Good day, ladies and gentlemen, and thank you for standing by. Good morning. Welcome to the HSN Inc.'s Fourth Quarter and Full Year 2013 Earnings Conference Call and Webcast. This call is being recorded. Following the conclusion of today's discussion, the HSNi team will be taking your questions. With that, I'd now like to turn the call over to Felise Glantz Kissell, Vice President of Investor Relations. Ms. Kissell, please go ahead.

Good morning, everyone, and thank you for joining us. On this morning's call, we have Mindy Grossman, Chief Executive Officer of HSNi; and Judy Schmeling, Chief Operating Officer and Chief Financial Officer. Judy will initially review our financial performance. Mindy will then strategically discuss the business. As always, some of the statements made on this call may be forward-looking and as such, are subject to many factors that could cause actual results to differ materially from expectations reflected in the forward-looking statements. Additional information regarding these factors, as well as various risks and uncertainties, can be found in HSNi's earnings release filed with the U.S. Securities and Exchange Commission and available on the company's website. HSNi does not undertake to publicly update or revise any forward-looking statements. In addition, on today's call, there will be references to certain non-GAAP financial measures. These are described in more detail in the company's earnings release and SEC filings available on the HSNi website. You are encouraged to refer to the press release and SEC filings and to review the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP results. With that, I would now like to turn the call over to Judy Schmeling, HSNi's COO and CFO. Judy?

Thanks, Felise. Good morning, and thank you for joining us. We took a number of strategic actions throughout 2013 to position the company for long-term success. We had solid fourth quarter financial performance despite a highly competitive retail environment and shortened holiday shopping season. Highlights for the fourth quarter included record customer levels at both HSN and Cornerstone; digital sales growth of 8%, including mobile growth of 59%, driving an overall net sales increase of 4%; and adjusted EPS growth from continuing operations of 11% to $1.11 per share. At HSN, sales were up 2% to $697 million. We had sales growth in health, beauty and apparel and accessories. Sales were down in jewelry, culinary and electronics. As we have stated previously, we have taken deliberate actions to reposition our jewelry and culinary businesses and will continue to do so in 2014. Sales in consumer electronics were challenged in the quarter due to the lack of innovation and aggressive promotional activity in the marketplace. Digital sales at HSN grew 7%, with penetration up 190 basis points to 39.5%. Strong success in mobile is a key driver for this performance as we focused on customer targeting, enhancements and product assortment and simplified checkouts. HSN units shipped were unchanged while the average price point increased 1%, primarily due to product mix and reduced clearance activity, particularly in jewelry and apparel. Our return rate improved 120 basis points, reflecting lower returns in many of our product categories. HSN shipping and handling revenue was unchanged in the fourth quarter compared to a 10% decline in the prior year. HSN's gross profit increased 3% to $231 million. Gross profit margin increased 20 basis points to 33.1%, largely due to lower inventory reserves as a result of effective inventory management. HSN's inventory levels are down 17%…

Good morning, everyone. During the fourth quarter, as Judy outlined, HSNI demonstrated solid performance in a highly promotional environment that included a compressed holiday season. We maintained our strategic focus of offering unique and proprietary products while at a great value, which helped us achieve top line growth of 4% and a digital sales increase of 8%. As Judy mentioned, mobile sales grew 59% with mobile now representing 14% of our total business. We also ended the year with record customer levels at both HSN and Cornerstone. Throughout 2013, we successfully managed the company to position it for long-term growth by remaining focused on the customer, emphasizing our unique content, strengthening our digital platforms and further leveraging opportunities and synergies across the HSN and Cornerstone brands. Now to HSN. Sales increased 2% during the quarter, comping a 7% sales increase in the prior year. Gross margin improved 20 basis points and EBITDA grew 5%. For the first time in more than 2 years, HSN's average selling price increased during the quarter while units shipped were unchanged. During the quarter, our emphasis on acquiring new customers and retaining our best customers resulted in reaching a major milestone of more than 5 million active HSN customers. An increasing percentage of customers are mobile users. Total mobile customers were up 52% in Q4 compared to the previous year and up 59% for all of 2013. HSN's largest customer acquisition increases continue to come through digital, including mobile, with digital accounting for over half of the new customers we added in the quarter. Best customers grew 6%, led once again by our successful credit card loyalty program. During the quarter, 30% of HSN's sales were placed on our exclusive HSN credit card, an increase of over 200 basis points from 2012. We now have…

[Operator Instructions] Our first question will come from Neely Tamminga with Piper Jaffray.

So Mindy, if you could talk to us a little bit maybe what you're seeing quarter-to-date. Obviously, your guys' year end is December, a lot of retailers' obviously are January. For retail analysts, there's a lot of negativity out there on the weather. Just wondering how you guys -- what some of the implications are maybe on your business with some of these other retailers reacting to some of these severe weather conditions?

Yes. Look, the reality is that nothing's easy in today's environment. And certainly, in the past, I always didn't like when people use weather as an excuse, but this has been a little bit more extreme than what we've seen. So it definitely has an impact. Now having said that, the consumer is discerning and what we're really trying to do is maximize those categories and businesses that are working and strategically manage our inventory, which we have been. We're thrilled with where we are relative to that, and focus on categories such as beauty, such as home, where we're seeing traction.

Yes, so -- and as to follow-on to Mindy's comment, Neely, definitely, the retail environment is very competitive out there so we are seeing that in certain categories. Like Mindy mentioned, in women's apparel, particularly at Garnet Hill, as well as the unknown with how much this weather is going to continue to go on and would that somehow impact Frontgate as we move into March. Hopefully, this weather goes away. But that's always a worry for outdoor furniture, so we'll have to wait and see what happens in March.

And if I could just have one follow-up on the price point. I think it was a nice callout that your average price point was up 1% at HSN. Just wondering if you could give a little bit more color maybe by category, how that kind of shook out? And then how should we be thinking about price points in 2014? I mean, it sounds like you've got these initiatives working back in the right direction, culinary, as well as jewelry, so...

Yes. Actually, almost -- price points were actually up in almost every category except electronics because we intentionally chose not to play in certain things like computers where we would not make margin. It's just not how we run our business. But in most every other category, price points were up. Some of that, that you'll see is driven by the fact that we had less clearance, so really selling through on full-priced goods, which is definitely a positive.

And it looks like our next question in queue will come from the line of Victor Anthony with Topeka Capital.

Echo to first caller's comments. Good numbers, relatively speaking, given the macro backdrop. But my question is really just on Cornerstone. $1 billion dollar revenue run rate business. They'll probably do about $100 million on EBITDA on 2015. Strong digital presence. If you could help us understand the strategic value for keeping Cornerstone into the mix? And what are the exact synergies that you actually see between the TV shopping business and Cornerstone?

Sure. That's a great question, and most people who know me over the course of the years know that I feel very strongly about not -- Cornerstone is not a brand. I think that in our portfolio, we have 7 very valuable and strong brands and businesses that each have their own opportunity for growth, as you've seen. But what we have also is significant leverage by combining those businesses. And then as of last year, on the operational side, combining the totality of our business operationally with centers of excellence that can really work to drive synergies. And what we have said is we will be kind of updating everyone on the progress of the impact of those synergies, whether they be in supply chain, customer care, IT, et cetera. So that's on the back end side. On the front end side, I think that both HSN and our other brands are identifying opportunity for how they can help support the growth of one another. So I mentioned Improvements. Improvements is a great problem-solution brand. And just like we have developed proprietary brands on HSN, our Origami brand, our license with HGTV, we feel that Improvements is a brand that we can maximize on HSN because it's very demonstrable and very relevant to our customer. So it has a benefit to Improvements. It has a benefit to HSN. We can now cross market and that's just one example. Last year, we had synergies between 3 of our brands around Halloween, so it was HSN, Grandin Road and Chasing Fireflies. And then we took all our brands around More the Merrier with a big gifting strategy, which we will be doing again next year. So there's -- my feeling is that the whole is greater than just the sum of its parts and that's what we're beginning to see. And potentially, we hope to grow our portfolio where we will find fits. So it's really less about keeping Cornerstone. It's really more about maximizing the 8 brands that we have.

Our next phone question will come from Jason Bazinet with Citi.

I just had a question on uses of capital. When I look at your balance sheet over the past 5 years, you've delevered fairly significantly. I think to be in a position of no net debt, maybe this year or next. And you have a lot of free cash flow at your disposal even after your dividend. And you said, I think in the past, that if you pursue acquisitions, there'll be sort of small tuck-ins. So can you just talk a little bit about how you plan to use either the borrowing capacity or free cash in the business over the next few years?

Sure, Jason. I think as we've articulated previously, we continue to strategically look at acquisitions. And we are and have been very active looking at all different types of acquisitions, whether it's brand for the Cornerstone business or something that would be relevant HSN or even more importantly, if it was something that could broaden and cover both business models that we have. So I don't think that we only said they were only small tuck-ins. It's just that we're not going to be doing some huge transformational acquisition. So I think that, that is definitely -- still remains one of our highest potential uses of cash, and we are very active in trying to look at the right properties to really accelerate our growth. Having said that, it is -- we are very discerning. We want to make sure that it has good quality management, good growth potential, that being part of the HSNI family, we can add value to the business. So we are -- and of course, not overpaying for something. We're very cognizant of that as well. So -- but we continue to think that at is going to remain one of our highest uses of cash on a longer-term basis and then, as well, our investment or reinvestment back in the business. We will be accelerating use of our capital that we have outlined previously in terms of investing in our warehousing to speed up delivery and reduce our cost, transforming the HSN systems environment, improving our customer service via those system transformations and really enabling us to have more marketing programs, so that continues to be -- will be a much more significant use of cash over the next 3 to 5 years on the HSN side of the business. And then we will also, obviously, continue to look at our return to capital program for our shareholders, including the share repurchase program, which we continue to remain opportunistic and that I think that's the strategy that we've articulated, as well as continue to periodically review our dividend. As you point out, we clearly have continued more room to be able to return cash to shareholders.

And our next question in queue comes from Trisha Dill with Wells Fargo Securities.

Just had a couple of questions. First, on Cornerstone. So when we look at sales trends there, they remain relatively stable, but decelerated on a 2- and 3-year trend relative to the last several quarters. And you called at some challenges in apparel, but just wanted to focus on home for a minute. Are you seeing any change in the growth of the home brands? And is weather having any impact there on order velocity or perhaps your ability to deliver there?

Really, on the home brands, we still feel confident in those businesses. Certainly, as Judy mentioned, weather can have shift implications for the big outdoor season. For example, 2 years ago, it was very warm and we saw a pull forward, and then last year, it normalized, so it's more in the second quarter. So I think that impact is really around just the shift within that business.

Yes. We continue to see strong growth over the course of 2013 for the home brands. And it's our expectations we'll continue to see that growth. The slowdown in the overall increase in sales was related to the women's apparel side of our business with the 3 brands that we have on that business.

Great. And then you recently talked about investing in data analytics and marketing last quarter after you announced some restructuring. And just wondering if you can provide any more detail on what you're planning to do here that's different from a marketing standpoint and maybe what the magnitude of this may be on expense growth in 2014?

Sure. So we have a multi-year system "transformation," but Phase 1 was very specifically around data analytics and an enterprise view of the customer to be able to go beyond just what we've had in terms of transactional data and really marry that to our new capabilities to be able to more effectively communicate, target our customers. We implemented Phase 1 of that in the middle -- towards the middle end of the fourth quarter, so doing a lot of testing right now. We feel very positive about the implications, but we're obviously going to be measuring that throughout the year relative to ROI. Our other system enhancements are really around quarter management, really more functional. And the reason we did this phase, first, is we felt it was going to generate the ROI.

Yes, Trisha. And in terms of impact on our expenses on a go-forward basis, we really have allocated part of our marketing dollars and taken dollars from other areas of the company to invest in this. So I don't anticipate, at this point in time, that you'd see any substantial difference. Now having said that, if for some reason, there was a significant reasoning [ph] because we saw such a great return on it, then we would clearly articulate that. But at this point in time, I don't see any significant change.

Our next phone question will come from the line of Matt Harrigan from Wunderlich.

I think it's been interesting to watch the transition and the perception of the HSN brand among the general populace. I mean, you have very high brand recognition. When you look at things like United Entertainment Group and the movies and everything, how does your brand perception track actually even among your noncustomers? Is that something -- obviously, there's leakage from that into your customer base based over a period of time. Is that something that's really a premise behind UEG and some of the other things that you've done? And then secondly, when you look at the gamification, I'm just curious how the activity there tracts among your best customers and among your new customers? I mean, how -- I'm sure it's a younger, probably more mobile profile, but do you have any estimate for the composition of the buckets in terms of who plays the Arcade games?

Sure. Great question. So as it relates to the HSN brand and what we're trying to accomplish in terms of awareness, as well as acquisitions, certainly, as well as entertaining and exciting our existing customers, we did a lot of work in terms of brand study around the perception of our brand a number of years ago. And we've been tracking that to gauge both perception and awareness, and we have definitely seen positive momentum on -- in both of those areas. And I think it's been a combination of a number of things, certainly, the products and the pipeline and what we done. But it's also these, I'd like to call them, transformational collaborations that we've done that creates a lot of both PR awareness for the brand and it exposes our brand to customer bases that wouldn't have potentially been aware, and that's everything from our movie partnerships to some of our celebrity integration to our live music events. So we feel that because we are such a content-rich retailer, that a lot of people kind of wish they had that content, how do we make that content become media and inspire people to want to come in to the brand? So that definitely has been a big part of the strategy. And it's not celebrity for celebrity's sake, we really look at authenticity of who we're going to partner with and why we're going to partner with them.

Yes. And the second question was relative, I think, to the demographics?

Yes, the gamification and just -- the people who -- mobile customers, younger customers, best customers...

But actually, what's really interesting is the reason that we launched Arcade is because we had done a lot of research on our existing customer. And we knew that this woman loves to shop, she loves sharing, she loves community platforms, whether it be Facebook or Pinterest, and she loves to play casual games. Women 35 to 50 make up 65% of that population. So we said, "Why can't she do that with us? And why can't we give her incentives that are going to make her feel great? She can win prizes. She can win points." We do find that of our Arcade customers, that definitely, the best customers fall into that category in the kind of the longer they stay, from an engagement point of view, the better that is because we're exposing her to more of HSN while she's playing those games. Now specifically, mobile, that is where the youngest, most affluent, diverse customers coming in. And now we have the capabilities to have Arcade on those devices so we -- just recently. So we'll measure what the impact of that will be. And then just gamification as a whole, which is really around reward for activity. As I mentioned, within the next quarter, we'll be integrating more of that within the site itself even off of the Arcade platform.

Our next phone question will come from Barton Crockett with FBR Capital Markets. Howard Ma - FBR Capital Markets & Co., Research Division: This is Howard Ma filling in for Barton. I know that you've mentioned that HSN continues to remain opportunistic with share repurchase. But the pace in the quarter was a step down from early in the year. Also, your repurchase authorization is almost exhausted. Could you talk about your considerations for the pace of buybacks and timing for an increase in the authorization?

Sure. In terms of -- I think we've articulated before, we don't really have a set number of shares. You can see us one quarter buying 2.7 million, another quarter buying 900,000. So there really isn't a set number of shares or dollar amount that we have articulated nor that we follow. So we do continue to remain opportunistic. And I think from the shares that we've repurchased [indiscernible] under our share repurchase authorization, our average price paid per share is in the $44 range. So we feel really good about our ability to continue to be active on our share repurchase program in a very smart way. And then in terms of the reauthorization, we do have approximately 1 million shares left in our share repurchase authorization from the Board. The Board, and in consultation with management, we continue to look at that. But at this point in time, since we continue to have 1 million left, there has been no decisions made in terms of an increase in our authorizations. Howard Ma - FBR Capital Markets & Co., Research Division: And could you also talk about your CapEx expectations and priorities for the year?

Sure. What we had articulated was capital expenditures in the $50 million to $70 million range in 2013. We were at the low end of that range. And in 2014, we'll probably end up being in the high end of the range, towards the $70 million number, which is primarily a result -- the biggest single investment is moving on our warehouse automation project. So that will be some significant capital expenditures in 2014. We also continue to work on the customer analytics, we have some additional work left on that, as well as our normal recurring CapEx in the business.

Our next phone question will come from Ben Mogil with Stifel. Lee Hon Siong - Stifel, Nicolaus & Company, Incorporated, Research Division: This is Kevin Lee for Ben Mogul. I was just wondering if you can talk about the return rate at HSN and Cornerstone in the quarter? It was much lower than we have previously seen. And is that predominantly due to product mix?

Sure. So let me -- there are 2 different reasons for that. On the Cornerstone side, most of that is product mix shift as the home brand continues to have higher sales growth. In the apparel brands, that mix shift is going to just automatically have a lower return rate. On the HSN side of the business, we are actually seeing lower return rates in all of our product categories. We have continued to make that a big focus for us to continue to focus on the quality of the products, making sure that the fit is appropriate, making sure that we are articulating that, both on the on-air programming, in terms of what you're exactly getting for your -- what you're buying, as well as continuing to improve our product information pages on our website. So that entire process is also leading to that lower return rate.

And our next question will come from Anthony Lebiedzinski from Sidoti & Company. Anthony C. Lebiedzinski - Sidoti & Company, LLC: Just wanted to follow up on the previous question regarding the warehouse automation project. So can you give us expected timing of when you expect to complete this? And how should we think about the impact on margins once you complete that process?

Sure. It's actually a multi-year process because we are going through on automating our warehouses in its entirety. So it's going to continue to incur over the next 3 to 5 years. The biggest part that we'll be doing is with one of our warehouses. So the investment that we're making is multifaceted in terms of really improving the delivery time to our customer and making sure that we can continue to have more capacity in our warehouse -- our existing warehouses versus having to go out and build additional warehouse space, so utilizing the cubed space much more efficiently. Anthony C. Lebiedzinski - Sidoti & Company, LLC: Okay. And then also a couple of months ago, you signed an agreement with Univision. Just wondering if you could give us an update on that? And could we see similar programs rolled out in the future?

So as you know, we announced the Univision partnership. It's very, very much in the test development stages right now. So what you'll see throughout the year are -- will be different implementations with the business right now. Boutique Univision is up. But again, we're in the test phase there. Now as it relates to other opportunities, certainly, we're always looking for collaborations that we feel are going to be effective, and we have done some other things in the media space. So for example, we do have the license for HGTV, Home & Garden, and we're developing all-exclusive and proprietary products. And the benefit of that certainly is the co-marketing between our 2 brands and having the authority of HGTV and their experts and their marketing for us. So we're constantly looking to see what partnerships and collaborations we think can extend our brand. Anthony C. Lebiedzinski - Sidoti & Company, LLC: And also, I was wondering if there was any way that you could perhaps quantify, give us some color, about your thoughts on the impact of the shorter holiday season on your results?

It's hard to say exactly what those -- that impact would have been. But I can definitely say, there was an impact in terms of people still were waiting until post-Thanksgiving timeframe to make their purchases. So I think that, in and of itself, compresses the time window and perhaps they weren't purchasing as much as they normally would have. And of course, we are also direct-to-consumer as well, so it's harder to get that complete last minute shopping. So like it's hard to say exactly a specific number, but I think across all of our brands, there's definitely a feeling from the front of the house, there was a definite slowdown as it relates to that.

And I also think that as a result of the shortened timeframe, I would say, in the years that I have certainly been in retail, I think it was significantly more promotional externally and early. And I think that's why you're seeing some of the margin pressures at other retail. Anthony C. Lebiedzinski - Sidoti & Company, LLC: Got it. And lastly, what is your expectation for your tax rate in 2014?

It will be back up in the 37% to 38% range.

And presenters, at this time, I'm showing no additional phone questions. I'd like to turn the program back over to Ms. Grossman for any additional or closing remarks.

Sure. Well, thank you, everyone, and we look forward to talking to you on one-on-one.

Thank you, presenters, and thank you, ladies and gentlemen. Again, this does conclude today's call. Thank you for your participation, and have a wonderful day. Attendees, you may log off at this time.