Michael Porter - VP of Finance and IR Bob Rosenblatt - CEO Tim Peterman - EVP, COO, and CFO

Mark Argento - Lake Street Capital Markets Alex Fuhrman - Craig-Hallum Capital Group Victor Anthony - Aegis Capital

Greetings and welcome to the EVINE Live Third Quarter 2017 Earnings Conference Call. At this time, all participants are in a listen-only-mode. A question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. Michael Porter, Vice President of Finance and Investor Relations for EVINE Live. Thank you. You may begin.

Good morning and thank you for joining us today. Joining me on today's call is our CEO, Bob Rosenblatt; and our COO and CFO, Tim Peterman. Bob will provide his thoughts on our business and Tim will follow with the highlights of our financial and operational performance. We issued our earnings release earlier this morning. If you do not have a copy of our earnings release, you may obtain a copy through the News section of our Investor Relations website at evine.com. Some of the statements that we make during this call are considered forward-looking and are subject to significant risks and uncertainties. These statements reflect our expectations about future operating and financial performance and speak only as of today's date. We undertake no obligation to update publicly or revise these forward-looking statements for any reason. We believe the expectations reflected in our forward-looking statements are reasonable, but give no assurance such expectations or any of our forward-looking statements will prove to be correct. Please refer to the Safe Harbor section in our earnings release today and our SEC filings for additional information. Finally, certain of the financial information disclosed on this call includes non-GAAP measures such as adjusted EBITDA. The information required to be disclosed about these measures including reconciliations to the most comparable GAAP measures are included in the earnings release. The earnings release is also an exhibit to our Form 8-K that can be accessed through the SEC filings section of our Investor Relations website. Now I would like to turn the call over to Bob.

Thanks Michael and good morning everyone. Well, there has been a lot of recent change in the macro retail environment as well as in the specific environment of video commerce. I thought I'd spend a few minutes discussing these events as they are important to help illustrate how our strategic positioning as a leading omnichannel purveyor of proprietary and exclusive goods using our increasingly valuable video commerce platform is a truly compelling opportunity for EVINE stakeholders. First and foremost QVC has announced it is acquiring HSN and our investors continue to ask, “how will that impact us?” My quick answer is that we believe that this is a great opportunity for us. I have worked at and have worked with many of the people at both companies and these are all smart people who love what they do. And over a period of time they will have this whole combination mostly sorted out, but as we all know, consolidation of two large companies is challenging even with the smartest of operators. It impacts employees as well as the vendors and personality selling products through their various digital platforms. It slows decision making and it frequently takes longer to accomplish than was planned. We think EVINE as a standalone video commerce company broadcasting on all screens, whose only ambition is to provide white space for great proprietary and exclusive brands to promote, tell their stories, and sell their products is a compelling alternative for both customers and brands over the next few years. From a macro environment perspective the main narrative recently appears to be around Amazon and Wal-Mart taking over all content and commerce that bricks and mortar retail I dead and their traditional television is dying fast. I'm quoting all three trends for a reason. We believe EVINE which is video commerce available on all screens really sits in the middle of all three of these evolving industries; media, e-commerce, and bricks and mortar retail. The facts regarding e-commerce and retail that we need to keep in perspective is that according to the U.S. Census Bureau e-commerce retail sales are still today only about 10% of total retail sales here in the United States. And e-commerce is and will continue to grow fast because bricks and mortar retail is going through a correction period while many of the overbuilt and underperforming stores and B&C malls are closing. That being said we don't think this correction period indicates traditional retail is dead or dying. And regarding the decline in traditional media, that too is going through a change in terms of technological delivery systems just like it has historically with continually changing delivery systems over the past 50 years from radio to newspapers to broadcast stations to cable monopolies and now to Internet service providers, social influencers, smartphones, and over the top distribution packages. But in terms of people watching and consuming video that really hasn't changed much especially for our customer. In fact and I'm quoting from a recent five year study published by Nielsen in July of this year, adults over the age of 50 who are our core customers are actually consuming more television than they were five years ago. They also happen to have more discretionary income and are living longer than they have in the past. My main observation from these three macro trends is this, all three sales channels are important and are changing. We believe that video commerce will be the skill or as we say the bridge that over the next two to four years will help make bricks and mortar retail more relevant, will help make e-commerce less one dimensional, and will help make traditional media more interesting because EVINE is one of the few live and interactive entertainment choices available today to the consumer at scale and this is the most important part. The barriers to entry at scale are expensive and daunting. With that being said I would like to talk a bit about our third quarter operational results and explain why we are so bullish about Q4 and beyond. First let's discuss content distribution. If you recall we previously forecasted that it would take us six months to launch 10 million new channels in the high definition neighborhoods on Comcast, Cox, and others. Great news, we launched the entire 10 million in November ahead of our original schedule. We expect this will help drive revenue growth in Q4 and beyond as we believe these new high definition channels should begin to provide the expected lift in productivity previous HD channel launches have created for us which is approximately 30% at maturity. More importantly we are already focused on how to secure the next 10 million channels in the high definition neighborhoods. Our investment to upgrade our broadcast signal to high definition which improved the quality of the TV signal by six times was completed in September when the signal went live. Strategically we are leveraging this investment by securing more higher quality distribution in the high definition channel neighborhoods. Next in product and programming, during the quarter we launched 21 new brands, two of which came directly from our competition and brought with them a strong customer following. In jewelry, we were excited for the launch of Victoria Wieck's exclusive collection of jewelry and watches. Victoria is an icon in the industry and brings a loyal fan base with her to EVINE. To engage this fan base we created a Victoria Wieck community website, a modern approach that allows Victoria to engage and interact with her fans throughout the day. Her recent launch generated almost twice the number of new customers as the category average. Akos The Solutionist Jankura launched in August with many sell outs and continues to perform well. Akos has had a long career in the industry and brings a collection of practical and problem solving products. It's familiarity with our customer base and this medium helped this new launch drive an 18% increase in new customer acquisition compared to its category average. Combined these 21 new brands delivered a 21% increase in sales and a 9% increase in new customers compared to new brand launches in the third quarter of last year. Our product portfolio continues to improve with our team of talented merchants who are scouring the globe to bring our customers a curated assortment that resonates with them while also facilitating the opportunity of discovery and storytelling. As I have talked about previously, Q3 was the first quarter since last year that we anniversaried our change in merchandising mix and moved our focus to organizing for revenue growth and I am proud of our teams' accomplishments. Revenue was $150 million, less than a 1% decline compared to last year. However, we estimate that revenue would have been a positive 1% for the quarter when excluding the estimated $3 million negative impact from the fall hurricanes. We began the quarter strong with compelling event programming in August that included our four day long all star gala celebrating our top brands and personalities and our live broadcast from the Minnesota State Fair that featured Paula Deen, John O'Hurley, and Akos. The strong start also included our fall fashion preview event that was highlighted by continued strength from our proprietary apparel brands which grew 13% compared to last year. We also celebrated the 10th anniversary of Jorge Perez, our beloved Waterford Crystal ambassador in August with much success, continuing a very positive trend for our tabletop business which grew 29% over the last year. After the strong start of the quarter, we experienced softness that coincided with the series of hurricanes. The good news is that we ended the quarter on a very strong note in October when we started our holiday season. Our Holiday 2017 Kick Off, Holiday Gift Grab, and Gift Spectacular Events were all top producers in the quarter and give us confidence that we have the right assortment heading into the fourth quarter. Additionally I'd be remiss if I didn't mention Beekman 1802, a brand that celebrated its second anniversary this year and launched two new lifestyle brands in the quarter. The first was Beekman 1802 happy place, a new collection featuring cleaning items made from plant based ingredients and goat's milk. This was one of the most valuable launches in the quarter with high subscription attachment. The second in line was Beekman 1802 mercantile which features practical and one of a kind gifts, collector pieces, and house wares products that were a hit with customers during the launch and is playing a big part in our holiday season assortment. Other highlights for the quarter include Invicta's 16th anniversary celebration with a live remote broadcast from Los Cabos Mexico. This event included the debut of the Invicta Marvel superhero collection. The lunch hour of this new collection produced our highest sales hour in over five years. We also introduced our first ever Star Wars timepiece during the anniversary selling out in less than 20 minutes. Chuck Clemency, one of our fine jewelry designers celebrated his 25th anniversary with a live remote broadcast from New York. The event featured 34 hours of live programming across four days with live audience shows and a brand new collection created specifically for the anniversary. Our relationship with MacKenzie-Childs continues to grow and strengthen after its very successful launch in the second quarter of this year. In the third quarter we successfully introduced home furnishing products including furniture and lighting and a kickoff of the brand's holiday assortment. Beauty was our top performing category in the quarter achieving 10% growth compared to last year. The growth came from our top skincare brands including ISOMERS, Skinn Cosmetics, Consult Beaute featuring Dr. Terry Dubrow and his wife Heather, and Active Argan. We also continue to focus on our subscription businesses and I'm happy to report that we grew both our front-end and back-end subscriptions during the quarter by a combined 20%. As of late there has been an emphasis on the importance of subscription services in the retail industry. Truth be told we have been a leader in this for much of our history although our total 12 month customer file was down 6% compared to last year, this was a function of the decreases we've discussed in the past vis-à-vis the lower lifetime value of consumer electronics customers. The improved composition of the customer's file is evidenced as our average purchase frequency increased to 4.7 items during the quarter which is a 9% increase over the same period last year. In addition we've improved our customer retention rate by 2% compared to last year. We have several tactics in place helping us to increase our customer base. The first tactic is to add new targeted television distribution while reducing the underperforming pockets. The recent launch of approximately 10 million additional HD homes is an example of this and we are continuing to look for more opportunities to make economic sense. The second is the improvement and expansion online through mobile and social distribution platforms. We have an unfair advantage over other retailers with our ability to create high quality video content using our quarter of a decade experience that has allowed us to protect the science of how to maximize effectiveness by type of merchandise. During the quarter we ramped up our live streaming video commerce shows on Facebook and YouTube helping to drive 120% sales increase sequentially compared to the second quarter. We also saw over 10% increase compared to the second quarter in users and sessions on our OTT platforms such as Roku, Apple TV, and Amazon Fire TV. These initiatives help grow our digital sales by 4% and increased our digital penetration by 250 basis points compared to the third quarter of last year. In addition our mobile sales grew 16% with mobile penetration as a percentage of digital sales improving 530 basis points. Before I passed the call over to Tim to walk through our financial, operational, and content distribution results in more detail I wanted to talk a little bit about why we are so bullish about the fourth quarter and beyond. As I mentioned earlier we really ended the third quarter on a high note with growth in the mid single-digits compared to last year, kicking off our holiday theme programming earlier and seeing our product assortment from existing brands and new brands really resonate with our customers. This improved assortment combined with the fourth quarter broadcasting in our new high definition signal creates a great formula for successful holiday season. I also remain bullish as I look out to 2018 and beyond as we are also formulating the launch of new specialty omnichannel brands. Our new brands will be focused on a strategy that relies less on television and more on a stronger reliance on social media, mobile, interactive advertising, and community and what we consider a combination of art and science of the next generation of interactive video commerce. We're just beginning to get in the groove. The core senior management team has now been in place for about a year. We're mindful that there are many areas of our business that we can still improve upon but that list gets smaller every month. We're on the cusp of doing something this company has not done in roughly a decade that is generate positive EPS for the year. Another step towards the goal is to execute during the holiday period. I'm very optimistic we will do just that. I will now pass the call over to Tim to walk through our financial, operational, and content distribution results in more detail.

Thanks Bob and good morning everyone. Let me start with the highlights of our financial performance for the quarter. Consolidated net sales for the third quarter were 150.2 million which was a decrease of less than 1% when compared to prior year third quarter. We estimate top line growth would have been 1% if we excluded the 3 million negative impact from the fall hurricanes. This 1% growth would be in line but on the low-end of where we expected our revenue growth for the quarter. Our return rate was 19.1% in the quarter which was an improvement of 140 basis points year-over-year. This improvement was driven by lower return rate across all product categories driven by our strengthened product assortment. Our average selling price in the quarter was $58, a 3% decrease year-over-year. This was primarily attributable to sales mix shift into our beauty category which typically has lower average selling prices and out of our watches product category. In addition we experienced ASP decreases within our fashion and beauty product categories partially offset by an increase in our jewelry ASP. Our gross margin percentage increased 150 basis points during the quarter to 38.1%. This increase reflects our improved merchandised margin rates specifically in our watches and home product categories as we continue to optimize our merchandising mix to drive both customer response rates and profitability. Our third quarter operating expenses totaled 57.6 million which was essentially flat year-over-year. This was attributable to an increase in general and administrative expenses that were offset by decreases in selling and distribution expense and depreciation expense. General and administrative expenses increased 1.1 million primarily driven by a year-over-year increase in accrued incentive compensation. Depreciation expense decreased 0.5 million driven by a reduction in our non-fulfillment depreciable asset base. Lastly, selling and distribution expenses decreased 0.7 million driven by continued expense optimization in both our program distribution expense and variable expense. Variable cost include our primary operational functions, our customer solutions group, our fulfillment logistics center, and our credit and payments group. And all three groups continued to perform well. Variable expenses for the quarter were approximately 9.3% of total net sales compared to 10.6% last year which was driven by continued efficiency improvements in all functional areas. In the customer solutions group we continued to focus on our live agent contact rate which measures the post sales support calls compared to units sold. We improved this metric by 180 basis points which reflects continued overall operational precision as well as strong first contact resolution in our customer solutions center. In the third quarter we also kicked off two key initiatives in this group, the first is our voice of the customer program which is refining our customer intelligence and responsiveness by deploying data driven decision making grounded by the voice of our customer. The first phase revolves around the introduction of the Net Promoter Score survey to our company and I'm pleased to report it has already improved our knowledge of our customers. The second initiative is designed to maximize sales through our phone channel by transitioning our existing order taking phone culture into more of an educated passionate sales team approach. As evidence of the success of this new effort, in Q3 we earned a 320 basis point lift in our sales close rate in the solution center compared to Q3 of last year. In our fulfillment and logistics center we continued to experience strong productivity which helped to drive down our cost per unit in the quarter by 26% compared to the third quarter last year. In addition, our building wide throughput measured by units per hour processed through the fulfillment center improved by 33%. In our payments and credit group we increased our private label credit card penetration during the quarter by 100 basis points compared to the same period last year. Our private label credit card remains an important loyalty tool while also helping to reduce our credit card interchange and other processing fees. Our content distribution agenda is one of the most important efforts to position our company for sustainable, profitable revenue growth. We remain in more than 87 million homes as of the end of the third quarter and as Bob has already talked about, we have increased the number of channels we are in within those 87 million homes and we've also improved the quality of these new 10 million channels because they are in the coveted high definition neighborhood. Comcast, Cox, and other MSOs are important partners for EVINE and we're happy to report that we are already seeing performance improvements in those markets. In addition to launching an even more HD channels over the next six months we are continuing to develop ways to further grow our customer base using the nascent but emerging over the top platforms such as Roku, Amazon Fire, and Apple TV. As Bob mentioned we are happy to report over 10% growth in users and sessions when compared to the second quarter. Additionally our YouTube targeted programs while not yet material in revenue continue to grow in both sales and audience. We generated adjusted EBITDA of approximately 3.8 million in the quarter which was a 49% increase compared to the third quarter of 2016. Year-to-date our adjusted EBITDA is 10.3 million compared to 9.8 million at the same time last year, a 6% year-over-year increase. As for the balance sheet, we ended the quarter with cash of approximately 23 million which was up slightly from the 22 million at the end of the second quarter. We also had an additional 13 million of unused availability on our revolving credit facility with PNC Bank which gave us total liquidity of approximately 36 million as of the end of the third quarter. During the quarter we also announced that we agreed to sell our Boston Television Station, WWDP for an aggregate of 13.5 million through a transaction that includes two agreements with unrelated parties. We feel we achieved a great price for this nonstrategic asset at a rare moment of consolidation in an already consolidated broadcasting industry. We completed the first step of this sale during the third quarter which resulted in the initial receipt of a 2.5 million cash payment. The cash received was used to pay down an equal amount on our loan to GACP. The remainder of the transaction is expected to close in the fourth quarter of fiscal 2017 following satisfaction of customary closing conditions including FCC approval. The estimated financial impact of this transaction including the complete pay down of the remaining 3.6 million loan with GACP is expected to include a 3 million positive impact to net income in the fourth quarter. Our inventory for the quarter finished at 77 million which is a 5% decrease from this time last year. We believe that we are at the right inventory level now to drive our sales expectations for this holiday season. In terms of our outlook for the fourth quarter of 2017 which includes an extra week compared to last fourth quarter, we continue to project revenue to grow in the mid to high single-digits. For full year 2017 we continue to expect adjusted EBITDA to be in the 18 million to 22 million which would be growth of 11% to 36% year-over-year, and we now expect full year EPS to be between $0.00 and $0.04 which would be the first year of positive EPS for EVINE since 2007. As Bob indicated we are pleased with our profitable start on what we call year two, the phase of our strategic plan where we focus on revenue and free cash flow growth. With that Bob and I are happy to take your questions.

[Operator Instructions]. Our first question comes from the line of Mark Argento with Lake Street Capital. Please proceed with your questions.

Good morning guys, congrats on a solid quarter. Just had a couple of questions, in particular Bob I know you talked in your prepared remarks about launching some new brands, almost like straight to a more of an omnichannel or online kind of environment, could you talk a little bit more about that, how you anticipate doing that, what was kind of the timing?

Yeah, I think that probably we are talking about probably somewhere in the second to third quarter we should be able to start being able to do the testing on that. And because we have another couple of channels, we'll be able to start doing the testing on that and hopefully if things -- once we work them out, we will be able to go into the fourth quarter, where probably we think we will be much more robust.

So is this basically product that you would launch instead of launching on the channel you've launched online, Instagram, Facebook, other digital or social mobile type apps or you can help me better understand what you are referring to?

Yeah, I'm sorry Mark I misunderstood a little bit. It's going to be a combination of all of that. It is all going to be looking at different families of business that we have white space that we're glad to say for the first time that we actually have enough products on our core network now where we can start looking at having other products, be available in different places. And that of course is going to be significantly driven on the web and on social commerce, but it also is still going to have a platform on TV but a smaller platform.

Great, that is helpful. And then one for Tim, obviously gross margins continue to be relatively strong, relative to our estimates on a year-over-year basis as well. I know you had talked a little bit about some of the drivers of that. Could you break that down a little bit more for us in terms of, is it mix, you know in the press release you talked about driven -- core driven primarily by improving rates, what rates are you referring to there, maybe you can help us better understand what's driving the margins?

Yeah, hey Mark. Thanks for the question. We continue to benefit from really a new buying process that we started probably a year ago. So as we talked about why we're bullish about the back half of this year, Michael Henry has a great team and he spent the last year buying in the right way with the right kind of balance. And when I say balance it's not just between categories say watches or beauty or fashion, it's really how we build up within the category. So there's a balance now that when we buy we're buying the right quantities, we're buying the right price point mix, and we're introducing them to the customers in a way that it is increasing the capture rate or the conversion rates. So the idea of contribution margin or merch margin as we're talking about here right now is something that starts at the very beginning of the buying process and that's just simply process and the benefit is really just having Michael and his team in place for a year. I think we'll see more and more of that in the back half of this year and that's just one of the reasons why in addition to the new HD homes why we think Q4 is going to be very solid.

Hi, it is Bob. And just to add to that, Tim's group has put some controls in place so that they look at the lifecycle of the merchandise literally from the minute that we purchase it through the timing of being able to get it out the door, to get to its ultimate gross margin. And since we're doing that we're doing a much better job of forecasting how much we need and how to be able to maximize the gross margin individual growth by item.

Okay, that is helpful. And then turning to the -- I know you talked about adding the 10 million HD homes, where are you right now given your distribution in 85 million to 87 million whatever the total number is, what percentage of those are HD currently and then help us better understand when you expect the full conversion?

So, it is not so much, Mark this is Tim, it is not so much a conversion in HD, because they really are separate neighborhoods on most systems and it’s a market-by-market perspective, like some have a collapsed neighborhood, very few of them that have a collapse between HD and standard. But we think the universe of high definition homes is in the probably 60 million to 70 million range, and we are in the 35 million range now. So if you think about it and 10 of those were just added on, and we're very pleased that we're able to add all of those on in basically one month, and so we were talking about six months, so now we're going after the next and it's just an exciting time because we know from prior HD launches of the 25 million the performance lift that we get immediately and then as they mature over a year is significant. So this is an important step as we talked about when we talk about growth in 2018, it's about the merchandising but it's also about the quality of the channels that we are on.

And then last one from me, obviously there's been a little bit of buzz in the press here with this overture by the Siegel Group [ph], is there a kind of a canned answer that you guys are giving, what's the perspective from the company in terms of some of the things that have been put out in the media?

Yeah, we have seen those articles as well. And certainly we have a robust independent board that evaluate all communications from investors like this. And so I can tell you that -- this process of that communication has been no different and our team evaluates that, our board and our finance committee. And certainly from Bob and our perspective we are flattered by the interest that everybody recognizes that we are undervalued. When you look out at the opportunity for us from stakeholders perspective we're just starting our growth phase and so I think it's just a flattering notion that people recognize we are undervalued, we appreciate it.

Thanks guys.

[Operator Instructions]. Our next question comes from the line of Alex Fuhrman with Craig-Hallum Capital. Please proceed with your question.

Hey, thank you for taking my question and congratulations on a great quarter. Wanted to ask a little bit about the HD rollout, can you give us a sense of what enabled you to complete that rollout of 10 million homes in November faster than schedule, was it a matter of the right kind of spaces on the dial opening up or perhaps being able to negotiate better prices than seen and then I think Bob I think you had mentioned in the prepared remarks that you typically see about a 30% lift when stations that add enough HD channel and that market reach maturity, is that kind of a two to three year curve to reach maturity, curious on how long that tail has been for the other markets where you have added HD?

Alex, hey this is Tim, great questions. Let's start at the top, we have been -- how were we able to execute and bring that to the homes up faster. I think one, I think it is Bob plot is always to under promise and over deliver. And certainly when we communicated at the end of Q2 we were very certain about getting the extra distribution but it just happened a lot faster than we thought. And I'd like to make shout out Carsten and Elaine [ph] who in our content distribution area that really have done a great job at every single element of the our platform growth. It's not just HD but certainly isn’t over the top as well. But specifically on HD, the 10 million homes is important for a couple reasons, it drives certainly the increased performance, it brings in new customers, and that's the other key thing that we want to talk about. It is not just making the existing customers that were in -- that we are already communicating with more productive that brings in new customers. So that's the double benefit. We think that based on our negotiations right now we're again confident that we'll be able to bring in another 10 million within the next couple of quarters and we hope to again over perform because with the lens we look at is accretive. It is the distribution that we're bringing in is accretive and the cost of these additional channels in the home is less than the standard cost of getting in at home and so adding these on is just a very efficient process for growing revenue, growing customers, and growing the bottom line.

And Alex thanks for the question. The other piece of the question that you asked in terms of the amount of time and the 30% increase over maturity has to do with the fact that historically we've been doing this now for the last year I guess we've been adding these HD homes. We've found that historically it's been about a 12 month curve for us to get up to the 30% increase in revenue in those zip codes. However, recently we had some launches in the Cox Cable System as well. We've seen an acceleration in that growth and we've super charged that growth by the fact that we're also actually going out to those markets and going out to the actual stations and doing a lot of marketing in those zip codes specifically to let people know as opposed to just find us to let them know that we actually are in HD. We've been doing it on our air in 90 million homes and we've also been doing it online. And we've also been doing it through traditional marketing ways as well. The other piece that we think is going to be a reason that is going to super charge more than the usual 12 months it takes to get that 30% accretion is the fact that now that we are in fully HD something that [indiscernible] in for last, God I don’t know, eight years now that we're full HD and that the picture quality is six times better than it used to be, it's obviously when you're selling merchandise, especially when you're selling the amount of jewelry and watches and things that really need to be looked at to be appreciated we believe just the fact that we are -- if you will we are on an even playing field now with the other two networks that we think we will get some accelerated -- from that. So whereby it used to take 12 months, I actually believe that it's probably going to be closer to six months maybe nine months to be able to get that full 30% increase.

Well, that's really helpful. Thanks both of you and then trying to also size up the impact of some of the brand launches that you've had recently, obviously you talked about an impressive number of brands you launched this quarter which seems to be consistent with the number of brands that you've been launching in a lot of the recent quarters and I'm just trying to understand if some of these brand launches are a lot bigger than others and I think you've mentioned that you are able to attract a few brands that have a longer TV shopping presence with some of the other networks out there and trying to understand did those brands have a really outside impact when you bring them on because of their existing fan base and kind of getting to I think you mentioned October sales were up in the mid single-digits which even excluding the impact of the hurricanes was clearly above the trend for the rest of the quarter, I mean is that what was driving that or was there maybe something weaker about your October quarter last year that makes that a little bit of a less comparable number just trying to unpack that a little bit?

Hey so, a bunch of good questions so let me start with the new brands. When we go out and look for new brands there is essentially a matrix that we look at in terms buy family of business that try to determine the best way for us to be able to prioritize them. One thing that has happened that's been wonderful for us is over the last six to nine months we've actually had a lot more vendors that are coming to us with product and because they appreciate the way that we've taken to building some other brands that we started with about a year and a half ago. So we're getting a lot more incoming calls if you will than we have in the past. So when you're talking about something like MacKenzie-Child that already has a strong fan base and they also already have a couple stores not many so it's still fairly exclusive. They are great at partnering with us, at being able to mutually help us and help them because of what we've found is that it lifts the importance of their brand. And because we don't have a full selection of the products we're happy to be able to send people to MacKenzie-Child and become MacKenzie-Child fans. And therefore they get a lift and they get to have their best person explain why their products are so special. And at the same time we get a lift. So I don't think we're as -- I don't think we feel so strongly about having to be the only ones with the merchandise but we want to be able to use those brands with the actual developers of the brand to do the best thing possible. So if the product is not available in every corner store and it has a great story to tell we find that those -- especially those that are like -- markets is very good for us to be able to help them tell their story in the way they want to. Secondarily on the brands that have already had a TV presence, absolutely. The brands are the real special thing as far as I can see. It's not the network and I think I've used this analogy before but when you take a Victoria Wieck who has a large fan base and happens to be on HSN previously or an Akos they are able to -- people are able to find that they are on our channel and I think it's kind of similar that if I think I like to think of us like the AMC network where you go, hey, I want to see what's on AMC tonight. I don't think that really works. I think what happens is you have breaking bedpans [ph] and you have walking dead events [ph]. So I think I think that if we are the place where we are happy to help people build brands it is a much easier way to do that. And we think that if we continue to be the place where people want to work and want to do business it'll be a much better place for us.

Great, thanks Bob, thanks Tim.

No problem Alex.

Thank you. Our next question comes from the line Victor Anthony with Aegis Capital. Please proceed with your questions.

Thanks for putting me on in, congrats on a good quarter. Just a follow-up on the brand discussion which is a pretty good, I think you said that you may have swiped away a few brands in the competition. I'm just curious how is that possible, what you rolled at, is that part of your strategy to target these competitive brands? And second I think I may have caught you said something about the YouTube channel, I just wanted to see if you could just elaborate on that and what exactly that is, thanks?

Yeah, sure. So on the first question, I think the first and most important thing I would like to believe is I was President of HSN probably 15 or 20twenty years ago and a lot of the brands that are on today were on their [indiscernible]. And I think that one of the things that we happen to do really well and it may be a little different than the business process that HSN and QVC uses is to be able to be more corroborative and offer more hours. And if someone comes to us at this point in time they could be -- instead of being a little fish in a big bowl they can be a big fish in a small bowl. And I think to the degree that we have a very corroborative merchandizing and marketing department I think some of the brands are feeling comfortable based on the fact that we've now been doing this for about a year and a half under the new management team, to have the confidence to be able to -- and along with that by having invested in the warehouse system and in the other systems that we have on the TV and on the web. I think people realize that we're playing on a more even playing field and therefore the upside here since we are so much smaller is much higher. And I think that's the reason that that's happening. Let Tim take question two.

Yes, the other -- Victor hello, this is Tim. The other platforms that we were talking about in the OTT arena whether that's the fire sticks, Amazon Fire or the Apple TV or even some of the internet only channels like YouTube, these are all important productive areas for us. But the numbers are still very small. We don't actually make them public but other than the metrics of how they're increasing and Nicole Ostoya, our Chief Marketing Officer has done a great job at creating different kinds of programming that just don't come right off the television but are specially made for those new types of platforms. And especially made for those demos that are in those new platforms. So it's something that is an important agenda for us for 2018 and you'll hear more and more about it and we will be more and more specific as those marketplaces scale.

This is Bob, I think one of the things that it is fair to say is that when it comes to actually being able to figure out the best way to sell on whatever platform you're selling on, we have the science and the art behind that for so many years that it is a little easier for us and we have the scale for us to be able to do something on Facebook Live or do something on any of the other social platforms or Instagram. And actually be able to produce it in a way that based on the science that we've learned over all the years makes it more efficient and effective.

Thank you very much.

Thanks Victor

Thank you. Mr. Rosenblatt there are no further questions. I'd like to turn the floor back to you for any final comments.

Sure, thank you all so much. We hope everyone has a great Thanksgiving weekend and so as the holiday season. And thank you so much.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.