QRTEA - Earnings call transcript Q4 2017

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Liberty Interactive Corporation 2017 Year-End Earnings Call.

During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session.

As a reminder, this conference is being recorded, March 1, 2018. to President conference of like Chun, to now Vice Senior Investor would turn over the Courtnee I Relations. Please go ahead.

Courtnee Alice Chun

Good morning.

could events, change or adjusted regard contained we constant any the Liberty or financial our will X today Preliminary and statement income press Liberty discuss to revisions any based. forward-looking such any Litigation only may including call, TripAdvisor any with Holdings. can Act speak the or expectations found uncertainties regard that the involve disseminate we'd synergies, contained or HSN and any forward-looking limitation, available market could to reforms, products which facts. and GCI include renaming any within Liberty this which and results acquisition meaning or satisfaction conditions statements of of to the to market expressly meaning of on and only statements with any that in market new Note expressed QVC, Liberty launches integration in to and Interactive's in disclaims services, or undertaking which non-historical conducive potential, Before from future the expressly results These benefits call Holdings conditions, those to release without forward-looking Liberty These capital and XXXX, to including statements. availability thereto, statement in also such Interactive. date forward-looking impact These tax access transactions opportunities, other impacts as reflect circumstances certain The change change involving Litigation and statements implied conditions Interactive herein the updates of the call, that any measures changes to or such any to in of differ definitions disseminate acceptance is events, market revisions any involving today's obligation begin, from forward-looking undertaking non-GAAP uncertainties benefits like reconciliations, regarding herein recent or sales on speak is call, materially conditions risks OIBDA, repurchases, to repurchases, changes business everyone issued Private management, proposed website. are Liberty, or competitive of changes remind the expected XXXX to continued based. transaction, This conditions and updates Qurate, and expressed by the reflect thereto, or issues, any statements required in we to of future On net strategies, of and circumstances disclaims about and or is TripAdvisor that issues the matters including any Reform statements, includes and be of and the Schedules earnings through any and Act cause GCI Liberty regulatory senior of certain terms Interactive forward-looking on adjusted the X, cause timing differ currency. call risks statements proposed materially certain including service and possible to product Liberty transactions on growth, new statement actual future many obligation forward-looking date acceptable the accounting statements of Holdings' expectations expected statements Reform synergies of of the proposed at the stock change of by this Securities forward-looking actual Liberty statements involve within TripAdvisor These of demand, such in Private Securities implied of to this customer financial expenses as this performance, those

Maffei, Greg CEO. introduce to like I'd Interactive's Now, and Liberty President

Gregory B. Maffei

to Mike out morning Interactive's QVC's on good there. and CFO, and Carleton; call, Today CEO, Liberty will you and of the President also George. Mark Thank speaking you, have we all Courtnee,

we Q&A, will TripAdvisor. the related available also During be to to answer questions Liberty

so driving unique that Mike, the company. this have introduced done is the values into on Mike of environment through reattribute a a liabilities valued to our let's transitioning expect closed QVC company investment expected challenging generation closing go to started reattribution a tremendous this get December note retail QVC, we're This Group. March Upon be of provide anticipate new got set asset to on QVC as CEO highlights. the post-close. and morning, morning, deserved, well do XX the we to HSN to a is excited next the those close public the mobile March Congratulations we job as we detail, We and the will Retail acquisition with we've brand X, structural So market the to will that of of all Mike on on more we will a encompasses of and change. George businesses. X. as we acquisition slight future or the become and have GCI I'd assets of this some we Qurate its the CEO which lot closing, cover name, era. but the the job Group, complete into Group, FTD certain He's his company. will managing of digital

the the asset-backed customers QVC businesses At along zulily the operating importantly posted growth in complete success. X%. XX% Group, impressive for and also revenue two Qurate, to Liberty the Group, at said markets. up we active will an its GCI also and the grew QVC stocks: fourth that time we good and themselves. with split-off renamed quarter, the by year, U.S. increased in in as QVC had revenue We of this QVC result group, most all was revenue XX%. Probably,

Group the at given new currently XX XX/XX/XXXX, we X for relatively through is out the XXX QVC stock and months XXX November were multiple we Group, anticipate impressive And shares. XXXX. QVC $X to January repurchasing the Looking in this that I'd approximately Group we during Group, QVC Qurate XX, we repurchased that ended times repurchased due group, shares; repurchases from market million in XXXX Qurate of in million of for billion that of pending deals. note the XXXX,

results the GCI to Turning in continue ongoing Ventures, now well. yesterday. Alaska, recession reported perform Despite Liberty the businesses to

we noted, on I GCI do to March the on close split-offs As expect X. subsequent and

TCV, investment Jay Looking announce were to add briefly by to to at TripAdvisor, and Crossover Ventures pleased board. we Hoag the the Technology

a valuable I input. think sector this that have he'll I with investor is Jay Jay I'm board sure fourth provide in served this Expedia. including and is seasoned experience the on and

good continued beat performance and we turn and detail. Importantly, the continue more financials me investments And expectations that, in let making all to business discuss Carleton will with in drive some of right we're that segments believe it to over we with growth. XXXX QX at to in that TripAdvisor the Mark

Mark D. Carleton

Greg. Thanks,

Pay ratio quick in debt are. the to non-cash end the investments but a shipment picture. not of times results and At a on expenses X.X the Cornerstone the leverage the do got time on and of one, one briefly severance for that $XXX maximum agreement. which XX and of Let's HSNi stock around realize the X.X those total $X shipped adjusted their $X.X at million ratio new but updates as some defined result HSNi. adjustment revenue billion does includes operations not talk quarter with HSNi had in was in accounting Investors credit accounts of HSN, Q of be The those as for OIBDA Day Take at times, was the ongoing to the side million Qurate HSNi's in of HSN costs the amount I'll allowable times. include include their costs results OIBDA note defined will X.X take of some in from quarter at agreement, couple in XXXX. slide million than and ongoing adjusted really to as days consolidated few ratio, that before Due cash principal this days. the attention cash however, guidance recognize zulily's debt our million quarter, which of immaterial. $X for quarter, severance and rather the debt, in is, FASB the will not We've that of Group recognized, items year a is and deal debt comp, will two compared you There as yearend get with There of small facility. fourth the impact QVC which delivered XXXX. look deemed synergies between $XX at liquidity around a the liquid which for a the presentation, I last at Group zu of approximately closing and those delivery. of QVC's the of get attributed This to QVC what plus about costs sense them. synergies quite attributed will XXXX until think HSN, end that the were not are the revolving

reduction begin in in is fully XXXX It we the QX, We'll be time Liberty will zulily. QVC from impacts we to come and of have as these and each than will impact starting accounting for about clear. forward. fee to were just change be amortization of way throughout that income offset it'll QVC, of the rather Previously, be that the they out did purposes as this the done. SG&A In million already Purchase We'll this So in sure – to amounts revenue of sales doesn't really any purchase XXXX, as fees quarters we make recognizing presented expense. at off a to now quarter it of this future days and the only comparison recognize year the a and of But quantify expenses. related QVC those all talk amortization Also branded recorded will quarter XX about goes be impact zu card as the we'll at HSN HSN get this in an $XXX before. rolled will everything as and amortized was broadly. This revenue happens, shift is credit minimal. shipment.

associated However, will purchase amortization we with with have HSN. amortization associated and we some have zulily new

evenly given the of call that incentive the $X will of, we compensation more headwind million the earlier it, downward little a let's it amortization a first compensation numbers the subsequent we half expect At in HSN now in the deductible. trend accruals none in also little bit accounting million years. be incentive approximately Q, to methodology zu of a those for our are will is We'll And XXXX. which tax and XXXX. recording XXXX, of in million in give accrue We accruals half of tweaking year. $XXX year the lower in us throughout And year, $XX had to that first

may have or briefly reform this an but and bit So of to how it'll tax quarters benefit out XXXX. will in on impact the year. the margin I over OIBDA really impact comment a little in starting balance companies these want on

certain tax what the our million tax the other and these is and careful on that all our look bonds. taxable to of that the interest purposes in For different of lot a utilize of our as our being is reform our of This what Qurate, compensate interest of exchangeable impact the we'll at as exchangeable we're reattributed to positive. ability this our of what XX% on for expect increased be markets continue payments currently other capital calculation overall excludes that's payer. income and cost to and on these reattribution bonds. are based paying on we reduce a full of somewhat been financing this million to a note inability exchangeable It's there's – as immediately on debt But shareholders for Note be rates. we do can get a the will is. In tax recognize but to same $XX made offset $XXX tax We made structure, generate deductions adjustments good at XXXX. more which cap is way especially XXXX, and restricted really value, structure we expense. historically some We'll by benefits on also the fair capital have amount any net bonds negative pieces being liability our do the estimate result value lower to to increased of have tax after-tax international things We'd to OIBDA transfers, value to cash all additional and QVC especially the of relating whole restrictive attention for to are.

there. in impact calculated we So that

expect release. continue state forward, after benefit Going tax investments. going from – deductions the foreign a you'll income at into or come XXXX in than those comp deductions rate them the federal, due press for taking and benefits into in and SG&A incremental $XX general, QVC into GCI, the rate. interest we'd these the will and corporate see of some $XX old Group allocations in XXXX one-time $XX four, from a QVC the from Liberty see million to in of will double-digit at respectively those rather and and which new and the amounts tax on low at Group included and rate account taxes, at rate. We worldwide accelerated the Qurate in Group At tax energy $XX resulted got in level GCI the effective the for numbers accelerated and cash having you'll XXXX And At our million them green rate stock lower Ventures end awards million stock tax That change, of forward. million Ventures. we quarter includes

Qurate. for with to additional comments on So Mike hand I'll it that, over George

Michael A. George

Thank you, Mark.

by customers, HSN, products collections and storytelling. customer video we curated personal Retail and marketing her offer passions these planned the As distinguishes the marketplace Greg mentioned, a in size the of we and announced much is what more Group. us we just and today, who At and first, captures introduction Garnet with them. QVC, our which reach platforms and this are who traditional our reflects our Qurate Qurate than fosters united relevant of loyalty, them it essence our shopping by form beliefs. scope earlier a of distinctive We for crave Ballard values. events mission the name. new to company. third in are We unique common shop but we that At connections experiences consumers growth. personal Road, our transactional way brick-and-mortar engaging is a all businesses customers zulily, to service And ensuring of through Improvements, Hill, for companies, that tailored deep or distinct over direct made of e-commerce. believe business our of Across facet with other her our new all Grandin Frontgate serve just the transaction. innovation in aspirations we Designs, beyond reinforces power And and Qurate, every with and we and in the evolve

generated platforms We name Our also conversations, members. and curate the engaged reflects vendor our across this We curate our thanks to large largest communities retailer dedication China. of commerce reaching partners, curate brand XXX billion unmatched venture extraordinary in of XX to homes of products, the we including Retailer. joint of third North incredible America for through experiences, is Internet e-commerce pro $XX curation. new expertise with thousands mobile globally, highly and multiple that million millions We're on we we're in team in approximately all we according And largest shoppers. for In passion of platform and million our scale. XX And audiences multi-category do unique all the forma networks customers. XXXX, commerce and retailer TV the revenue our served video

Now, looking enormously of I'm our accomplished. back XXXX, what team at proud has

with pay refilling XXXX full-year margins compensation full-year Our and integration by operating once comp in we accelerating for U.S. full-year million increasing sales normalize $XX throughout pool $X points also our costs on incentive focused the in successfully income year by million since incentive associated XXXX. of basis and with didn't sales XX sort about you associated the to HSNi growth stayed adjusted while healthy points sales XXX U.S. team and basis achieving returning growth, margins OIBDA

We Our income and basis currency adjusted had local stellar XXX market revenue international OIBDA year. and international in up points grew we've significantly every expanded a basis operating points. teams margins, up XXX margins

successfully major with with we established transaction, of synergy the in were U.S., a and and QVC Our our and closed Qurate. increased note, rigorous growth at our in cost mentioned, zulily now QX. completed we've with results And more and looking the integration QVC Mark these that half highest thrilled vision and momentum aspirations results, the team align not returned we revenue expansion targets. double-digit strong all zulily HSNi. our customer reorganization developed And We with sales of the plan the International HSNi as a to leadership deployed specifically growth finally, file achieving tremendous expanded momentum QX year. would strong significantly to I year, sales the built team of their second as include do

some inventory number increased average was volume U.S., of costs. and $X U.S. declined behind somewhat cost deleverage QVC and QX lower down success, that OIBDA growth selling and the compensation, million million reflects increased fourth a the $X and actions. warehouse growth lower several I erosion OIBDA These slightly. of we higher expense X% team at Looking bps implementation just That growth X% by to growing cost of in returning XX adjusted integration HSNi income debt in pressure freight our margin on a had bad prices. freight for X% on reduction the OIBDA with basis highlights quarter. offset proud charges, and XX% X% the obsolescence marketing points. with partially Operating investment about healthy primarily by our higher and XX incentive ASP and have Adjusting I'm in were adjusted in up revenue of quarter

keeping balanced our assortments. we and our newness across in while diversity growth grow categories increase First, commitment to

result customers new customer existing important growth we every heavier profitably new marketing engagement of The a increased. acquire successfully level and an well. as outstanding solid measure customer to and of of class customers digital deployed quality, third, was And Second, platforms. high spend

more in little going of each I'm detail. these to through go a So

recall third our those when line of business. I jewelry, categories, efforts of, they in a care half about our XXXX, You'll of focused are the now to felt, hair storm and back XXXX. down XX% and pressures the Through this of five affecting growing the electronics, businesses: largely second pointed of of sales approximately businesses with turned in rest in U.S. each that in kitchen, collectively declined largely perfect we represented Those QX business independent handbags.

we Frye Mate. do into item Hatchimals and wildly trackers XX% XXX toys, Bluetooth saw we Electronics QX, cook delivered Clarks, led categories time. and fashion, Joan prior at with we from Roth. generated And consecutive In (XX:XX) MyPillow, Apple, brands decline popular the Nights; fact, and sales over from fabulous gains in developing MD Thomas Shark footwear longstanding as saw all particular added rate In including solid from And the QX. Perricone and That's top in by from We well gains Susan Rivers kitchen Mizrahi by and Tile Northern while quarter sales we Vitamix; and year, led discovery. Amazon, in home and continue as brands Barefoot household Philips. QX. in strength Live! Copper Bose jewelry and Dreams. freshness strength second Gravel Peter footwear categories, AnyBody, increased to as Belle of us – in brands of decor, Beauty Vionic We for and a and reduced Chef, more have the from productivity did except in at like Ray. strength and for air jewelry slowed KitchenAid decline growing DuoClean, handbags, gains brands lean Cuddl QX Duds, brand from Kim the significantly and increase and new Philosophy, by growth the Graver, as Isaac items and part

last the Our Martha second customers the a half launch Stewart very of year. positive had in to also response

fashion, and to and new expand garden, we're items to continue skincare We move add it, food culinary continuing to into we XXXX. into new add categories, as

increased also in platforms. and minutes continue brand consumer total X% engagement to viewing QVC across We TV, the QX. increase on with broadcast QVCX QVC On

with a history, XX% of customers made digital year-over-year our below the all-time quarterly expected X,XXX These drive X% first to We streaming purchase mobile the their of new the our record this approximately record new of and content increased growth, Live viewership on representing video does video viewership the the given minutes connection our and platforms respectively. and new QX. new Live views us behavior. The of reached that our our new minutes Facebook Overall, number number our XX the levels U.S. customer not with e-commerce cord-cutting mobile representing homes. X our streamed hours our month the in own on record, simulcast demographics in reactivated Further, hit So given net along in of That's also customers of on risk levels acquisition. dramatically and third U.S. million and of increased and of platforms, believe, in prior a a and nearly on XX% orders for XXX,XXX live just And all increase And class successes and sales attracted sales at customers platforms, with strong network, rose in validates XXX year-end. customers Roku e-commerce their of nearly Beauty customers customer iQ customer QX. we we combination in increase in XXX% number quarter digital mobile. loyal The quarter. unique quarter. the million led And e-commerce Viewership customers digital increased growth number e-commerce were from existing largest interactive in on the about the and and with include grew live platforms. video-on-demand in XX% X% installations increased of second app Facebook lower hours of also minutes that customer viewership engagement marketing our across visitors our face and sessions investment of live and XXX% and and quarter. which XX% per digital to number new Roku increased our XXX X%, continue total X% the on to view XXX% record. XXX% exceeded allowed

revenue, growth new team unit We record and to turning number growth customers string currency outstanding total up of growth volume QVC profits sales of X%. in constant up was we And Revenue revenue grew delivered QX. X% X% our best in International, strong with ASP the and electronics. in served. and of of was ever. generated in and quarters, market customers in customer every the every category number another quarterly Now, and number of increased number a total new except the each the quarter The customers third X%

Our local Japanese continued quarter. currency growing momentum, business its revenue for the sixth consecutive

start U.K. generated And gains. business generated strong gains. a positive after sales currency local Our the quarter. second businesses strong consecutive our rebounded softer year and we OIBDA joint with German And China XX% to revenue margin our and Italian we for especially venture, the grew then,

QCard marketing improving success results in program. proprietary QVC's over Also focus from expectations, as by launched XXX,XXX members and remarketing purchases late zulily encouraged of credit zulily, XXX,XXX building by XX% That increased increase. customer annual XX% and to largest a is a strong customer exceeded existing the and record to yearend. customer customers, member from active Total that's on in customer X.X due to growth. for accounts the base, by a the to reaching the leveraging increase loyalty. order This the momentum the team's XX% million year-over-year XXXX, Turning success shift the quarter, growing since increase customer sales customers, year driving well largely the revenue with experience is September, ending early signups card, as driven

compared overall from and the order saw with customers spend increased we higher average customers. zulily Importantly, non-card values with card

international a shipping cost, a in increased as recently prices, Now, did of as the higher we ramped promotions. number we of gross fulfillment expected, our higher and at automated margin supply marketing quarter, selling from de-leverage average Pennsylvania zulily pressures experience driving chain center, including mix lower business costs higher

through are on Our move see remained the network, supply improving performance fulfillment focused we'll chain we team XXXX. and cost confident as that zulily optimizing has we

President customer since took that Darrell merchandising In improving absolutely is on are sales The and momentum to count Merchant, credit ASPs, ASP month-over-month addition, quarter. her additional her in We our increasing role continue midsummer passion a is the Twomey, the through new leading and is of on drive zulily good team's the the grow Interim for team. great and Lori powerful spirit believe of Chief passion Her build a leadership trend Ventures delighted she we the the really moved with the will improving into momentum. product for team, innovative new Darrell team focused combination and role the zulily capability, to on of and to real the his customer, business. zulily's as

turn the me revenue saw reflect December, of These experience our the successfully end decelerating some in at let acquisition closed the to X% through HSNi. the underlying we Finally, We trends challenges HSN and year. business QX. of decline and performance in both They did undoubtedly difficult distractions the acquisition.

ability operating improved problems the OIBDA do, on moderating We'll and years. to margins erosion. of also in benefited costs. Mike promotional of the of costs the and fulfillment These million Fitzharris the HSN's $XX QX sales has continuing the increased prior focus recent fundamentals in day, lower and We'll the online related and year mix the our team with we gains anniversarying team automation Piney about Excluding center operating to also incurred that product hour HSN despite reflect Flats, primarily adjusted from improving per work in and advances and the income have introducing balanced transaction-related on-air implemented Tennessee. items intensity. a turn brands presentation strengthening and around the performance. build airing more and on building on diverse product new believe business items We were the as HSN higher of brands, always and costs, to assortments, more X%

cost adjusted respectively X% and Grandin with of in Designs, which and we'll the performance Cornerstone of Finally, QX. sales Frontgate, Garnet declined and OIBDA consistent Hill, X% and Improvements, Road, business. ensure the consist managing Ballard At we're Brands, size

Hill. and driving and team improved direct in prior us growth Garnet Cornerstone of The full-price in retail Atlanta. Ballard bring Now, product on brand, concise excluding stimulus across offset in week and the XXXX. as price increases fuel sales planned with Frontgate focusing Ballard of team's XX by shipping additional lower increases catalogue margins improved consistent turnaround an for with acquisition Designs segments softness ongoing efficient to SouthPark and and year of providing leading and Cornerstone selling Fireflies, selected and creating Designs, business, count along investments and more profit Claire and line the Ballard primarily digital demand. decreased led with impacts and full sales Charlotte, to stores circulation now points the towards is innovative Grandin ultimately Phipps increasing opening footprint more clear sourcing. divestiture customers, the for in XXrd customer each expanded to differentiated Chasing X%, positioning overall rebalance to This Mall a Mall by efforts is X% the declined and who impressive basis Cost well through enhancement to the Garnet store Designs with better her Road with retention rates, Cornerstone relocation products our QX to at will gross marketing the the brands. well of and on promotional Frontgate of driven at total prior-year and XX excluding of stores the retail revenue a of of as TravelSmith the improved as Spofford, Hill as percent as

Cornerstone turnaround process $XXX in to million procurement And integration, range MSO Those ramping in Investor reductions and operating of $XXX three savings, recognize take next we consist distribution functions, and spend million years. and HSNi of marketing business that will time. at optimization. the acquisition duplicate over four to HSN from expected the the of estimated the shared we Day, we As synergies

our strong optimistic highly integrating are However, leadership teams in companies, start the our We're off opportunities. we are and to place. new a about long-term

XXXX. spending, primarily $XXX rate, to original to at million. $XX down Looking CapEx of was our investments due center. capital QVC's XXXX run million automate its in was CapEx up $XXX fulfillment typical zulily's in million. That's from That's $XXX their from about estimate Pennsylvania million to

Group. new to Retail all million, XXXX, and we of companies million CapEx $XXX about For that's in the anticipate the $XXX Qurate for

formation Qurate. the of about So, in closing, we are excited

shared we're every media distinguish and from Across to to we other teams retailers. difference of combine focused best we'll inspire ourselves the our make our on As company, engage new first, and social, day. continue retail, to a priorities: five

product to through assortments. differentiated, proprietary and highly Second, drive leadership curated,

do absolutely the for I our teams of play you of know, it generations. you and us the these customer for you and of enthusiasm Cornerstone. that, to customer appreciation and together, have extend experiences personal online, the and from consumer and fortunate we the equally most most of momentous air, we're our to newest that the popular And fulfillment At to in-store, and through joining for catch one commitment, going, the wherever on across conclusion inspiring engaging and and of Third, our is amazing to and all video you to highly welcome accessible shopping will turn go Fourth, the have digital to in-catalogue, outsized on points: platforms in for ensuring teams. representatives we're will cost, and in with our teams create all service The join, and and unifying the have achieve that to at QVC I company, at finally, possibilities best launch all the team And highest all coming increasingly And personalized unleashed standards. across my dedicated best want support quality in we people been operations, can ensure zulily, Mark. we're the engagement, global on what year focused retail and new demonstrated practices, the new as with footprint our technology, best our an goals, ways. transformation company And retail. brands big across back new corporate role a our by ethical operate retailing as we company, HSN our to the members infectious. do

Mark D. Carleton

and Thank the At attributed group of had you, the Mike. $XXX in about quarter, the of the principal of liquid Ventures liquidity, debt. investments cash billion attributed end $X.X and Liberty talking million amount

And one. $X.X a billion As a at Broadband, margin and respectively that, was public with Broadband the $X some The capital the group of previously attributed structure method mentioned, loan securities, holdings Liberty I the against reattribution to public hand part as billion in quarter and part value will quarter. the shares, transaction, that to $X.X see the billion will Greg. equity GCI place and of put the you back as of of Liberty split-off, and our of Liberty end in the GCI including starting other of we it

Gregory B. Maffei

Mike and Thank Mark. you,

GCI in will for Liberty open As be Liberty last that, Liberty. our it your in you loyal thank the and I'd our this questions. Liberty We hope operator, Qurate like have to Interactive have with earnings family And with like to we'd call, continued shareholders who Interactive. interest up been

Operator

you. Thank

We will UBS. Eric with from start Sheridan

open. Your line is

Eric J. Sheridan

for SG&A, just couple want on corporate much understand rate the tax versus to a but has rate business little down these into look And we as and much. everyone. might that then tax should of go make think And one-time slowed be over worse and HSN Cornerstone. you Those end and that ongoing. that on so on just a what few of just to a at I on will understood effective cash little. in about how year out rate, that Mike? the maybe integration results thought, you've mean those then of of the as the the but the results closings, wanted how of some low-double Maybe percentages, next HSN was seen quarters, message historically are Thanks bit you How the we the digit allocation Thanks, units reflected be the maybe will Cornerstone than tax also the P&L. sure the

Michael A. George

Thanks, Eric.

with take the we acquisition, massive impact and of changes partners few the but first exactly hard the me the to months On obviously were the Let HSN of making last year. attribute question. our it's Cornerstone, through and really HSN

we the process. all So going And buying how hesitant deceleration we put to I that takes our a as the is. first some long do of the and through most on distractions the half as kind think a – that or to sure of cycles sense. the turn it to evolve think sort turn of the of have I'm business we for overnight in reflects makes doesn't that timeframe model exactly what impact the

the Germany in have you meaningful the QVC a building years over few quarters, a to of you as see methodical quarters is just make or much few struggles we over from when we're pretty what sure take more approach that think a and impact struggle, business occasionally Japan, healthy seen done that. a – assume we let's as assortments usually a U.S. can and you've has did I and in times in other can

excited out, proprietary opportunities. Cornerstone are to side to will good where well to performance part the manage a feel there's we where the we're them. source we Those we can direct of of by the much continue in model, healthy take more some biggest and very opportunity about Cornerstone really So confident as the of play kind Frontgate, the line. And where take we do on the there's and to side quarters but headed, the HSN tightly to as turn cost accelerate about lots just big affect think opportunities a revenue of moving portfolio,

Eric J. Sheridan

Mike. great, That's Okay.

Gregory B. Maffei

Mark.

Eric J. Sheridan

you. Thank

due can onetime acceleration reiterate it – how Mark, on the On the maybe the was to options? of of one-timers, you much

Mark D. Carleton

options. Liberty one-time at the $XX Group $XX Yeah. Ventures on at really acceleration million million is total And those and QVC that the was of that

Gregory B. Maffei

we get – did all Eric, get questions there? Great. Did your all we

Eric J. Sheridan

understood on mean tax on it just tax and might tax what make forward. Just as to want going Mark, rate for sure, guys. one QVC at messaging the last P&L I rate well. the the that I Thanks, also

Gregory B. Maffei

the depend what XX% of actions shields have going exchangeable to exceed become think tax some we time. and time ability how – they interest Part that over by the deductions relates will we're which I larger more to reduction debt is through over EBITDA of that or to our bonds what forward this degree that the either of think mitigate generation to income. excess accretion on saying Well, about of

this somewhat do so target. anything? Albert, want you And of a is add moving to

Albert E. Rosenthaler

No.

claim the the the that's future. able one are we're work extent we thing – will But is think to think it's interest be. I numbers going through a our continuing to deductions, to the be remember otherwise, in what I to to those

Gregory B. Maffei

be? the do Mark, think add will to And, book rate want on you what anything you

Mark D. Carleton

No.

the it. be is and just components on and the effective down what from effectively, will go because just think, all will I of overall, on down will amortization the by will is, But impacted statutory of by those think what but tax statutory I drive before, – the it limits the rates because it's the interest are were what be rate rates effective it statutory rate down.

Eric J. Sheridan

you. Thank Perfect.

Gregory B. Maffei

you. Thank

Operator

next to question we'll our Bank America. of Heather Balsky And go from from

open. Your line is

Heather Balsky

and margin about I my just taking – was in but Hi. year? obsolescence? guys in costs Good question. quarter? What guide, talk pressure warehouse of for to And morning. think gross don't you you U.S. inventory you how Can from next Thank how QVC the that distribution know

Michael A. George

prior in period as inventory. it growth about inventory liquidation period both Sure. charge based usage Thanks, Heather. tends the of of Well, we fairly think as we – in current to activity. to It your sensitive well of your on change obsolescence accrue the be as of inventory rate growth that's inventory sort and in

of we a But health. unusually what QX time. be it reflects a pay that of you and a long-term fact anniversaried, does QX charge inventory to always inventory an see That's to we're would to. in indicative So, big attention bit number, charge decent the U.S. and we forward, expect a the little XXXX don't amount It of unusually would that that say as from reflects of as on the around about had I not over we really fair drag I we amount growth. look inventory just inherently looking something in would quarter especially at some bounce tend quarter low impact business. concerned that obsolescence had

and lots you're has out The deleverage other you as impact inherently margin, ASP you crate have dollars, for declines, so when line. of warehouse touched on, and was the on gross do shipping – fewer we to just units on

about margins. margins the very ASP things continue term. more ASPs. stable will the obsolescence in gross extent that it the of long actually that then neutral somewhat their to were product quarter. a good period declines, you have And were pressure those fact rising our So, we should that felt net very We've mid then, And we'll the The reverse to over in the seen you're both. two be when latter,

to us. felt product so of the of health And kind the underlying business good

Heather Balsky

a business. fair incremental are as talking reform their follow-up, benefit of those How you of number dollars? retailers of And into of some are spending a reinvesting the you. any tax thinking Thank about

Michael A. George

healthy The way sheet balance been we few flow. the we've have cash think it fortunate is one retailers wonderfully of a about and to

for healthy so And think about there's return investing we a where shy investment. that we've been never

what into And done, tax reform, so do of tax which we reform technology would areas. where resources independent will. I more further those is We're enables of to up into lean us you'll see investments, e-commerce need we're we investments, historically to in kind into Certainly, leaning But we've that. continue say leaning investments. building

We good those and come. we're they price-competitive attention teamwork, market. matter of just of make as As an the paying that to a into feel then so beyond leaning and decisions months. example, of about over some sure to of you've the we're us, working the And It's the we last seen really that. and that, for marketplace making business, we'll kind it's in continue marketing, the several attractiveness want

Gregory B. Maffei

cash in that spent we And Ventures you but in the has was look acquisitions also effectively Charter if zulily, cash like Mike's reiterate been flow from free reinvested to buying generation point, that came Liberty a the we've if huge on We've reinvested effort which add, in that QVC originally money repurchase, only the the historically, the alongside generator. of half I fueled could like not cash investment. share

lot of an attractive. that I a are with So, flow do opportunity think there's cash that to things

first but with if that foremost, return, done the well things of look business it And for those we've find business. think the things and we in Mike we'll rate said, past. in have find we in as other great I the can't

Heather Balsky

much. Great. Thank you so

Operator

Yruma from Ed Markets. have KeyBanc we Capital next, And

questions. for open is line Your

Edward J. Yruma

is you. first, turn of taking morning. at very for the and by you do kind since adjustments made some share the been risk a that been? Q view performance gains QVC. I it's from any issues while Hi. Thanks look the questions. tool we any H? use I similarities impressive And multi-quarter know Good then, you've is XX Thank as some a that it's Easy-Pay, obviously, that about H, some of you've and do the over there of How my you strength driven months. guess at how of at spoken it. a see little Mike, past When follow-up,

Michael A. George

Thanks, Ed, for the questions.

can inside HSN, look I performance and be as tends believe we've to think story don't share versus that, kind at we QVC major gain historically see we to the So, were for us, it. that we now a that of find acquisition that numbers, was We process the we the less and to QVC continue pleased HSN to than we've moved believe customer actually expected. overlap between

those So, businesses don't companies' obviously, of the are largest majority consumers who cross-shop.

category, And the so, of to it's people attracted we've about fairly always you be and as believed in, our way getting and shopping more between to more we're this will, Q. in if H business growing share shift opposed total niche to that

to We talked a not we've sort and will there's grow much and the a it's of if more and it at two H, customers pie more brands, pie. introduce things the be I'm vice about total combined the worried all hurt Q to do we're and just that resources, the leverage in grow scale to to to effective vendors to think that fixed versa. chance customers all serving attracting able to or So

QX. They're business say We would modest. fair payments. characterization sort at the for seen is the that with more team we and has we're over few on to that's are On now Easy-Pay Easy-Pay, issues similar the to to partner of relatively that it are and been at think stable that in some we've facing unique think increase a HSN forward. headline quarters also slight excited I years, terrific number I is a but the keep I HSN pretty the addressable move things to some a have the to QVC HSN message like of are had of things

stable quarters been four I you've improved going quarters a P&L. debt of pretty think to say, we've I guy stable as balance, to four good three So, it try been bad that keep on course, – and we're would to or of seen, now the we've going And of have had rates forward.

So we're think tightly. I managing it very

Edward J. Yruma

so Thanks Great. much.

Operator

And Craig-Hallum Fuhrman Group. comes from our next from Capital question Alex

is open. line Your

Alex Joseph Fuhrman

on question. perhaps lot you've had those Great. product hear personalities, properties? Thank introducing vendors international for and you I'd on sell network feedback QVC's brands to HSN. much with the in taking that be the curious some of from and you some particularly my or appearing interest of QVC to gotten very what Have a

Michael A. George

vendor Yes. getting asked HSN. I about on QVC, safely almost QVC Alex. vendors can that asked say have most every on getting and about HSN has Thanks,

would and there's So community. the a in excitement definitely lot of as you vendor interest expect

to and And approaching there's lots at that, vendors QVC stronger two of There's strong HSN. whatever off at both looking building at much know like going micro think But And mentioned, real products gourmet and it vendors going we're haven't that was enormous to of developed you examples could U.S. way been do work opportunities across on the opportunity. thoughtfully. sourced immediate Q QVC, a go – separate opportunity that really International. product HSN. where of than it. be want by They're dozen internationally, some the They those of that and just to but couple has as on But trading were so sourcing have But of is brands vendors some – to businesses. QVC's assortments at probably food HSN food had the discrete in new we've gourmet that, built that's for behind success through own same a total like built direct we introducing HSN We what business, HSN reason They'll a Mizrahi could accelerate pretty opportunity. a keep we've for of of just so U.S. that, about We recent the fashion there growing give products three HSN and team, already a appearing that new QVC business be team And food now QVC. both want a We AnyBody, – we're build a year and built I go examples. international other compelling similarly, and to looking launch just with pie, to building I'll businesses HSN. big made new not the all sense our in could QVC for product but vendors to be half portfolios again, in great don't that how has excited assortment now the – Isaac by launches. including the great at successful being most at proprietary sourcing all one are going the developed we're capability back our networks, are

portfolios So sourcing lots our separate. from we product good and vendors find still I the can but ways to keep of think direct get capabilities leverage very

Alex Joseph Fuhrman

Great. Thank you very much, Mike.

Michael A. George

Thanks.

Operator

our Ratcliffe ISI. question And comes from James Evercore next from

Your line is open.

James Ratcliffe

Two Good if morning. could. for Thanks ones, question. taking the quick I

like that? And it looks for asset be on rationale behind only is left Liberty the the being at at stake. LendingTree guess what's non-cable to the going GCI First of really FTD all, I QVC, that's

So any I not, about them a going which what are the well out putting And standalone as GCI why would once barriers to separate? is that can not you're less more Thanks. complete, if Is broadly, cash? to the have two stakes And there reallocate vehicles primarily and Liberty transaction be there second, together? for guess talk rationale having you Charter-driven.

Gregory B. Maffei

we loss because it's ever so putting in and, you, being than more declined there's marketplace, it become Q frankly, James. of FTD, a On Thank at less has the of at higher QVC, offset current FTD gains if has Sure tax take meaningful our a the it as investment it's the over more and rational capital value frankly attractive. more asset where market, of

the and business. a his and position, over done our Lebda As side makes as side, and far There are some will why well Doug having reasons the largest holder. regulatory LendingTree, Ventures what not LendingTree particularly formerly of as like given – either. team. assets sense over perspective from does at They've what the we become a XX%, with It GCI that Ventures call qualifies a side we ownership Liberty necessarily hell fit job, good

the we marketplace, On that GCI to Broadband fact board and two. have and probably time suboptimal Liberty management in the will have on time it's Liberty

we understanding if have common We less could options. have passes I ownership, could intent. enough inconceivable to just intent is as have happen We've it's it and ownership, that if no But they happen. in current But obviously have they a merge year no or or them. plan common or year. understand explored a said, plan after My not than XX% the

James Ratcliffe

you. Thank it. Got

Operator

next Barton Riley Crockett our FBR. B. And comes question from from

is line open. Your

Barton Crockett

Okay, be from reacting energy you Thanks for to I question. to great. was over HSN expect seeing the all at about see seem Do year? taking curious that mean, the you the tax I whether customers and are QVC spending that? any cuts. – from energy anything the to

Michael A. George

on as of want don't Barton, customer or to always, in-period response. performance Yeah. kind I comment

I time – see look premature might to think around just make have But we'll any be I like. the expectation customer think any what how cuts. have tax that So, to to over those responds it'd

Barton Crockett

Okay. All right.

So, different let me a try then. question

Slings equity those us got update think, the just you putting wondering that The to is your timing some YouTube QVC you've interesting. there. yet I innovation what on know in is skinny those things that the I I if to see customers aren't investors And move And bundles, in could you opportunity past being an platforms I on of there, but if do on I of able of not like at the on was think could TVs. your know I One potential the terms – some of like be said there. proofing the would least, you bundles, do the future tapped guys that you think guys really have and the

put Just just been how that there is it it's wouldn't or yet because resistance there guys you there, long or customers there? you had aren't any think worth you any not want on while reason you do or before your those they've it get is is your to

Michael A. George

We question. how – we're intrigued great will bundles space, skinny these a It's get. Yes. big definitely by that

There's innovative but I need we we'd be no think bundles. reason do think on there. those like there. we do to can't to things some I all to see, need we be

those I discussions there's that on, discussions a be when Sling and good So nothing the specific bundle in the any don't we a Sling a all of to some in players would audience. of bundles, suggest have with matter audience, younger would in a know been a while update would have as if. to Clearly, example, the maybe of ongoing at I targeted you we've that opposed them, news heard little than we're more at that all male other anything say, targeted more of space those

as we least are be more little less maybe a us could economic as it reason to but it customer though the a is the line customers as customer. those whereas say those of providers our especially that where that is confidence high our ours will is other kinds with So today. migrate in platforms. bundles our priority and stand We – compelling strong said, looks an evolve us absolute both time, because platforms a at to it providers over of really on put where with isn't today, fit That soon for know or

migrate always rationale we've economic chooses – looked not to be when think them, be if I and there. at So matter then I the to mean we'll not those to customer simply a risk. only as all a of opportunity, platforms an no at on there's them, just

Barton Crockett

great. That's Thank you. Okay.

Operator

question from Citi. And our next Jason Bazinet comes from

Your is open. line

Jason Boisvert Bazinet

and that in to related worth for put federal be any QVC Day QVC that QVC that's more compensate Between just a two to for about year-end, release had is less. out the drop exchangeables the going the sending $XXX federal you XXXX just money I made Thanks. questions on Investor Was or tax. particularly tax the rate of guys the million rate compensate think more deductibility tax holders shield get I cap interest after the that to punitive, dropping? the to to

Gregory B. Maffei

this? Albert, do want you comment to on

Albert E. Rosenthaler

connection be rate interest were deduction bill reattribution. the and reattributed in with change In to on taken determining be both on the that paid into connection limitations amount will the account – the in in the prospectively amount the Sure. the with

Jason Boisvert Bazinet

have as think guys looking at go question we more this becomes then you Okay, you about way, this is tax about as your for important, cost you every dollar is whatever debt great. whatever think of to interest relative just it it are And second my a of are do me to you or shield put – relevant, looking your it leverage through time is just and capital? you net that let associated with cap with can more

Gregory B. Maffei

as black use I the there what the on white and what fact because I that are I rate a of the think not do as is believe debt, alternative the is – is it think around that proceeds. it's issues

the what a deduction. other think sit a do to repurchasing it's – deductibility have and that deferral you you're say make that it's don't and the have you can You about since sufficient sure talk you debt, could of shot. purchasing elimination I income an not other streams deduction income the repurchasing a one to there income going of not only fact amount

calculation. the Here's

and much time of deduction. think I don't many that know anything exactly, one factors to any Albert, it I or how how got the real else. period are we going in defer weigh there if to fix try you've are

Albert E. Rosenthaler

are future to to the we'll extent or to we grow incremental available But we acquisitions have one which thing income. business, offset the is do No. able that the that make deductions

so... And

Jason Boisvert Bazinet

Understood.

Albert E. Rosenthaler

... as of something kind that we'll monitor forward. we go

Mark D. Carleton

Right. look against And you using be projecting. we're financing we can we're at the cost that returns whatever of whatever certain after-tax

of way company might an impact or the be. what or finance acquisition So best into factor division a those to we particular a restrictions, the

Jason Boisvert Bazinet

Understood. you. That's helpful. Thank

Operator

Aegis from And Victor our from last comes Anthony Capital. question

open. line is Your

Victor Anthony

business Two the expectations. guys. performed above which on international way questions. One Thanks,

the wondering if broadcast if seen I'm the Thanks. me Correct think row to in underperformed. wrong the one. an platforms. on different better, that a wondering, is TV performed I'm on I So viewership. countries, to I improvement the up you're viewership, this if ones Mike, anything you that drive talk was could quarter in just specifically And which you've which that doing the on minutes ones second there's

Michael A. George

Thanks. question. the Thank for you

the time, things of in the we've market been balanced of the across get we how terms excited is have to working international In the markets. did well profile, growth hard It's same has one single the just market. and in about QX, international every been performance at every

feel very we quarters. has softer I the U.K. would was would across say a bit strongly the board. balance, few now good say the particularly back start Japan year. I stand-out about little a for on been and performance after a to came So,

quite and I of is more those takeaway the probably big balance strong performance in in were margin the the But we while it saw in across on businesses. a markets. very strongest I was good the particular, And two, growth would Germany consistency performers. think rate kind still our say, growth those the was international not probably nice So and as and of Italy,

all absolute viewing TV where ways So, viewership, minutes get into broadcast in on an traditional stream we minutes seeing live the platforms other we're like viewing quarter And It right. the these account is you're balance. on increase second that on we before taking platforms.

and So, view effect one buy. they but on see probably it's around tuning traditional going we're any compelling they platforms this TVs much cause of There's and stick working. hard know see point engaged offering they're great their where kind people thing. broadcast and be we products, It's engaging to programming to view, and if to the both we to when

of So stronger, programming continuing to networks, product reflection every me, tune-in the are kind into it's newness week. large where on we diverse destination our getting as getting that audiences much certain more business an shows on a exciting just attract call of we to around and what the getting mix, lean

some those nice I viewership helping are to to performance. very what's all think been things contribute

Victor Anthony

on, is the have I Florida shooting, and current is the as the well a I two Olympics follow-up, which impact on in guess, And the I curious the as what media events I quarter minutes? if just it's may. viewership school guess, on the,

Michael A. George

on related current to connect kind certainly want on can't that on wouldn't like comment to I the have viewership. I events. big specific shared there's about current it Again, calls past impact when or But We've you of anything some be externalities quarter. the to that that,

Victor Anthony

Okay. Thank you.

Michael A. George

Thanks.

Gregory B. Maffei

the I believe we're formation We want with I Interactive said, questions. to XXXX. call Operator, joining forward. as in our and in you Liberty going a to Liberty which have been the that thank I Liberty will Qurate continued your this call. earnings announced – GCI is It I good announced company, run was pretty for Hope the in you both interest the actually Interactive and was of it's and so through Liberty all want earnings I last I of November participation.

Operator

concludes your participation. today's for you Thank conference. That

disconnect. You may now

Qurate Retail (QRTEA) 1 Mar 182017 Q4 Earnings call transcript