Greetings. Welcome to QVC Group's Second Quarter 2025 Earnings Call. It is now my pleasure to hand the call over to Jessica Donati.

Thank you, and good morning. Before we begin, we'd like to remind you that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Forms 10-K and 10-Q filed by QVC Group and QVC with the SEC. These forward-looking statements speak only as of the date of this call, and QVC expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in QVC Group's expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based. Please note that we have published slides to accompany the earnings release. On today's call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA, adjusted OIBDA margin, free cash flow and constant currency. Information regarding the comparable GAAP metrics, along with required definitions and reconciliations, including preliminary note and schedules 1 and 2, can be found in the earnings press release issued today or our earnings presentation, which are available on our website. Today speaking on the earnings call, we have QVC Group President and CEO, David Rawlinson; QVC Group CFO and CAO, Bill Wafford; and QVC Group Executive Chairman, Greg Maffei. Following today's presentation, we will address questions that were submitted in advance of the call. There will be no live Q&A session. Now I'll hand the call over to David Rawlinson.

Thank you, and good morning, everyone. We appreciate you joining us and your continued interest in QVC Group. Coming off a challenging Q1, we continue to manage through what has proven to be a difficult macro environment in Q2. Namely, we continue to experience declining linear TV viewership as well as ongoing volatility in consumer confidence. QxH minutes viewed declined 15% in the second quarter. Declining consumer confidence in the earlier part of the second quarter was primarily driven by international economic policies and geopolitical events. Our implementation of key initiatives to strengthen our capital structure for the long term remains ongoing. At the same time, we are acutely focused on moving the business forward and implementing our WIN strategy to drive the future of live social shopping. To this end, we continue to advance the number of cost-cutting efforts and accomplished various milestones this quarter. In late June, we successfully completed the transition of HSN's operations to Studio Park in Westchester, Pennsylvania, bringing our 5 U.S. TV channels across HSN and QVC under one roof. In total, we now feature 52 hours of linear content a day. This will not only generate cost reductions but is also a major milestone in our WIN growth strategy and a testament to the dedication of our team. With a single headquarters for QVC and HSN, we believe we are in a much stronger position to efficiently create content for multiple platforms. To keep our customers engaged through this transition, particularly for our avid and elite customers, HSN launched Hello HSN PA!, a month-long marketing campaign across all of our touch points. We brought our customers with us on this exciting journey through moving theme programming and deals, shout-outs in our top-rated shows, behind-the-scene social clips with our host and much, much more.…

Thank you, David, and good morning, everyone. Unless otherwise noted, my comments compare financial performance for the 3 months ended June 30, 2025, to the same period in 2024. Starting with QxH. Revenue declined by 11% due to lower unit volume and less shipping and handling revenue, with a partial offset in favorable returns rate and higher average selling price. From a category perspective, home revenue decreased 12%, driven by reduced demand in culinary and pressure in many of our Today's Special Value events. Apparel revenue decreased by 9%, consistent with what we experienced in Q1. Beauty revenue fell by 13% in Q2, although we did see wins in brands like bareMinerals, Elemis, and Tatcha. Accessories experienced another challenging quarter with a 15% decline, driven again by footwear and loungewear. Electronics grew 4%, driven by smart home, computers, audio and gaming. Operating loss was primarily driven by a $2.4 billion noncash impairment charge related to goodwill and trade names. Adjusted OIBDA margin contracted 165 basis points. Gross margin declined approximately 15 basis points with higher product margins and favorability in obsolescence, more than offset by fulfillment pressure and sales deleverage. Product margins increased by 50 basis points, driven by better return rates, partially offset by lower shipping and handling revenue and initial margin. Obsolescence favorability of 25 basis points is driven by the overlap of abnormally high balance in Q2 2024. Fulfillment expenses were unfavorable 90 basis points due to increased freight rates and sales deleverage. On an aggregate dollar basis, operating expenses decreased 13% and SG&A expenses were flat. Operating expenses decreased $16 million, largely driven by lower commissions. SG&A expenses were flat, driven by lower personnel costs, offset by higher marketing costs. SG&A was unfavorable by approximately 175 basis points due to sales deleverage. Moving to QVC International.…

Thank you, Bill. This was another challenging quarter for QVC Group, and we aren't where we want to be. We remain unable to offset the declines in linear in a challenging environment, but we were pleased to see the growth in social and streaming. As I said, and you heard it from the above, we are making good progress in social and streaming, and we continue to lean in here. We are balancing execution and a cost focus with investing in this growth businesses. We are also working on our capital structure and our balance sheet, and we are proactively evaluating financial and strategic alternatives. We were pleased to regain compliance in that with the NASDAQ. And with that, we'll address the questions we received prior to the call. Thank you, operator.

Thank you, Greg. As I mentioned before, we've received a number of questions submitted prior to the call. Our first question is for David and comes from Carla Casella at JPMorgan. David, can you share some trends in new customers versus reactivated customers versus core customers?

Yes. Thank you for the question. As I mentioned during the call, our traditional customer count does not include any new customers we have purchasing through TikTok shop. Our trailing 12-month customer count declined 3% versus Q1 and versus -- last year, our total customer count was down about 12%. But as I mentioned before, we know that over 100,000 new customers brought -- bought from us through our TikTok shop, and comparing that to Q2 2024, that would improve our new customer count to plus 7% versus the reported negative 21%. We expect that social will continue to help drive new and reactivated customers like we saw in Q2. A few other things I'd call out. We are seeing some stability and average customer spend. That customer spend is up 1% this quarter and existing customer retention is also up, improving about 100 basis points versus last year.

Next question, also for you, David. Can you share the percentage of sales coming from the core business? And has that changed?

Sure. We estimate that social and streaming revenue is approaching low double digits as a percentage of QxH revenue. That obviously still leaves 90% of revenue in QxH driven by core linear and digital. However, our social and streaming businesses grew over 30% in Q2 versus last year and is now a larger percentage of QxH revenue than they were in the first quarter. We've -- and so I would say less is coming out of our core, given just some of the trends that we are seeing there. And then with the significant growth in social and streaming, we would continue to expect to see a shift with increasingly more social and streaming revenue as a percentage of total revenue over time.

Great. And our final question is a 2-part question around tariffs. First, did you see -- can you share the tariff impact expected for fiscal '25? And what are your top ways to mitigate tariffs? And then second follow-on, did you see any tariff impact in the second quarter? And are your vendors passing on increased tariff costs?

Great. A lot there. We're monitoring tariff impact. We're taking a lot of the steps that we've discussed. We're being prudent about placing new orders and canceling certain existing orders from high tariff countries. We're managing sourcing. We're actively negotiating with vendors. And in some circumstances, we've implemented price changes. We're still working towards our target that no single country will represent more than 1/3 of our sourced goods in the U.S. by the end of the year. That is a big change from where we were, which is more than half of our goods coming from a single country, and so that's a major effort. And we think that's one of the major -- that diversification will be a major source of stability going forward. But we continue to see volatility. You've seen lots of changes even in the last few days. We saw the first real impact of tariffs in our Christmas in July event, which kicked off in June. We completed an inventory assessment for that. We limited some orders and buys, and then we also took some price actions on the things we were selling during the Christmas in July event. As I said, tariffs will continue to be fluid, and we continue to adjust in changes in rates, including to the most recent ones. But what was encouraging about the Christmas in July event is we did not see big drop-off in demand in response to the price changes that we made in that event. And so it gives us some confidence about our ability to navigate -- continue to navigate our way through some of the current tariff challenges. And the last comment I have is that we should also remember that our international business had minimal tariff impact. And I would just remind everybody not to forget about that business. Our international business makes up over 25% of our revenue and is more insulated from some of the impacts of the tariffs. With that, I think that is all the questions. I want to thank you, again, for your interest in the QVC Group. And I want to thank you for your interest in our results and look forward to continuing to share our story and continue to visit as we make more progress on this transformation. Thank you.

This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.