iMedia Brands Inc (IMBI) 2012 Q1 法說會逐字稿

Good morning, and welcome to the ValueVision fiscal 2012 first quarter conference call. Following today's presentation, there will be a formal question-and-answer session. Today's call is being recorded for instant replay. I would now like to turn the call over to Teresa Dery, General Counsel at ValueVision. You may begin.

Thank you, operator, and good morning. I am joined today by Keith Stewart, CEO; Bob Ayd, President; Bill McGrath, EVP and CFO and other Senior Management. Comments on today's conference call may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as anticipate, believe, estimate, expect, intend, predict, hope or similar expressions. Listeners are cautioned that these forward-looking statements may involve risks and uncertainties that could significantly affect actual result from those expressed in any such statements. More detailed information about these risks and uncertainties and related cautionary statements is contained in ValueVision SEC filings.

In addition, comments on today's call me refer to adjusted EBITDA, a non-GAAP financial measure. For reconciliation of adjusted EBITDA to our GAAP results and a description of why we use adjusted EBITDA, please refer to our Q1 news release available on our website. All information in this conference call is as of today, and the Company undertakes no obligation to update these statements. I will now turn the call over to Keith.

Thanks, Teresa, and thanks, everyone, for joining us today. Overall, we are encouraged by our progress our team has achieved across the business in the first quarter. Though we are still not where we need to be, we are seeing improvements in many areas of the business as a result of the actions taken over the past year. This progress underscores our confidence in the business and that we are on the right path. Challenges in our consumer electronics segment continued to impact our results this quarter. Going forward, that segment will represent a smaller part of our overall Company sales as we focus on other categories that performed well during Q1.

This operating progress was also reflected in our financial metrics, including further improvement in gross margin. We also saw consistent monthly trends on customer satisfaction with improved performance in both new and active customer accounts. Lastly, we strengthened our balance sheet in Q1, we secured a new $40 million bank line, and we completed the negotiation of the substantially improved terms with our largest TV distribution provider. This agreement should generate $15 million in annual cost savings for ValueVision starting January 2013 as well as increased exposure with an additional channel on the provider, also starting at the same time. I'll now turn the call over to Bill for more a detailed financial review followed by some remarks from Bob on our operational initiatives. Bill?

Thanks, Keith. First quarter sales were $136.5 million, a 4.9% decline from last year. Consumer electronics continue to be a primary drag on comparative performance as revenue in this segment declined by 76% from strong prior year results. Excluding consumer electronics, aggregate sales in all other categories was 12% versus last year, reflecting an enhanced product mix and a shift in air time allegations to these categories. First profit in the quarter was $51 million, down 4.4% and roughly in line with our sales decline. Gross margin increased 20 basis points to 37.4%. The slight increase in gross margin percentage reflects the favorable product mix influence of lower consumer electronics sales, offset by promotional initiatives in the quarter.

Operating expenses increased 4.5% over the year ago period to $56.4 million. This reflects higher transaction costs associated with an 18% increase in shipped units during the period. Our average selling price of $95 is down 19% from last year, principally as a result of the mix shift from higher ticket consumer electronics to the categories of watches, health, beauty, fashion and home with lower price points and broader customer appeal. Operating expenses were also impacted by our expanded distribution footprint. Average homes rose 4% to 81.4 million compared to the prior-year first quarter. This primarily reflects the addition of around 2.4 million Comcast homes during the third and fourth quarters of 2011.

On an adjusted EBITDA basis, the Company incurred a loss of around $1 million in Q1 versus positive adjusted EBITDA of $3.1 million in the same period last year. Q1 results included a $500,000 prepayment penalty related to the early retirement of our $25 million term loan. The Company also recorded a non-cash interest charge of $2.3 million related to the write-off of previously capitalized debt financing cost associated with the $25 million term loan. The year ago first quarter included a $25.7 million non-cash charge related to the early redemption of the $49 million Series B Preferred stock and accrued dividends. Net loss for the first quarter was $8.7 million, or a loss of $0.18 a share compared to a year ago loss of $28.9 million, or $0.71 share.

We're pleased with the strengthening of our balance sheet in the first quarter. We ended Q1 with $45 million in cash, including restricted cash, versus $35 million at the end of fiscal 2011. The improved cash position reflects the seasonal timing of cash receipts from fourth quarter receivables, as well as disciplined management of other working capital components within the quarter.

On February 10, 2012, ValueVision secured a $40 million revolving credit facility with PNC Bank. The facility bears interest at a rate of LIBOR plus 3%. During the first quarter, we used the facility to retire our 11%, $25 million term loan, plus the early retirement penalty, and paid a $12.5 million deferred payment obligation to a distribution provider. With these actions, we've completed the restructuring of our balance sheet and believe we are in a strong position to fund working capital, capital expenditures and other business investments going forward.

Lastly, as disclosed yesterday, we've renewed our license agreement with NBC for the Shop NBC brand through January of 2014. The terms of the license agreement include an immediate cash payment of $4 million for the first 12 months of the license, and then an additional cash payment of $2.8 million in May 2013 for the pro rata portion of the license beyond the first year. I'll now turn the call over to Bob.

Thanks, Bill. Excluding the significant decrease in consumer electronics, we believe the aggregate double-digit sales increase achieved across our other business segments in the quarter reflects a more solid foundation to advance top line sales going forward. The consumer electronics category will remain an important component of our business over the long-term. However, will represent an increasingly smaller percentage of sales. Our efforts to recruit the right candidate as a director of consumer electronics has not yet been fruitful. This has hampered our ability to source compelling product in the category. We are actively working to put in place the leadership and resources to restore this segment to health.

The jewelry and watch segment achieved solid performance in Q1, driven by the watch category which benefited from a compelling product offering including a mix of brands introduced last year that are now gaining traction. Regarding progress made in our merchandising strategy to broaden the product mix in our other categories, the home, beauty and fashion segments, grew significantly as a percentage of our total sales in the quarter. This product mix shift in constant flow of new product was achieved at lower average selling prices and at higher margins. As a result, this attracted more new customers, helped generate higher retention rates and increased the size of our overall customer file.

Our customers are constantly seeking new, compelling and engaging content. As we strive to meet their needs, we brought on board approximately 80 new vendors, introduced over 5,600 new styles, and launched 31 new concepts in the quarter. With many improvements made in the quarter, we are in a stronger position to invest in these categories and drive further improvement across the board. However, we are not where we need to be. As we continue to invest in these businesses, our progress will continue. Another key initiative at the Company, we're working diligently on improving our customer experience. We are listening closely to the customer and are instituting a number of customer-centric policies and initiatives.

We made product exchanges easier for the customer, improved and standardized product information in all product categories, streamlined our order capture processes and increased agent empowerment to resolve customer issues. I am pleased to report that these efforts are also helping deliver progress and customer satisfaction, retention and reactivation. Our strategy for success remains focused on the three pillars of driving the top line, broadening the product mix, and optimizing merchandise margins. We remain confident in our abilities in believe we are executing the right strategies to advance the business. With that, I will turn the call to Keith.

Thanks, Bob. In closing, I did want to underscore our optimism for the long-term potential of the business. Though we encountered some recent challenges, we've taken positive steps in addressing these issues in Q1 and are confident this improved performance can continue going forward. In the quarter, we achieved solid progress on a number of operational areas of our business. Examples include a broadened product mix; increased customer acquisition and higher customer retention; a lower average price point and greater shipped unit growth; reduced our future distribution cost and improved channel positioning; and an overall improved balance sheet. We recognize there is more work to be done.

For the balance of 2012, we will continue to focus on introducing more new and compelling products that we believe will delight the customer. We will also focus on content and customer service initiatives designed to attract new viewers, encourage repeat business and reactivate customers who have not shopped with us recently. Driving growth in our customer file is an important component of leveraging our distribution footprint and increasing our household penetration. As Bob indicated, another pillar of our long-term growth is ensuring our customers feel valued and engaged in our programming, merchandise assortment, and overall multi channel experience. We are focusing substantial attention on these key areas.

We've also substantially solidified our balance sheet over the past year. This has provided additional working capital flexibility and should facilitate other growth initiatives, including investments in our path to HD broadcasting. We certainly appreciate your confidence and support in our business. We are now ready to take your questions. Operator?

(Operator Instructions) Nick Zamparelli with [Zeke LP].

Hi, guys, thanks for taking the questions. Just a couple of quick ones here. First, on finding a new head of CE, I know that, Bob, you mentioned on the prepared remarks that you haven't had a lot of success yet. Maybe just provide a little bit of color there on what your expectations are, and timing, and how the interview process is going?

This is Bob. Well, obviously, we have not filled the position, and we are not happy about that. But we are working with a professional recruiter in New York, and quite simply, we just haven't found the right candidate. And what I don't want to do is put in somebody there just to take a chair. I really want the right person, so when we hire this person, this person can move the business. And up to now, I haven't -- I don't have that person yet. But believe me, we are absolutely focused on filling that job.

Okay. And then, on the improved channel positioning, I know you've mentioned in previous calls that particularly on some of the new distribution deals, you've procured better channel positioning, and you were waiting to see how it did before proceeding with more investment in channel positioning improvement going forward. Any read on how that is going that you could provide for us?

Yes, Nick, this is Bill. Overall, it is going pretty well. We like the results that we are seeing out of the major markets that we had improved our positioning in, specifically Miami, Atlanta, Baltimore and Washington. You find that as you roll that out into more, I will call it the less populated areas, not quite so strong, but in aggregate we feel very, very good about it. And although we didn't have much of an expansion in the footprint in the first quarter, as we look ahead to second and third quarter, we may be lowering that position in a couple of other additional major markets. And we felt good about the results. I'll state that they are in the major markets, they are cash flow positive in terms of the incremental revenue versus the marginal distribution cost that we incurred as a result of the expansion. So, that's a pretty good bellwether for us.

One point of clarity -- when you say lowering the position, you mean improving the channels.

That's correct, and expanding the footprint as a result of that.

So, the investment is essentially paying off so far in the markets that you've decided to do it in?

Yes, that's correct.

Okay, great. All right, thanks, guys.

Thank you, Nick.

Neely Tamminga, Piper Jaffray.

Great, good morning, you guys.

Good morning.

I have a bit of a product question for Bob, too. As it relates to the categories that you're winning in right now, could you talk us through maybe -- are there some price point differentials within those categories? Are you noticing any trend as to how she's choosing or gravitating towards those price points? Obviously, understand the lower price point overall, but just within those categories that you are winning, that would be helpful.

Sure. Today I'm more fixated and the customer is more fixated on value than price point, but that being said, lowering the price points is your strategic initiative for us, and we both know, as we lower price points, generally we can get more new customers, and normally, return rates go down. We won in fashion. I don't think it was a price point strategy that allowed us to win, however, I would say we're getting real success in lower price points than historically we've done in the fashion division. The home business we've done very well with, I would think. We're in the process of repairing that, and in the first quarter, that wasn't a price point piece, that was purely based on value. Health and beauty -- again, I think that price points are sensitive there, and we've targeted it to more moderate price points, and we are in the process of growing that business as well.

Could you, Bob or Keith, in the past you guys have been willing to talk about maybe some current trends as we think about Q2. Is there anything we can -- would you say that largely what we saw in Q1 can continue in Q2, or are there some nuances that we need to be aware of, from a revenue perspective?

As Bob mentioned, we continue to invest in these new businesses. I think what is noticeable in Q1, Neely, is within the home business, which we have a tremendous opportunity, along with beauty and fashion, our mix increased by 900 basis points. That helped to lower the average selling prices; that was a lower barrier to entry for new customers. So, we saw a broadening of the customer base because of the lower ASPs and the mix -- expect to see more of the same in Q2.

That's really encouraging. Thanks so much, you guys, and good luck.

Thank you, Neely.

Peter Mahon, Dougherty.

Good morning, guys, thanks for taking my questions. I was just wondering, obviously with the performance of the CE segment, the product that you guys have, you are not as confident in as you might once have been. And that's really -- my curiosity is what you're putting on the air to fill that time spot that was previously consumed by CE product?

This is Keith. There was a conscious decision in Q4 and Q1 to invest in new businesses, and that has been, for quite some time, our strategy to broaden the overall mix. And to Neely's comment or question, broadening the mix will help us lower the average selling prices and increase our overall customer file. Now that's, broadly said, it's going to be in the home business, which is a very, very large segment within our industry, our health and beauty business, and our fashion and our accessory businesses; again, those typically are at lower average selling prices. I would say we did a fairly good job of broadening the mix. As I mentioned, 900 basis points in those areas, but there's a lot of growth opportunity to come.

And as we have looked at our inventories and our cash balance going into the quarter, our inventories were a little lower than what we would like. We still need to take those inventories up a little bit, so we can continue to invest in those businesses. We expect to see more progress moving forward because of that strategy.

Got it, great. So, do you see enough traction in those new initiatives to give you some confidence that we can break the historical trend of generally a decline in revenue from Q1 to Q2? Have you seen enough traction in those new initiatives to feel comfortable that there might be a revenue increase in Q2 from Q1?

I'm not going to comment on Q2 revenues, but I can comment on the traction that we've seen consistently quarter over quarter on the health and the beauty business, as it increases its penetration, its strong margins and new customers. We've seen a consistent trend in fashion and accessories, albeit to a smaller degree, but a very wide assortment. That gives us great confidence. We're seeing some traction in the home business, but that business is still in its infancy. We still have more investment to do as it pertains to people, inventory and overall product mix.

Got it, great. And you mentioned that return rates were 21.2% in the quarter, that is flat year-over-year. As I think about it, as we transitioned away from CE to some of the other product categories such as jewelry, beauty and whatnot, I would have thought that return rates might go up. Is that the right way to think about return rates? And what was the reason for the lower return rates in the quarter, and is that sustainable?

Peter, this is Bill. And yes, you are thinking about it the right way, and that is that CE as a category tends to have a below-average return rate. The categories that backfilled that, as Keith had mentioned, the home classification, which has a comparable return rate to consumer electronics, as does beauty, so there is somewhat of a neutral effect there. The classifications of watches, fashion and jewelry, however, do have higher return rates. And so, you have that mix influence that, I would say other things being equal, provides a slight uptick in the return rate.

That was offset, however, in the period in that the price points within those categories, particularly jewelry and watches, were lower than they had been in the prior period. And that tends to be within -- especially within the jewelry and watch classifications, return rates are most sensitive besides the mix elements, but within those classifications, most sensitive to price points. And so, anyway, the accumulation of those factors are that return rates were basically in line [with the period].

Got it, that makes sense. As I think about distribution and selling cost, Bill, you typically let us know what the transaction costs were for the quarter. Would you mind giving us that?

Sure. Our transaction cost for the quarter -- we measure it per gross telemarketed unit, so basically per unit ordered. We're about $2.81 in the quarter, down about 5% from last year. And as I mentioned, that effect -- that positive effect was offset by volume. Basically, we had shipped about 18% more units that we had in the prior-year Q1.

Got it. And when I think about the revenue level that you guys did, it was certainly better than most expected. But I would have thought that distribution and selling costs would have been a little higher. And as I look about the components, whether it be cable and satellite fees, transaction costs, or credit card fees, has something changed in the equation to lower those distribution and selling costs? And is that something that we can sustain at these levels?

Yes. I'd say, in terms of the activity or the basic components, Peter, we mentioned the favorable performance in terms of the transaction cost per unit overall, and that component of cost is the cost of taking an order and fulfilling an order, other than the shipping costs. Our other elements of variable expenses, credit card fees and bad debt expense, basically in line with last year. I think we talked about that being around 4% to 4.5% generally as a percentage of sales. We do have, on a net basis, you've got a favorable influence there. Distribution costs, again, basically in line with last year as a -- in aggregate dollars -- or I should say, I take that back, 4% in total. I was thinking the cost per home in line at about $1.35.

Got it, okay. And obviously, that cable and satellite fees will change in 2013 as you recognize that renegotiation?

Yes, that's right. Other things being equal, the cost of that agreement will be lower by $15 million in 2013.

Got it. And last one for me is just -- you guys mentioned that you were pretty aggressive in terms of your shipping promotions throughout the year -- or throughout the quarter. Based on that, I would have thought there might have been maybe a little bit more accounts receivable than there were. Am I thinking about the transition from CE to these other categories correctly, in that some of these items are sold so much lower -- at a so much lower price point, that even if there is a higher volume of them, that AR shouldn't increase quite as much as we might have thought about in the past?

Yes. The level of support with value pay will vary, certainly with the average selling price of the individual items. And you are certainly correct in the consideration that the mix of higher-ticket consumer electronics is supported by value pay installments. It does move. I would say -- and we had a reduction. If you look at in terms of days sales, we were about 51 days in accounts receivable at fourth quarter; we're down closer to 47 days now. I would say we were probably 51 or 52 days at this point last year.

There is various levers that we would use for promotional activity. Certainly, value pay is one. And shipping is another element that we use either complementing value pay or sometimes in lieu of value pay, and there was a little bit of that in the quarter. Lower-ticket items tend to respond well to bundled shipping offers, and so, that becomes a component of the influences that we had in Q1.

Perfect. Thanks a lot, guys.

Thank you, Peter.

Mark Smith, Feltl and Company.

Hi, guys. Bill, what you just talked on there on shipping promotions, what is your view on that going forward?

We find that, again, it is effective, Mark, particularly in certain categories of goods where you can bundle multiple purchases under a fixed shipping offer on the day. The customer responds well to it, and honestly, as they continue to respond well in terms of the marginal sales lift that we see out of the promotion, we would continue to utilize that actively as part of the overall portfolio. It can be an everyday offer, but it tends to be a strong complementary offer around events.

Okay. And then, you guys talked a little bit about fashion and some other places doing well. Do you feel like you've got any bump from warmer weather?

I don't -- it's Bob. I don't think that was the reason at all. We've been focusing on fashion for quite some time, and we were able to really move the needle dramatically in the first quarter. I think we had product that people wanted. The price points, as I mentioned earlier, came down. We are having success at the more moderate price points; we have items that drive the business, and to me, it was all about product.

Okay. And talking product, looking in the rear view, can you comment on Macy's, Calvin Klein bags, Brooks Brothers, some of the different things that we've seen over the last few months? Can you talk about how effective those have been?

I think that these are businesses that are just starting out, but I think the results have been strong. We're looking to build businesses -- substantial businesses over time. I was particularly happy with the Macy's cookware product, and our relationship with Macy's remains strong, and we are going forward with them. The Brooks Brothers relationship -- I was in New York at Brooks Brothers last week. We are pleased with those results, and we're taking steps to build an even larger business, and Calvin Klein as well.

Okay. And last question, maybe for Keith, what are your views longer-term on the license agreement? Is this something that you want to continue re-upping on, or is there a chance to rebrand?

Thanks, Mark. Yes, we made the announcement yesterday; the extension is largely of the same terms. In fact, it was an addendum to the existing agreement. I would say the largest difference was the terms we printed outside of our Christmas season; it was an 18-month. As Bill had mentioned in his transcript, the cost was largely the same. I very much view that is us stepping up, as well as NBC Universal stepping up to their commitment.

Great. Thanks, guys.

You're welcome.

[Mike Butler, IKO Money Management].

Yes, hi, guys, it happens to be Greg Butler, speaking on behalf of Mike. I spoke with you guys last conference call, and just want to get everything in order because when we spoke last time on the year-end and Q4, I brought up the watch situation with the jewelry. And Keith, you told me, with the long haul -- you're in it for the long haul, and you saw many good things ahead. And you told me you wanted to get away from -- I think we were at 25% with watches and jewelry, and you wanted to bring that down with bringing CE up. Now, today, it's almost like converse, the whole statement. And the call is now getting away from CE, and going back to the low-ticket items.

You showed some promise with the growth on the top line. What do you want to say about that as far as going forward now? You told me -- and then I'll let you answer -- that when I brought it up last call, that it's something that you haven't stopped when you were looking for a guy to -- someone to run that division, and you will have an answer by Q1. Now, it looks like you're changing gear on what's going to be going on in the immediate and long-range future. So, if you could just give color on that, and I'll ask one or two more questions thereafter.

Thank you for your question. There was either confusion in the call or the communication; I apologize for that. Our mix has never been 25% between jewelry and watches. It's always been 50%, or north thereof. Over the long-term, we will shift our mix; and I will talk to CE in just a moment. And we believe that our mix is -- we are going to be at our best, our very best when the home businesses do include CE. We will be somewhere between 45% and 50%. Our health and beauty business will be between 12% and 14%; our apparel and accessories will be somewhere around 10% to 12%; and then the rest will be into jewelry and watches. That's ultimately where we need to be.

This is a journey, it's not a wind sprint, it's not going to happen from quarter to quarter. And there will be variability based off of consumer demand, and a variety of other implications based on a short-term window with that. That is what our long-term plan is. And what we did see within the quarter was an increase in home, beauty and fashion of the mix by 900 basis points. So, that was an improvement, and it primarily came out of consumer electronics.

Now, I am very disappointed in the consumer electronics performance, and we continue to, as Bob had mentioned, look for a replacement of that position. We're not going to stop working on replacing that position and trying to improve that business. It's important to note that moving forward in the next few quarters, our comp sales are not that large, as it pertains to consumer electronics. It allows us the luxury to, A, continue to work on electronics because we need to get that fixed, but also to continue and invest and drive new businesses, which will drive new customer growth, which will certainly help us meet our long-term.

And I certainly agree with you, it's just that the last call, you just came across as really trying to get CE up and going. So, basically what I'm getting out of this is, you're learning as it goes. And in the long-haul, which you did explain, which was exactly how you put it last time, you're going to roll with the punches, and whatever is working is what you are going to really follow through with, but you still are looking for a CE Controller in that department?

We are still looking for a CE Director. Very clear, we were not successful in recruiting --.

Right, no, your statement did say that; I'm sorry, go ahead.

That's all right, the buck stops here, and I am accountable for that. I'm going to continue to work with Ned, along with the team. And we will continue to broaden our mix, and yes, to a degree, any retailer will play their hot hand, and consumer demand is going to drive the ultimate product offerings in which we have. But our experience over the decades that we've had within the industry states that we will be able to achieve that mix over the long-term, and that mix bears a lot of fruit in the form of revenues, profits and customer file size.

And with that great experience, you and your team that you brought with you over there, what can you just give color on or enlighten us with maybe just in the last quarter? What have you learned that you want to tell us about in changing from not being where CE was going where you wanted it to be, and now, like I said, you're just going to roll with the punches? Like you said, you're going to play the hot hand, which is -- can't argue that fact, that it's a great way to do business. Is there anything that you want to explain that you learned? With the great expertise and experience that you carry?

There's not enough time, but I will close this part of the call [with the following]. CE by attrition became a smaller part of the mix. As I mentioned, we increased in a material fashion other elements of the business, and we've yet to get to the mix where we ultimately want to be, and we have a lot of work to do there. We've been working very hard in our customer-centric policies. Our new customer growth has grown because of the broader mix and the democratized ASP.

Our retention has grown, as Bob had mentioned, because of our customer-centric policies that we've -- and our reactivation of customers have grown significantly. For example, we know if a new customer doesn't re-purchase from us in the first 90 days, they probably won't. We developed a very sophisticated model of reactivation to bring those customers back into the fold, and we've seen significant growth in those areas. So that, along with an improved balance sheet, better distribution costs, and a litany of other things, we've seen an awful lot of progress. But we've got an awful lot of work to do, and I do thank you for your call.

Okay, and I thank you for your time, and you did enlighten and help me understand. Again, good luck, and thank you for your time.

You're very welcome.

(Operator Instructions) Gunnar Hansen, Sidoti.

Hi, guys, have a couple quick questions here. Can you guys give us a little further information in terms of, at what time last year a lot of the CE trouble began?

The business tapered off somewhat, Gunnar, in the second quarter, but the declines were accelerated really in the third quarter and into the fourth quarter.

Okay. And about which month was it that you guys kind of first got notice of the decline there? I guess in the second quarter?

I think in the -- it's Bob. In the second quarter, May and June, as I remember, were difficult months, especially June, and then we had an uptick in July. And then in the third quarter, there was a further deterioration. If there's any good news here, and we are in the process of trying to fix this, is that the amount of CE business that we are up against going forward this year for quarters two, three and four is approximately, as a mix, 0.5 of what it was in the last two quarters. The mountain to climb becomes much, much less.

Okay, and then I guess last question, in terms of some of the improvements you guys have had in terms of customer growth, retention, and to that effect, can you guys attribute that to any particular product segment? Or is it really just a broad improvement?

What actually happens is, you broaden the mix, and you offer more variety to the customer, and you democratize the ASPs. Give a lower point of entry for the -- easier point of entry for the new customers to come in. You've got more variety for them to be interested in, easier for them to come in, and that's helped the new customer acquisition. The retention rate has [been an awful lot], and we still have a lot of work to do here. It has been the customer-centric policies that we've introduced within the quarter, specifically our returns and exchange policies, and a variety of other things that we are doing to focus in, to better service our core customer. And on the previous question, I did address the reactivation, so it is a three-pronged attack on customer service.

All right, great. And then finally, which one of the product segments grew the largest here in the quarter?

I'll take that. I believe we were very pleased with the growth in terms of top line in fashion especially, very strong growth home, for the first time, very strong growth in quite a while. Watches strong growth, and health and beauty strong growth. I call those our core businesses, other than CE. The core businesses other than CE grew 12% in Q1.

Right, great. Thanks, guys.

Versus a decline of 5% in Q4.

Right. Okay, thanks, guys.

Well, thank you, everyone. With that, I would like to thank you for your time and your interest in ValueVision. And with that, we will conclude the call.

Thank you for your participation in today's conference. This concludes the presentation. Everyone may now disconnect, and have a great day.