associates, Inc.: Good morning everybody. Can you talk a little bit about the geographic breakdown of fourth quarter sales, the anticipated decline of 10%, and where the strongest and weakest markets shake out?

Yeah, I mean, we typically don't guide at that level within the quarter. I would say – to talk about it from a channel standpoint, I would say from a DTC standpoint we're expecting to see a little bit of improvement from what we saw in Q3 from a DTC standpoint, and that's primarily related to some of the e-comm issues we had in Europe that we expect to be recovering from in the number, but we are comping a pretty high DTC comp from last year. And then in the wholesale business, again, the lower guidance is really reflecting a lower at-once assumption in terms of the cautious perspective that we're taking relative to that. So as you think about the various – across the regions, we still expect to be in a growth position in Asia, specifically in China in the fourth quarter as we kind of recover from a Q3 standpoint. And so we are projecting a little bit of softness across the board from the wholesale account business. Steven L. Marotta - C.L. King & Associates, Inc.: Okay. That's helpful. And my final question is – I understand the conservativeness surrounding the first half of next year and order flow and the challenging environment. In the totality when you consider your direct-to-consumer layered onto that, and inclusive of e-commerce of course, is there a chance at low-single-digit growth in the first half of the year or is that the stretch dream?

Are you referring to overall single-digit growth or are you referring to DTC? Steven L. Marotta - C.L. King & Associates, Inc.: Comprehensive. Overall.

Yeah. What I would say is we're not providing specific guidance on 2017 at this point. I think what we are saying – I guess the message we would like you to take away relative to spring-summer 2017 is we are being cautious. But we haven't indicated a specific growth or decline number obviously for spring-summer 2017. So I want to be careful about what people are taking away from the call around that message. Again, we feel good about the spring-summer 2017 line. We've had good receptivity. We've done a lot of work to improve the foundation from which we will grow from, specifically as we think about China and as we have exited underperforming retail stores. So I think we feel good about 2017, but we are being cautious and planning the business accordingly. Steven L. Marotta - C.L. King & Associates, Inc.: Okay. Thank you.

From Monness, Crespi, Hardt, we have Jim Chartier on the line. Please go ahead. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Thanks for taking my questions. Carrie, you mentioned you wanted to get SG&A to a point where you could start to lever again. What type of sales growth do you think you can start to lever SG&A again on once you start to take down the costs, benefiting from the SAP systems?

I don't really want to put out a revenue growth that we need to leverage. I think the opportunity we have is given the foundational elements that we put in place, the stability that we have come to over the last couple of years, we believe there's an opportunity to leverage the SG&A against that. Now we do have – like I said, have the headwind of the resetting of the variable comp, but otherwise we should be able to drive some leverage in SG&A once we adjust for that even as we think about a more cautious top-line revenue growth number. So that's what we want to be mindful of when Gregg talks about planning the business cautiously. Obviously, if you plan your business aggressively, SG&A, it's easy to say you're going to leverage SG&A. I think our point of view is let's plan the business cautiously, be ready to respond to the demand that's out there, but we need to control our SG&A costs in an environment that doesn't deliver that for us. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Great. And Andrew, you've talked about allowing your distributors in China to work through some excess inventory. Where are the inventory levels at those distributors now and when do you think you'll start to shift those distributors and they'll start growing again for you?

Yeah, so actually we have distributors in Asia and the biggest issues happened not in China, just to be 100% clear on that. So the distributors in Southeast Asia and the Middle East where we think – where we know inventory levels are heavy. And I can say we've made some good progress on that in the last three to six months. We think we've got another three to six months of working on that and then we'll be in good shape. Jim A. Chartier - Monness, Crespi, Hardt & Co., Inc.: Great. Thank you and best of luck.

Thank you.

And from Susquehanna, we have Sam Poser online. Please go ahead.

Yes. Two other questions. Can you give us some idea of how to think about the tax rate for the fourth quarter? And then in your inventory and in your sales, can you talk about sort of the percent of regular price and the percent of closeouts or promotional, because it sounds to me like you're really working hard to, as you mentioned, to clean up your distribution?

Yeah. So the tax rate in the quarter because the quarter was a loss and given geographic dispersion of where our income is and our losses are in the quarter, the tax rate percentages, you'll see it in the – looks completely out of whack. I think it's important – really it's more about where we are from a year-to-date from a tax rate standpoint and where we expect to be on a full year basis. And that's pretty much in line with where we were – I probably can't use last year's example – but it's pretty normalized tax rate in the 20%. Sam, I can follow up with you after, I don't have that at my fingertips. But Q3 will be unusual given the loss and the geography of the income. I don't know if that answers your question, but again we can follow up afterwards.

Q4 you meant, will be?

Yeah. Well, given the loss in Q3, the tax rate percentage is going to look unusual. So it's really looking at tax on a year-to-date basis and what we project for the full year.

All right. And in...

Go ahead, Sam.

And then as far as the percent of closeouts and so on and so forth?

Yeah. I mean, obviously we don't break out full price versus closeout sales. I think the key thing, yes, you're absolutely right, we're working really hard to clean up the business and the piece that we've focused on very coherently is the discount channels. As we talked about that in Europe and America, we've significantly cut back the proportion of business that we sell into those channels because we think that's undermining the brand in the long-term. We think this is an opportunity to elevate the brand. At the same time, it's a promotional environment right now. And so as we look at our DTC business, we are certainly not looking to lead the market down in terms of promotion and we're doing exactly the opposite. We are cutting back our promotions both online and in-store, but you do have to provide some additional incentives for the consumer to purchase and be competitive in the marketplace. So it's a balancing act as you know well.

And then, let me just come back on the tax rate real quick Sam, so year-to-date through September and the effective tax rate is 24%, but in the quarter what you'll see as you look at the key was the tax rate is 1000% in the quarter given the geography of the jurisdictions where we have income, So that's what I was trying to allude to in terms of Q3 will look unusual, but you've really got to look at it on a year-to-date basis.

Thank you.

Thank you. We will now turn the call back to management for closing remarks.

Okay. We just want to thank everyone for your questions, and we appreciate the support.