Ladies and gentlemen, good morning and welcome to the HSN, Inc. Second Quarter 2017 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 Art Singleton, Senior Vice President, Treasurer and Investor Relations. Mr. Singleton, please go ahead.

Good morning, everyone, and thank you for joining us. On this morning's call, we have the members of the Office of the Chief Executive, Rod Little, Chief Financial Officer; Bill Brand, Chief Marketing Officer of HSNi and President of HSN; and Judy Schmeling, Chief Operating Officer of HSNi and President of Cornerstone Brands. Rod will initially review our financial performance, then Bill and Judy will review their respective business units. As always, some of the statements made on this call may be forward-looking and as such, are subject to the 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 Securities and Exchange Commission and available on the company's web site. HSNi does not undertake to publicly update or revise any such 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 web site. You are encouraged to refer to the press release and SEC filings to review the reconciliation of these non-GAAP financial measures for the most directly comparable GAAP results. I will now turn the call over to Rod.

Thank you, Art, and good morning, everyone. On the last earnings call, we said the second quarter results would be impacted by the challenging retail environment, margin pressure as we move through excess inventory at HSN and incremental costs related to our supply chain optimization initiative. Our results for quarter two are consistent with this outlook, and in line with what we expected for the quarter. Across all of HSNi, we're focused on optimizing our portfolio for growth, while investing in operational execution for future efficiency and leverage. As we outlined in our last earnings call, we have four key priorities focused on: One, building upon our proprietary product pipeline and investing in key consumer growth categories and experiences; two, optimizing our digital platforms, particularly mobile; three, driving customer acquisition, engagement and spend; and four, developing and leveraging talent across the organization. At HSNi, sales were down 4% in the second quarter. However, after adjusting for the effects of the two Cornerstone brands we divested in September of last year, HSNi sales were down 2%. HSNi's digital sales increased 3% adjusting for the divestitures, while penetration increased 260 basis points to 55%. Gross profit decreased 40 basis points to 36.1%. Operating expenses were down $25 million or 9%, primarily resulting from anniversarying last year's $20 million asset impairment charge related to the divested brands. Our GAAP results were also impacted by $5 million of transaction costs related to the pending acquisition of HSNi by Liberty Interactive Corporation. Excluding the non-cash charges, which include the impairment charge and transaction costs, operating expenses decreased $4 million or 2%. GAAP EPS was $0.62 and adjusted EPS was $0.63 compared to $0.50 and $0.74, respectively, last year. The current year's results were affected by additional cost of approximately $3 million or $0.03 per share…

Thanks, Rod. At HSN, we just closed out our birthday month celebration; a flagship moment for us every year and especially important as we mark our 40th year. It's a special way for us to connect with our loyal customers and introduce new customers to our experience. We look forward to continuing the 40th celebration throughout the year. In many ways, the execution of birthday month reinforces our critical areas of focus, creating differentiated and proprietary product. A go-to-market strategy focused on unique experiences and compelling content, all enabling us to retain and acquire customers across all channels including TV, digital, social and beyond. Let's start with product. We are focused on building differentiation in our portfolio to continue to surprise and delight our customers. Categories that had growth in the quarter included health & wellness and home, offset by decreases in electronics, beauty, fashion and jewelry. On the health & wellness front, we continue to be very pleased with Andrew Lessman's ProCaps Labs business. He had an extremely strong quarter on both sales and customer growth. The customer base for this brand is now at a record high. This quarter, we executed our second live streaming event from Aspen (10:19) during the 24-hour Health & Wellness Day. It was a great way for our customers to engage directly with Andrew and learn more about improving their health. In home, crafts and scrapbooking continues to be a strong trend, driven by newness in the market. Our crafts events drive deep customer engagement and attract new customers, with strong unit sales. We continue to see strength in home, organization & storage, most recently with Joy Mangano's Huggable Hangers, a continued strong product for us. We celebrated the 20th anniversary of Huggable Hangers with a Today's Special this quarter that sold over…

Thanks, Bill. Good morning, everyone. In Q2, we saw sales growth of all of our brands with the exception of Improvements. Overall, sales grew 3%, excluding the impact of divested businesses. Digital sales and penetration continued to grow. Digital penetration, excluding Chasing Fireflies and TravelSmith, finished at 70% with digital sales growing 4%, an increase of 110 basis points to the prior year. We continued to strategically reduce catalog circulation by brand where appropriate and are investing more in retail and digital marketing to drive our overall demand. As a result, catalog circulation, excluding Chasing Fireflies and TravelSmith, declined by 7%. While we still have work to do, we continue to see improved trends with product margins and gross profit. Our gross profit rate declined 70 basis points this quarter compared to reduction of 130 basis points in Q1. The decline in Q2 was due to shipping promotions in the home brands, lower shipping rate tables at Ballard Designs, and unabsorbed fixed costs associated with the divestiture of Chasing Fireflies and TravelSmith, offset by improved product margins. Our focus on digital in Q2 included the launch of a checkout redesign for all brands; a new single-screen checkout that reduces known areas of friction and provides a best-in-class user flow. We also made enhancements to our product-configurator tool, optimized site speed and made updates across all of our mobile properties to enhance the user experience. Notably, late last month, we launched our redesigned web site for Ballard Designs. This is the first of a significant update to the Ballard Designs' digital experience, elevating the site look and feel, focusing on design services and creating an increasing immersive experience. Stage two will include additional functionality, as well as layout changes that will go live later this year, including a tighter integration of…

Thank you. Also, to allow everyone the opportunity to ask questions, we ask that you have one question and one follow-up if needed. Our first question comes from Barton Crockett with FBR. Your line is open. Barton E. Crockett - FBR Capital Markets & Co.: Okay. Thanks for taking the question. I wanted to ask about the disclosure, I think that Bill made about the decline in customer file, which I think you said was around 5% and attributed I think mainly to new and reactivated. I want to make sure I understand what you mean by mainly new and reactivated. Am I correct to interpret this as, there's a normal kind of churn in the legacy and you just didn't get enough new and reactivated this period to offset that decline, and normally you'd get more new and reactivated coming in? Is that essentially what happened?

Thanks, Barton. So in terms of growing our business, we've been focused for a number of years now on a healthy customer file and where we have our strength is with our loyal customer. We continue to see her shopping with us more frequently than ever, spending more and an increase in units. Where I pointed out our decrease in new customers, our new customers that are discovering our experience and I think that's a reflection on the world changing and how we're investing across our TV landscape, our digital landscape, our social channels to build that engagement, build that awareness of HSN. So, not comping those new numbers and those customers that we haven't seen for over 12 months is what I was referencing on the reactivated side. So it's a discovery opportunity for us. We're working with our merchants to create the right product experiences that attract new, while keeping our current customers engaged, and we're making sure that through our digital marketing activities that we're really looking out there at customers that are shopping, that look like our customers, that just haven't discovered HSN. And I think the climate is obviously very competitive and we are fighting that to really attract as many as we can. But we did see a short fall, as I pointed out, a big chunk of that was a non-repeat event of a huge customer event driven by a Hollywood movie opening for us. But overall, I continue to have confidence in the businesses and our loyal customers. We know when they're here, they're shopping and so that gives me confidence that our product portfolio is strong, that our engagement tools are strong, our overall experience is strong. I am now working with our teams on how do we open those floodgates, how do we help more and more people discover HSN. Barton E. Crockett - FBR Capital Markets & Co.: Okay. And if I could just follow-up, I mean, one of the secular questions that swirls around this group is, are people just going to watch a TV channel like HSN less and would that essentially be fewer people walking in front of your store front? QVC on their side have said they have already seen a decline in viewership. Are you seeing a decline in viewership? Is that part of what's affecting this number here?

I think we see a change in consumer behavior, which is the investments that we're making in our content activities and how to distribute that content across more platforms to get in front of more customers. So, I think overall you can see the industry trends and how people are watching TV, watching live TV and we've been able to counteract that by this engagement that we have with our current customers and keeping them here, and then leveraging new tools to engage with additional customers. So certainly... Barton E. Crockett - FBR Capital Markets & Co.: Can I just – I'm sorry. I'm sorry to interrupt you. And then, I just wanted to ask one final thing is, I know you're not going to talk in detail about the QVC merger, but in general thematically, is that merger something that you think might have real potential to turn around this new customer kind of blip down that you've experienced?

Our focus on the HSN business is, as I've been mentioning, to drive our overall healthy customer file. As we've been mentioning, our product portfolio and making sure we have the right mix that attracts those customers, while keeping our current customers engaged. And I think going forward, it will always be our focus here at HSN to drive that healthy customer file.

Yes. And Barton, it's Rod here. I think one of the theses for the acquisition if you read what has been stated publicly is, this is a stronger combination together. And so, we do some things well, they do some things well and putting that together, it's just a more powerful combination to pool resources and go after consumer segments and people maybe not considering us today. So yes, we agree with that. Barton E. Crockett - FBR Capital Markets & Co.: Okay. Great. Thank you.

Thank you. Our next question comes from Mark Rosenkranz with Craig-Hallum Capital. Your line is open.

Hey, great, thanks for taking my questions. Wondered if you could talk about the HSN side of business. We've seen some press results in the recent quarters, especially in this one. You previously discussed how you anticipated some improvements in the back half of the year for a number of reasons, lap in the shipping changes and changing of the merchandise mix. Just wondering if you had any comments on how things have started in July and if you still see that type of improvement in the back half of the year?

Yes. So as we've articulated before, we do expect to see improvement in the back half and that's certainly what the team is focused on. That said, it is a very competitive environment and we do expect that sequential improvement in back half for the reasons that you cited, including the lapping of shipping. I met with our Chief Merchant yesterday, Carmen Bauza; we went through again our holiday strategy. We've looked at the product. We'll continue to do that. We feel very good about how we're positioned from a product mix standpoint going forward, and we are doing everything we can to drive that demand.

Yes. And Mark, I would also add, from our perspective, I wouldn't get hung up too much on quarter-over-quarter performance. I know you can draw a conclusion. If you do that, as we've said consistently, at least for the last six months, we view this as a halves business. If you put the first half together and you look at the second half in comparison, we do believe the numbers will improve as we move forward. There's four reasons that Bill touched on, the merchandising, product pipeline piece of that which we think will be stronger. But the shipping rate table you mentioned, we lap that this month, in August 15. So we get more like-for-like as of August 15. We lap the Chasing Fireflies, TravelSmith divestiture in September, so we get more like-for-like on the Cornerstone side. And then, if you recall, we had a significant one-time spending in the back half of last year, primarily consolidated into quarter four around the supply chain optimization initiative in that start-up, which we will not have this year. So the totality of all of that is what makes us feel better and then just the everyday work on the execution that Bill mentioned comes on top, which we think will also be better.

Okay, great, that's helpful. Thanks for taking my questions.

Thank you. There appear to be no further questions in queue. I'd now like to turn the call back over to Mr. Little.

I think we're done for the day. Thank you, everybody. Appreciate the time.