QVC Group Inc (QVCGA) 2012 Q3 法說會逐字稿

Good day, everyone, and welcome to the Liberty Interactive Corporation quarterly earnings conference call. Today's call is being recorded. At this time, I'd like to turn the call over to Courtnee Ulrich, Vice President of Investor Relations. Please go ahead.

This call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including statements about financial guidance, business strategies, market potential, future financial performance, new service and product launches, and other matters that are not historical facts. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements including without limitation changes in market acceptance of new products or services, competitive issues, regulatory issues, and continued access to capital in terms acceptable to Liberty Interactive.

These forward-looking statements speak only as of the date off this call. Liberty Interactive expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Liberty Interactive's expectations with regard thereto or any change in events, conditions, or circumstances on which any such statement is based. On today's call, we will discuss certain non-GAAP financial measures including adjusted OIBDA. The required definitions and reconciliations, preliminary note and schedules 1 through 3 can be found at the end of this presentation.

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

Good morning, and thank you, Courtnee, and greetings to all of you out there on the call.

Today speaking on the call, we will have besides myself Liberty's CFO Chris Shean, QVC CEO Mike George, and QVC US CEO, Claire Watts. So on to the highlights.

QVC posted very solid results particularly in light of local currency issues. We had strong growth in our newest market China and importantly we continued our pace towards digital and mobile success continuing to show the ability of the QVC platform to adapt. We completed the recapitalization of Liberty Interactive into two tracking stocks, Liberty Interactive and Liberty Ventures. Since we began that, the day before our shareholder value was increased by $2.6 billion since the day before we split the stocks, August 9, and we're very pleased with the success to date of the two new tracking stocks.

As a part of that division or reattribution, we completed a successful rights offering at Liberty Ventures raising $328 million. When we combine that with the proceeds of our forward sale in Expedia, Liberty Ventures now has $2 billion of cash. I'd note that even with the increase in the revolver balance at QVC which was used in part to fund that cash at Liberty Ventures, leverage at QVC is still a very conservative 1.9 times.

As you may note, Liberty Interactive purchases were down for the quarter. This was due to a couple of factors. First, we were out of the market for six weeks while doing the recap. Secondly, when we entered our normal blackout period, as most companies have, we had a repurchase plan in place but the stock responded very strongly and frankly rose above our grid so for much of the quarter we were out of the market. When you consider repurchase this quarter -- sorry, we consider them abnormally low, and probably disappointing to you. I would note, however, that the Board of Directors has approved an incremental $1 billion to the share repurchase authorization and I believe we remain committed to share repurchases.

With that, let me turn it over to Chris Shean to discuss the financials.

Thanks, Greg.

Liberty Interactive Group's revenue increased 3% in the third quarter while adjusted OIBDA increased 5%. QVC increased total revenue 2% for the quarter while adjusted OIBDA increased 6%. Liberty Interactive's other eCommerce businesses grew revenue 13% while adjusted OIBDA decreased 56% in what is generally our smallest quarter of the calendar year.

All but one of our eCommerce businesses reported an increase in revenue for the quarter as a result of increased marketing efforts and increased conversion resulting from site optimization and broader inventory offerings. As we mentioned at the investor meeting, the eCommerce group is facing challenges around adjusted OIBDA. In this quarter, the decrease was a result of increased spending in paid search as a percentage of revenue, continued promotional activities and seasonal inventory, and lower advertising revenue due to pricing and a shift to mobile applications.

Additionally, there was an impairment charge to good will at Celebrate Interactive as a result of continuing declining operating results and disappointing third quarter trends. We're still determining -- separately, we're still determining the impacts of the devastating storm on the East Coast. We do have some distribution facilities that were impacted and expect additional impacts to be -- that may affect placed and future orders.

Now, let's take a quick look at liquidity. At the end of the quarter, Liberty Group had attributed cash of $558 million and $4.5 billion in attributed debt. QVC's total debt to adjusted OIBDA ratio, as defined in its credit agreement, was approximately 1.9 times compared to maximum allowable leverage of 3.25 times.

Now, with that we'll hand the call over to Mike George for additional comments on QVC.

Thank you, Chris.

We were very pleased with our results in the quarter with revenue up 2% and adjusted OIBDA up over 6% despite significant affects head winds that depressed our dollar denominated results. On a constant currency basis, we increased revenue 4% and adjusted OIBDA 8%. Worldwide, we saw particularly strong growth in our beauty business up 11%, cooking and dining up 9%, and home decor and home improvement up 5%. These gains were partially offset by soft results in consumer electronics and jewelry.

We continue to invest in elevated content and programming such as our Fashions Night Out event in September. In partnership with Vogue, we held major events in New York, Florence, Milan, Rome, and Tokyo for our viewers and customers around the world. And we remain focused on distributing that content in compelling and relevant ways over all the screens and devices our customers interact with.

Our eCommerce business continues to grow at strong double-digit rates up 14% worldwide in Q3 to 33% of our revenue, a 3-point increase from a year ago. And we fully deployed our new WebSphere eCommerce platform in the US, Germany, and the UK during the quarter which provides some immediate benefits, including improved navigation and the technical architecture that facilitates organic search, and it will also enable us to deploy innovations on the site much more quickly going forward. We saw a particularly strong benefit in Germany where eCommerce penetration jumped 4 points from just 14% last Q3 to 18% this quarter.

We've highlighted the explosive growth of our mobile business on the last few calls, and we're seeing that trend continue, as well. Mobile orders increased 96% worldwide and were up over 140% in the US, Germany, and the UK. In the US, mobile orders in the quarter represent a 22% of total eCommerce orders, in the UK 30%, and in Japan 44%. And last month, Internet Retailer ranked QVC US as the fifth largest mobile Commerce business across all industries and among multi-category retailers, QVC US had the second largest Mobile business behind only Amazon.

We see these strong results as clear confirmation that our strategy to create highly immersive digital shopping experiences with strong integration across TV, PC, tablet, and mobile platforms, is not only succeeding but significantly outpacing the industry. Our overall customer funnel remains strong, existing customer retention was unchanged at 89%, and similar to the last couple of quarters, we saw good revenue growth from both existing customers and dormant customers who we reactivated in the quarter, particularly in the US and Japan. Revenue growth from new customers remains a little soft due largely to the mix shift away from consumer electronics, which tends to attract new customers and to a smaller degree, challenges in Japan with new customers locating our channel following the digital conversion last year.

Q3 was also a big quarter for us in terms of advancing our international expansion agenda. In addition to continued strong results in Italy, where we just celebrated our second anniversary, we launched in early July our new joint venture with China National Radio. We remain focused on exploring additional markets with Spain, France, and Brazil topping the list, and we hope to be able to share news on our next market sometime next year.

With that overview, I'll touch briefly on the results by market. The US grew revenue 3% with particular strength in fashion, beauty, and home offset by soft consumer electronics and jewelry sales. Adjusted OIBDA increased to 7% driven in part by favorable warehouse expenses and improvements in our customer service and TV affiliate commission costs due to the continued growth of our eCommerce platforms.

Japan posted another outstanding quarter with revenue up 9% in local currency, driven by balanced growth across our fashion, beauty, home, and consumer electronics categories, while adjusted OIBDA increased 12% due in large part to fixed cost leverage and improved warehouse productivity.

Our German business continues to struggle in a difficult consumer economy. Revenue in Germany was down 6% in local currency with soft results in fashion, health, and consumer electronics. Beauty was the one bright spot in the quarter, up 32%. We grew adjusted OIBDA 2% despite the revenue decline driven by improved warehouse productivity and reductions in fixed costs partially due to lower bonus accruals. As we navigate this difficult environment, we remain highly focused on all the fundamentals in Germany including balanced product rotation, tight management of promotional activities, and strong inventory and expense control.

In the UK, we were pleased with our 3% revenue increase in local currency in the face of a challenging economic situation and greater than expected viewership and sales declines during the London olympics. However, we struggled on the OIBDA line, down 9% due partially to soft product margins driven by both product mix changes and higher clearance activity in apparel and pressures on expenses from our headquarters move, including higher than anticipated costs to decommission our old headquarters and stepped up rent and other expenses in the new facility.

Italy achieved revenues of EUR 17 million, up nearly 140% from last year and 16% up from Q2 and the adjusted OIBDA loss fell to EUR 4 million, a 45% reduction in the loss from a year ago. We continue to be encouraged by the strong sales wrap in Italy and especially by the high retention and repeat purchase rates that we're seeing.

And finally in China, our CNR Mall joint venture achieved revenue of RMB132 million in Q3 or about $21 million. That's up 85% over last year and up 12% over Q2. The adjusted OIBDA loss was RMB28 million or about $4 million. We have a 49% stake in the joint venture, and so we will account for the economics on a nonconsolidated basis under the equity method of accounting and reported a $3 million reduction in net income for the quarter.

CNR Mall now reaches 44 million homes and has served over 800,000 customers to date. The business has shown great success attracting new customers, although retention and repeat purchase rates are below what we see in our other markets. At the formation of the JV in July, QVC took on key management positions including the CEO role and we're working closely with our new partner to evolve the format closer to the QVC model, which we anticipate will drive up repeat purchase rates.

This will be a gradual evolution with the particular focus in the short to midterm on introducing highly differentiated QVC vendors and brands into the product mix. I'm happy to report that a few months into the JV we are delighted with the team, the business, the partnership, and the long-term potential in what is already a $7 billion market in China for TV shopping.

And with that, I'll turn the call over to Claire to provide more details on the results in our US business.

Thank you, Mike.

We are making progress on our efforts to create a next generation of retail. We're continually improving our unique product and programming strategies, while integrating our live broadcast, website, mobile, tablet,and social platforms to enhance the real relationships that we have with our customers. We remain committed to offering our customers unique shopping experience across all platforms.

We celebrated Fashions Night Out this year with an interactive fashion event for customers in the meat packing district in New York City and a three-hour live broadcast premiering collections from Nicole Richie and Jennifer Hudson. Our fashion event attracted more than 3,000 QVC fans who were able to try on our products, take pictures of their new looks, share their experiences socially with their friends, and meet their favorite QVC designers.

Our Fashion business continues to be strong as evidenced by a very positive response to our seasonal offerings launched in conjunction with our Fall Fashion Days events. Our stand-out brands included Isaac Mizrahi, Joan Rivers, Susan Graver, Laurie Goldstein, Lisa Rinna, Dooney & Bourke, Clarks, and Spanx. Our Beauty's Best event featured a full day of prestige beauty with best performing brands Bare Minerals, Philosophy, It Cosmetics, Perricone, Mally, Tarte, Clarisonic, and Josie Maran.

On the home side of our Business, we're encouraged by the early response to our preseason holiday assortments. In September, we offered a 24-hour Comforts of Home event with strong performance from Duraflame heaters, Orec, Bissell, Candle Impressions, and Sharp. Also in our home division, we saw strengths from a number of brands including Apple, Dell, Bose, Dyson, Vitamix, and of course our very own David Venable's cookbook done in collaboration with Random House. To date, we've sold more than 253,000 units of the cookbook and it's prominently featured among new cookbook releases at Amazon and Barnes & Noble.

Our team is uncovering opportunities to improve the customer experience on every step of the journey. Our customer service communications that are delivered after the purchase continue to anticipate questions and create a personalized shopping experience. Whether it's a video that helps a customer assemble the new Master Built Electric Smoker, or a step-by-step guide about different ways to tie a Layers by Lizden scarf or a reminder how to use the new beauty device that you just spent $300 on, we want to make sure that our customers get the most from the products they buy.

Our customers are increasingly engaging with QVC on multiple platforms as evidenced by our extraordinary growth in web and mobile penetration. Q3 digital sales grew by 14% with penetration of 39%. As Mike mentioned, our mobile growth is explosive. Q3 orders increased by 142% and penetration in Q3 grew to 22% of digital orders.

QVC's recognition by Internet Retailer in the mobile commerce space is a reflection of our team's commitment to understanding the customer preferences by platform. For example, our apps are generally utilized for quick ordering and items on air. So we create a quick access to our Today's Special Value, items on air, customer reviews, and the TV live stream. For our best customers, this a fast and convenient way to shop the show whether she is watching live or not.

Tablet, as we've stated, is the fastest growing portion of our mobile portfolio, and we have implemented more than 30 enhancements to optimize the shopping experience for tablet users this year. Our customer tablet experience is grounded in shopping and enjoyment activities and as a second screen activity to the live broadcast. We see this come to life with interactive programs such as In the Kitchen with David and The Lisa Robertson Show, where customers are watching the live broadcast and engaging with our program hosts on Community Forum, on QVC.com, on social platforms such as Facebook and Pinterest and on our mobile applications.

During In the Kitchen with David experiences offer additional content on our ipad apps while she is watching the show live such as Pull, Behind the Scenes photos, Recipes and Tips, and Chat, which is one of our most popular features on the page. We've also created a companion experience of The Lisa Robertson Show offering various looks from the show, interviews with featured designers, as well as the very popular chat. What we're finding is that our customers not only want to interact with us and our personalities, they also want to engage with each other during the live show.

We believe that one of our most important differentiators is the real relationship we have with our customers. Our hosts are our key ingredient in that relationship, whether it's through the live broadcasts or increasingly on new platforms like social. The host links created for social platforms accounted for 42% of our sales and 32% of the sessions from all social platforms.

We're excited about the shopping experience we're offering our customers in the fourth quarter. In October, we successfully premiered culinary rock star Guy Fieri's cookware line. We celebrated our nineteenth year of Fanny shoes on sale through our partnership with the Fashion Footwear Association of New York, we've donated more than $40 million towards finding a cure for breast cancer over the years. We've broadcast our fourth annual Customer Choice Beauty Awards which exceeded our expectations in both production value as well as sales across our platforms. We have received more than 44,000 votes online through our iPhone and iPad voting pages. This compares to 28,000 votes last year, an increase of 57%.

As we look forward to the balance of the quarter, while the rest of retail promotes commodity gifts based on price, our holiday brand campaign positions QVC as the destination for inspired gifting. Our story, all the joy, none of the craziness, will be revealed in chapters with each weekend focusing on what's most topical for the gift shoppers, from perfect entertaining, to family gifts, to stocking stuffers, to self-gifting and everything in between.

And although we feel very good about the plans we put together for Q4, we are seeing an impact from super storm Sandy. As you know, this storm caused extensive flooding, power and transportation outages, and physical damage to the East Coast. Questions remain about how recovery efforts in the weeks after the storm will affect holiday spending. But as always, we will adjust our offerings to what the customer is responding to, and we will attempt to minimize any potential negative sales impact from this storm.

And with that, I will turn it back to Chris.

Thanks, Claire.

Now, let's take a quick look at the liquidity picture for Liberty Ventures. At the end of the quarter, we had attributed cash of $1.2 billion and $2.9 in attributed debt. Proforma for settling the Expedia forward and completion of the rights offering, the group has attributed cash of $2 billion. The value of the equity method investments and non-strategic available for sale securities attributed to the group was $3.2 billion and $1.6 billion respectably at the end of the quarter.

Now with that summary, I'll hand it back to Greg to wrap up.

Thanks Mike, Claire, and Chris.

We are pleased with our results for the quarter and look forward to a strong finish to 2012 in Q4. We appreciate your continued interest in Liberty Interactive, and with that we will open it up for questions. Operator?

(Operator Instructions)

David Gober, Morgan Stanley.

Greg, just curious when you think about leverage at the QVC level, I know you guys have talked about the fact that you're well below the target levels there. How quickly can you get there? How do you think about -- when do you start to take on more leverage and how do you see that unfolding?

Well, I think as we outlined at the Investor Day, we believe we can easily support 2.5 leverage at QVC and obviously when we're at that 1.9 level now, getting to that Q -- that 2.5 level at QVC, there are really three sources supply of capital. One is obviously cash flow generated by QVC and to a lesser degree by our eCommerce companies. Second is growth in the eCommerce and QVC income streams, OIBDA streams, which opens up incremental borrowing capacity in our minds. And finally just getting from the 1.9 to the 2.5 that we stand at today. And all three sources will become available in increasing amounts over the next couple or three years.

How long will it take to get that 2.5 is probably a function of really how much volume there is in the market and where the stock trades. You know, we tend to put in ladders which are a more aggressive in repurchasing stock at lower levels. I think we're probably more likely to continue with ongoing share repurchases rather than one-time, meaning self-tenders of the like, but I firmly believe that over the period we outlined, the three years we can easily get to the 2.5.

So it's more just a function of when -- the uses of capital more than when you think it's prudent to borrow given the --.

Yes. I think we would like to borrow right now and frankly you can see us going out and looking at doing an incremental bond deal, as we've done over the last year. We did one in Q. We did a couple more I think a year and two years ago in Q, you'll continue to see a stretch maturities and take advantage of what we view as a attractive bond market as much the ladder and cheap financing, but I don't think that changes the issue about getting to the 2.5.

Okay. And just a follow up on the eCommerce businesses. This is obviously the second quarter in a row where revenues continue to grow very nicely, but profitability seems to be taking a leg down. Just curious how that splits. I know obviously it sounded like Celebrate was probably the laggard there. Is that just a function that this is an important quarter for those guys and they underperformed and as you think about that business going forward, do you need greater scale in eCommerce in order to keep up with the big dogs there?

I think our strategy there, which has largely been about differentiating around customer engagement using content community to drive commerce. I think that's the right strategy. Our execution has been spotty at some of the companies. We've had some one-time events such as retention bonuses or a settlement -- legal settlement, which have hurt the numbers and we've had other issues at some businesses like Backcountry have been hurt by warm weather. We hope, unseasonably, our unusually warm weather which has hurt demand for winter sports gear. So, there's been both self-inflicted wounds, some one-time events which I think are abnormal, and we believe some abnormal weather patterns.

Some of the businesses have performed very well. Bodybuilding would be a great example, and we are very enthused. I think you'll see us make some Management changes there over the next couple of months, upgrades, and I think that will bode well, but I think we're well positioned.

Great. Thanks.

Tom Forte, Telsey Advisory Group.

I wanted to talk about the trends in what you are selling at QVC in the US and thoughts on consumer electronics. If you see improvement there in the fourth quarter, would that then reduce some of the gross margin benefits from selling all these other categories, especially apparel?

So, this is Claire. Thank you for the question. The categories that have been strong for us continue to be strong, so we've highlighted our beauty business has been quite good, our apparel business is very good. Our cooking and dining business has been outstanding and this season the early reads on our seasonal offerings in home and toys have actually been very good as well.

As far as electronics, it's still a mixed story. So for us, we sold tablets and cameras pretty well, but computers are still soft, and TVs are soft. So as we look forward we think those trend lines will hold, and that's really how we're looking at the margin mix. That's how we forecast the fourth quarter to come in as our current trend line.

Thank you.

Trisha Dill, Wells Fargo Securities.

Just a followup to that question. The growth at QVC in the US slowed a touch despite an easier comparison from last year. Can you talk about how your -- how the specific categories compared to last quarter and maybe where you saw slightly softer results?

Yes, so our quarter definitely built. July and August were a little bit slower than September which was quite good. As far as the comps by category, it's -- we had very good performances candidly in all categories except for electronics and our accessories business has been a little bit slower. Otherwise, we had very good balanced growth across the other seven divisions. So, we feel good about where we are.

Okay. And then just in QVC US, can you remind us when you took the shipping and handling price increase in 4Q and whether or not we should expect a benefit in the current quarter from that increased shipping and handling revenue?

Yes, so we took our adjustment in the -- in October last year, and we've been experiencing the benefit throughout the first three quarters of the year.

Great, thanks.

Barton Crockett, Lazard Capital Markets.

I was wondering if you could update us, first on your progress in deploying that $2 billion cash hoard in Ventures into investments. Are you meaningfully cracking that or do you think you can meaningfully invest that over the next few months?

Barton, I think we are looking now at probably half a dozen deals in house that we find interesting and worth pursuing. I can't suggest any of those are for sure to close, and those range in size from $50 million to several hundred million. We've also got some larger plans in work which are probably less developed to spend considerably more. You know, this is a work in progress that is going to have hopefully good sign posts along the way, but there's not a grand plan to get it invested in X amount of time.

Okay. For these projects that you're looking at, can you give us some sense of your initial view of the return on investor capital hurdle that they're applying to these investments?

Well, I have to tell you it varies because in some cases we can look at something that has a 12% return but we think we can put a lot of leverage against it in cheap financing and get our equity returns considerably higher. Then other ones which we probably have less ability to finance because they probably have more volatility in the cash flows or less certainty in the cash flows and we're going to look at rates probably considerably higher if not 20%-plus, so it really does vary.

Okay. Great. That's helpful. And then on the QVC business, a question about the top line trend domestically. There was a slight deceleration in the year-to-year trend versus a slight step up at HSN. When you compare and contrast what QVC is doing versus HSN, is there something they're doing that you guys could emulate or something you think they are doing slightly better than you?

Mike, do you want to handle that?

Yes, I'll -- I guess at a high level Claire mentioned -- when you look at our results, I think the slight deceleration if you held everything else equal I think it's really what Claire touched on. Which was the consumer electronics business did slow down for us meaningfully in the quarter. Now, you saw that our OIBDA results were quite strong. So, consumer electronics is good on the top line, good for new names, not as big a driver of OIBDA given a different margin rate. So to me it's -- that's really, I think the core of the story. Other than that, we felt pretty good about the business, fairly balanced as Claire described and trend lines were fairly consistent over time. Is that fair, Claire?

Yes, that's fair

Okay. All right. I'll leave it there. Thank you very much.

Ben Mogil, Stifel Nicolaus.

Just wondering if you can talk about how you saw the consumer evolve during the quarter in terms of sentiment, despite more domestically but internationally as well. And then how you are feeling -- what you've seen so far in the quarter? How you are feeling heading into the holiday season?

Claire, I'll let you speak to the US and then I'll comment on international.

Yes. So for US, definitely our quarter did build. The customer sentiment Looking at the fourth quarter, as I said, we've been pleased with the initial response to our seasonal offerings which is a good indicator for potential. But we are dealing with Sandy at the moment, and we're just trying to find our way through that and see how long the impact is going to last, but initially the reads for holiday we were pleased with.

Good. Thanks. And Mike, maybe on the global environment.

Yes, I think probably somewhat a similar story globally. Generally speaking, I would say sentiment was stable to improving as we went through the quarter. One of the things that makes it a little bit hard to read is that we were candidly surprised by the degree of Olympics impact, I mentioned it as it relates to the UK where it was most severe. It was meaningful in Japan and actually in the US as well. That clouded some of our August numbers but in general we felt better as we got past that and got into September. I would say the one exception to that broad story would be Germany which just feels like that consumer is very conservative right now, and I don't necessarily see that either worsening or improving. But in other markets, it felt like as we got a little bit closer to the holiday period, maybe a modest uptick in consumer sentiment.

Okay. That's great. Thanks for answering.

Matthew Harrigan, Wunderlich Securities.

Something that differentiates you from the Amazon and traditional retailers is just the social media phenomenon and how you can leverage that being a media company as well as a retailer. We've really seen that in the US. You just pointed out how different Germany, Japan in particular I guess could be from the US and on the anthropology side. How do you see that in social media experience and how that resonates with the consumer?

And then secondly, I guess on the margin contribution side, you really can't capture things just on the ASP or the unit sales in terms of just how robust the underlying business is, and I think you're trying to maximize the sales per minute. You're probably also trying to maximize the margin per minute. Are you even just worrying about the sales number or is that just something that falls out of how you allocate your margin targets because obviously you're trying to create OCF as opposed to creating revenues. Then sales look great cosmetically but it's kind of whatever if it's low margin.

So let me try to take both of those and Claire can add to it as well. On the question about -- as you said we are definitely seeing the impact of the social integration and social strategy we're pursuing in the US. I would say it's further advanced in the US for sure than internationally but I think those same broad trends that you're seeing in the US are equally relevant internationally. The markets tend to be a step or two behind in realizing them, but we're seeing it.

Italy as an example of one of our newest markets it has the distinction of having the highest ratio of Facebook fans to total customers, dramatically higher than everyone else. So while the customer base is still small, unbelievably engaged on Facebook at stunning levels. Japan has put a big focus on social strategy and it's going to be rolling out a number of new social innovations over the next six months. Many of which already exist in the US, both in terms of Facebook strategies as well as community form strategies on our own website.

I would say UK is a somewhat similar story to the US. Their social is a little more developed and many of the strategies they pursue look similar to the US. So long way of saying we do think that platform integration number one and then social integration number two is powerful. Powerful for all of our businesses around the world. It will look slightly different from market to market but we're trying to rapidly transfer best practices in these areas and are seeing a benefit everywhere.

On ASP versus units and revenue versus margin we certainly would love to see healthy revenue growth from quarter-to-quarter, but not obviously at (technical difficulty). As I've said on prior calls we never get distracted by ASP versus units. We really don't think that's a primary issue for us. We think the customer has a certain spend that she's spending and then on what the hot product trends are. She might buy five low priced items or two expensive items and we've set up our economic structure to be reasonably indifferent with that choice. I've mentioned before that markets like Japan have very high ASPs and relatively low units per customer, but that just is more mixed impact result of what products have been successful in Japan over time. So, we don't worry much about the ASP versus unit story.

Revenue, we do care about, and we want to be getting more per share of wallet every quarter, but as I said we're not -- we would have loved 4% or 5% revenue growth instead of the 3.5% that we got in the US. But given that it reflected a deceleration in consumer electronics, we were pleased that we had enough other ammunition to still drive a healthy growth in revenue and a very strong growth in OIBDA.

And if I may, when you look at the build as your website, obviously you gave the eCommerce percentage but just the ability of the website to prompt activity and purchase activity without having something on air recently. Do you think that is really ramping up heavily with all the improvements in your website and such and that creates another fulcrum for growing the business?

Claire, do you want to speak to what we are seeing in the US on that?

Sure, absolutely the web experience and the category that we call Buy Anytime which is a category of merchandise that's not related to the previous 24 hours of having been on air. We're seeing continued double-digit growth in that area. So, yes, we believe that is a very strong revenue potential for us and important to round out our entire experience.

Thanks for your time.

I was going to say we're seeing similar trends internationally to what Claire described so definitely we see that Buy Anytime business as a leverage point around the world.

Thanks Mike, thanks Claire.

Thank you and with that, that does concluded today's presentation. We thank you for your participation.

Thank you, everybody.