Thank you. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Forms 10-K and 10-Q filed by our Company and QVC with the SEC. These forward-looking statements speak only as of the date of this call, and Qurate Retail expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in Qurate Retail'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, adjusted OIBDA margin, and constant currency. Information regarding the comparable GAAP metrics, along with required definitions and reconciliations including preliminary notes and schedules 1 through 3, can be found in the earnings press release issued today, which is available on our website.

Today speaking on the call, we have Qurate Retail President and CEO, Mike George; Qurate Retail Group CFO, Jeff Davis; Executive Chairman, Greg Maffei. Please note, we've also published slides to accompany the earnings release.

These slides are also available on our website. Now, I'll turn the call over to Mike George.

Thank you, Courtnee, and good morning, everyone. The third quarter was challenging, with continued sales and OIBDA pressure at QxH and Zulily.

However we are pleased to see Cornerstone turn to growth after adjusting for the closure of improvements and a further acceleration of growth at QVC International, and despite the sales pressures, we achieved strong growth in free cash flow. As we look ahead, we are intensely focused on improving our operating results, accelerating synergy capture and better positioning our companies for a change in marketplace, while sustaining strong cash flow.

Turning to QxH, let me start by welcoming to Leslie Ferraro to our company, Leslie Ferraro joined us in September, and has jumped right in to her new role, as President of QxH. Since Q3 marks our third quarter of declining sales at QxH, while I take some time on this call to walk through the categories and the customer segments that are contributing to the decline.

Summarize what we believe are the major drivers behind these declines, and most importantly, share what actions we’re taking to improve the trend and return to strong performance. So I'll start with the category view.

Our home business is down $45 million in the quarter versus last year, and down $88 million for the year, driven largely by three pressure points. First, at the end of last year, we closed HSN’s Joy Mangano Ingenious Designs subsidiary.

While this brand sales productivity was strong, its cost structure was unattractive, necessitating the closure. The exit has created short-term sales pressures, along with margin challenges as we clear the inventory.

We anniversary the exit at the end of the year. Second, the kitchen electric's business has entered a more challenging product innovation cycle and we're beginning to see this impact our sales, especially in Q3.

And third, the premium mattress category, a significant business for us, is undergoing a dramatic shift as consumers migrate to Bed in a Box options. Our team has done a terrific job jumping on this trend, with our successful partnership with Casper, the innovation leader in this space, along with our proprietary offerings from Northern Nights, and our Scott Living products.

However this new category comes at a significantly lower price point than traditional premium mattresses, which is pressuring overall sales. Our fashion businesses of apparel, accessories and footwear are down $17 million in the quarter and $32 million for the year.

This is a significant change in trend as these businesses had been strong drivers of growth over the last several years. These categories are down substantially across the industry and while we're gaining market share, we have not been able to sustain growth.

Our beauty business is up $9 million for the quarter and down $4 million for the year. Similar to fashion, this year's performance is a significant change in trend, as beauty had been a strong contributor to growth for many years.

And it reflects a substantial slowing of the prestige beauty market as you've heard from other beauty retailers and manufacturers. We were encouraged to get back to growth in Q3 in the face of these category headwinds.

Our consumer electronics business is flat for the quarter and up $18 million for the year. It's a modest factor in the worsening trend in Q3, and reflects challenges we're experiencing in securing compelling offers at attractive margins, in some of our biggest brands and items, especially for our off-air assortments.

And finally, our jewelry business is down $20 million for the quarter and $60 million for the year, as we continue to reduce jewelry airtime in favor of more productive categories. Since jewelry has been declining for multiple years, it is not contributing to the worsening sales trend this year.

Now turning to the customer view, the overall sales decline is reflected in a modest pullback across the customer base. But we're encouraged that we don't see significant pressure in any one customer segment.

Fundamentally, our customers are still with us, and we just need to do a better job every day giving her a reason to buy. In particular, for existing customers, who represent about 87% of our sales in the trailing 12 months, count declined 3% in the quarter and 1% in the last 12 months, while the average spend per customer was largely stable.

Importantly, the decline in count has not translated into any meaningful change in retention rates, which we measure on a rolling 12-month basis. Rather indicate that some of our more infrequent customers pullback from making a purchase in the quarter.

For new customers, who represent about 7% of sales in the last 12 months, we were encouraged to see continued growth in count, up 1% in the quarter and a strong 5% over the last 12 months. Q3 marks our 9th consecutive quarter of positive or flat new customer growth at QVC and the second consecutive quarter of growth at HSN.

While most new customers come to us organically, our added investments in performance marketing are helping now bringing in 30% of new customers. Finally, for reactivated customers, who represent about 6% of sales in the last 12 months, count was down mid-single-digits for the quarter and the 12 month period, reflecting in parts the challenges in our apparel and kitchen electrics businesses, which outperform with reactivants, as well as the overall softness in on-air sales.

So I have been giving you this category and customer view of step back to talk about root causes. In our business, it's never just one or two things that drive big changes in trend up or down, but rather a confluence of factors.

And these factors we believe can be summarized in the three broad buckets. First, we're facing a choppy retail environment.

As I mentioned, many of our largest and most strategic categories are under significant pressure. According to market research from NPV [ph] in the U.S., women's apparel, accessories and footwear sales are all in negative growth territory industry wide for the third quarter, and year-to-date through September, and prestige beauty and kitchen appliance sales have slowed dramatically from the prior year.

Second, we continue to experience execution pressures associated with the acquisition of HSN. The reorganization of our buying teams has created short term distractions, although we believe we're getting to the other side of this.

Our fulfillment network optimization is still in early stages and when completed will provide significant benefits to the customer and the P&L. But it is both costly in the short-term and creating more service disruptions to customers than we anticipated.

And our efforts to stabilize and restructure the HSN business have involved taking a number of difficult and costly steps, such as the exiting of Ingenious Designs business. Despite these short-term pressures, we remain fully confident in the acquisition rationale and the power of this combined platform to drive substantial value for customers and shareholders and we are thrilled to have the HSN team in our family.

And third, we’re operating in a changing industry context, facing the headwinds of declining linear TV viewership and growing brand proliferation, more volatile product life cycles and intense price competition. These headwinds are not new, but they added the other pressures we're seeing.

Offsetting these headwinds are a few powerful tailwinds as well. Including the rapid growth of digital media, and the increasing value of retail platforms that can help brands tell their stories directly to consumers in a compelling, authentic, immersive, and video rich way.

Looking more deeply at TV viewership, we are encouraged that our total minutes viewed continues to grow, despite declines and overall reach driven by core cutting, reflecting continued strength among our more engaged viewers. However, the decline in linear viewing does place additional pressure on our ability to reach new and occasional viewers.

We're driving a number of initiatives to offset the linear TV erosion with higher viewership across our digital and OTT platforms. The trend towards shorter and more volatile product life cycles is translating into heightened pressure in terms of our larger brands.

While we do not have high sales concentration in any one brand 10 of our larger brands, representing just 9% of sales accounted for nearly 90% of the year-to-date sales decline. We actually see this as an encouraging sign and a reminder that the difference between growth and decline is concentrated in a small number of brands.

So now I'd shared what's happening and why, let me get to what matters, the actions we're taking. While we can control some of the macro pressures like a challenging fashion cycle or product and price volatility, we can respond more effectively to get the better outcomes.

So first, we're intently focused on discipline day-to-day execution. We're controlling our inventories, driving improved product margins, reducing fixed costs, stabilizing the organization, and working to deliver more consistent service levels to our customers.

Most importantly, we're working hard to delight our customers every day by increasing product differentiation, expanding variety and getting new ideas to market faster. For example, in Q3 in fashion, we're driving growth in the active and athleisure segment with the launch of zuda on QVC.

That's our new proprietary athleisure lifestyle brand as well as a new exclusive collaboration we launched new balance times Isaac Mizrahi, which brings performance footwear together with unique fashion. In beauty, we launched Carmen de beauty [ph] an exclusive beauty brand.

She has a significant social following and we supported the launch with extensive programming across our social platforms, including Facebook Live, and Instagram TV, and we're reinvigorating some downtrend in beauty brands with stronger offers to our customers, such as vendor supported, free shipping and handling. Second, we remain committed to achieving and most likely exceeding our synergy targets.

Third, we're tightly managing every element of our cash flow with the commitment to maintaining the high levels of cash flow conversion we’ve delivered over time, even while making important investments in areas like our fulfillment networks, and re-platforming our website. We have a number of ways we can improve cash conversion, even if our adjusted OIBDA results are pressured, as we did this quarter.

Finally, we're working aggressively to better position our companies for a changing marketplace, minimizing the impact of the industry headwinds I mentioned, while taking full advantage of the tailwind. We remain confident in our long-term direction, but we need to sharpen our focus and intensify our execution of five key strategic initiatives to reestablish growth.

To be the industry leader in curating special products at compelling values, to extend our video reach and relevance over all the digital platforms our customers engage with, to reimagine daily digital discovery, making our digital experiences as engaging and sticky as our TV experiences, to expand and deepen the engagement of our passionate community of customers, and finally to deliver joyful customer service. And, I'll provide a deeper dive on these five strategies at Liberty’s Investor Day next week.

Finally, I'll wrap up my comments on QxH with a word about the holiday season. With Thanksgiving falling later than previous years, we'll have a shorter window to engage customers for the Christmas shopping period.

All retailers face this pressure, but with December 21 being our last ship date without the customer paying for expedited shipping, it's more difficult for us to capture last minute sales. We've launched a thoughtful merchandising, programming and event strategy to pull demand forward as much as possible to complement this strategy we're integrating new shows like Sean Saves Christmas, Down Home with David, Mary deals and Gifty, as well as digital platforms such as Holiday HQ to inspire early gift giving ideas.

Turning now of QVC International, growth accelerated in the quarter led by strong gains in Japan. We continue to pursue a series of strategic initiatives across international that are largely in line with our efforts at QxH.

Notably, when the early stages of building our European capabilities and performance marketing, advanced analytics, digital discovery, and strategic merchandising. We're also continuing our product margin improvement initiatives, including disciplined promotional and inventory management, optimizing product mix and air time and implementing selective price increases, which yielded a positive result in Q3.

In Japan, we actively prepare for the consumption tax increase from 8% to 10% that went into effect on October 1st, applying learnings from the last increase in 2014. As a result Q3 benefited by pulling forward demand in advance of the tax increase, especially in higher price products and categories such as jewelry.

However, we do expect the consumption tax increase to have an adverse impact on our Q4 sales, in October as we expected, our sales in Japan declined. Turning now to Zulily, our Q3 performance was highly challenged, we continue to see significant headwinds and marketing spend efficiency, as the cost to acquire new customers continues to rise.

We remain disciplined on our marketing return requirements and reduced our overall marketing spend by 14% in the quarter. As a result of lower and less effective marketing spend, we saw further erosion and the activation of new and reactivated customers, as well as lower purchase frequency among existing customers.

Overall product freshness also continues to be a headwind and we have not made sufficient progress and improvements to our overall customer experience. As we aggressively focus on stabilizing the business, we are working to diversify to more efficient marketing channels, reinvest in the customer experience and increase our product freshness.

On product, we are working aggressively to add premier national brands. And we've seen some early success partnering with well-known brands Tommy Hilfiger, Calvin Klein, Ashley Furniture, and a pilot with Nike.

And we'll do this while maintaining growth and commitment to our unique and boutique brands as well. These actions are combined with a concerted effort to reinvest in the customer experience.

We're leaning into our differentiated fun and addictive mobile store with an increased focus on initiatives to earn her trust through operational excellence and exceptional customer programs anchored by price transparency. In October, we launched best price promise, which was the first initiative demonstrating our commitment to increased transparency for our customers owning our position as the lowest price leader.

While the vast majority of our merchandise is unique, and boutique, we have thousands of items that launch daily, where we can directly compare our pricing to Amazon and Walmart. Since the launch of our Best Price Promise, where Zulily item is identical to an item sold by Amazon or Walmart as opted as 97% of the time Zulily offer the lower price.

With our best price promise we're now featuring Amazon and Walmart's prices on identical items on our product detail pages that highlight our significant price advantage, and build customer trust. In addition to our efforts on product and price, we're investing in improving shipping times and piloting options to lower shipping and returns cost.

As we see headwinds in marketing spend efficiency, we’ll plan to reallocate some of our marketing spend at these efforts and deepen our investment in our customer experience. At Cornerstone excluding improvements, we had a strong quarter, delivering both top line and OIBDA growth, driven by continued strength at Ballard Designs, including the strong performance at our retail stores, a positive turnaround at Grandin Road and improved trends at Front Gate.

As we move forward, we’ll be focused on sustaining the momentum in our home segment, as well as continuing the progress we’re making with our gross margin initiatives and our discipline around operating expenses. Finally, we plan to build upon the Q3 launch of Ryllace, our Premium Plus Size proprietary fashion brand that fills a real marketplace need.

We were pleased with the reaction at its launch event and our teams are now beginning to promote the brand more broadly. Before I turn the call over to Jeff, I want to thank our 27,000 team members, who show up every day striving to make a difference for our customers and our business.

We recently celebrated the launch of the year along effort, involving several hundred team members to shape our Qurate purpose and define the principles for how we work together to serve our customers. I'm especially grateful in times like these for our team’s dedication, and passion.

And on this Veterans Day, we extend our special appreciation and thanks to all of our QRT team members who have served in the arm forces or whose families have served. A reminder of the upcoming Liberty Investor Day, I look forward to have an opportunity to speak with you in greater detail about the strategic initiatives and our areas of focus.

And with that, I will turn the call over to Jeff.

Thank you, Mike, and good morning, everyone. Beginning with QxH, net revenue declined 4%, on 4% reduction in unit volume slightly offset by 1% increase in ASP, due primarily to make shift within home innovations and the home category.

Adjusted OIBDA declined 7% and margin rate declined 50 basis points, primarily due to sales deleverage and headwinds from network fulfillment upgrades, general rate - freight rate increases, inventory management and continued marketing investments. These factors are partially offset by reduced TV commissions, synergies, and product mix impact.

Our network optimization plan will reduce our U.S. fulfillment center footprint to seven facilities by the end of 2020, down from nine.

We had a soft opening of our new Northeast fulfillment center in Q3, handling a modest amount of large size, non-conveyable products. We also continued to stabilize our Lancaster facility to support apparel fulfillment.

We anticipate additional expense headwinds in Q4, primarily from new Northeast site at least, and project implementation costs. However, we anticipate improved productivity and reduced transportation and fixed costs start to have favorable impact on adjusted OIBDA in 2020 along with capital avoidance on facilities we are closing.

We will provide an update on our U.S. fulfillment center optimization and current year impact at Investor Day.

Finally on QxH we realized cumulative costs energies of $110 million through September 30. We anticipate total 2019 synergies net of onetime costs to be consistent with our prior indications and will provide more detail at Liberty's Investor Day.

Moving to our international business, in constant currency international delivered a strong quarter with revenue up 3% on an 8% ASP increase, which was partially counterbalanced by a 3% decline in unit volume and lower shipping and handling revenue. Japan had the best performance across the markets with strong revenue growth.

This performance was driven by better product flow and category level initiatives. Strong demand from its TSV replay and expansion of programming and carriage, as well as initiatives to practically pull forward demand in advance of the Japan consumption tax increase.

Adjusted OIBDA grew 15% and margin expanded 180 basis points from gross margin improvement and the closure of a former France operation in March of this year. At Zulily revenue declined 17% due to the factors that Mike mentioned.

Zulily also recognize a $1 billion non-cash impairment charge, which is not included in adjusted OIBDA and is the primary driver of its operating loss. Approximately 60% of the charge was related to its trade name, with remainder attributed to goodwill.

Adjusted OIBDA declined 56% and OIBDA margin declined 200 basis points, primarily due to sales, deleverage of supply chain and fixed costs, partially offset by reduced marketing spend. Our initiatives and actions to diversify and test new marketing channels strategically reinvest and enhance the customer experience will take time to yield meaningful results.

We anticipate the current rate of sales erosion to accelerate in the near-term, given the reduced number of new and reactivated customers, compared with prior periods. Our Cornerstone business returned to growth with revenue up 5% and adjusted OIBDA increasing $3 million, excluding the improvements business that was closed in Q4 of last year.

The business gained traction with product margin initiatives and remain discipline with operating costs, shifting marketing spend from catalog to digital. Looking at the business broadly, we have not seen a material impact from tariffs levied to date.

As a reminder, the next tranche will not go into effect until mid-December. In total, the announced tariffs cover approximately 35% to 40% of total Qurate Retail cost of retail sales.

Approximately 80% of the tariff imposed costs of sales is from vendor sourced products. Meaning we are better able to mitigate the tariff impact with our vendor partners.

With the remainder of the product is direct imports. Of our overall exposure approximately one-third are in electronics with the rest spread evenly across apparel, accessories and remainder of our home categories.

Our teams continue to work closely with vendors to share the cost burden across the supply chain and increased prices were necessary, as well as look to shift product sourcing from China to mitigate any impacts to our results. While it’s too really to predict the impact on future sales demand, we will continue to monitor the situation, and hope for a swift resolution to the trade dispute.

I wrap up my comments with a discussion on capital expenditures and cash flow. Capital expenditures were approximately $83 million in the quarter and $249 million year-to-date on a cash basis.

For the full year, we now anticipate cash CapEx to be approximately $370 million to $390 million on a cash basis, which is in line with our prior estimate, but higher than prior years. The increase is attributable to our U.S.

fulfillment network optimization initiative and continued information technology and commerce platform investments. Shifting to the balance sheet and cash flow.

We improved free cash flow in Q3, primarily due to the timing of the renewal of TV distribution rights and the absence of transaction related costs incurred in the prior year and discipline of working capital management. Finally QVC’s consolidated leverage ratio, as defined in our credit agreement was 2.3 times at September 30th, as compared to our maximum ratio of 3.5 times.

With that, I'll turn it over to Greg.

Thank you, Jeff. Let me comment a little bit on our capital allocation philosophy at Qurate.

We look at the fallen buckets, which are not necessarily mutually exclusive. First, investment in the business for the future.

CapEx as you heard from Jeff is elevated in 2019 as we invest in IT and other fulfillment initiatives, but we expect this to revert to more normal levels in 2020 in part as we complete the integration of HSN. Secondly, managing our tax exposure, while the tax liability from our exchangeable bonds was reduced substantially due to tax reform, we've decided to be proactive, and some of the elements including attacking the MSI bonds, and towards that end, we repurchased $88 million of bonds in October and hedged a portion of our uncovered MSI exposure.

We also continue to deploy capital into what we believe are very attractive tax advantage investments and you've heard about some of those in the past. Third, return on capital to shareholders.

This year through 10/31, we bought $392 million of stock. We will continue to be opportunistic going forward, but are aware that the stock has experienced much more volatility this year.

Qurate continue to generate very strong free cash flow, and we will prudently invest that across all of the buckets I've mentioned above. As Mike and Jeff mentioned, we look forward to seeing many of you next week at our Annual Investor Meeting on Thursday, November 21st in New York, the link to register is on the homepage of our website.

We appreciate your continued interest in Qurate Retail. And with that operator, I'd like to open up the line for questions.

Hi, thank you for taking my question. First on QxH, can you just talk about some of the near term levers you have to improve performance?

Are there any thoughts about investing more in free shipping or marketing and what can you do on the product side? Thanks.

Thanks, Heather. It is a bit of all of the above.

I mean, most importantly, it's just continuing to read and react to what the customer is responding to on the product side. And as you know, we benefit from being able to adjust what we're offering fairly quickly.

So trying to continue to shift to where she's going in areas - that we know are areas of strength, like fashion and beauty, working intensely to get those back to sustainable growth, launching a number of new product lines, I mentioned a couple of them in Q3, but we've been building our capabilities within our proprietary product development team and you'll see a handful of new brands roll out over the next several months. We're partnering with influencers to try to bring niche influencer brands to market we're - we just completed our effort we talked about in the last call to scour the country for up and coming entrepreneurs and will be met with about 850 or so entrepreneurs if I recall the numbers correctly, and will be launching 80 to 90 of their brands over the next few months.

So for us, it just starts with product and just being relatively focused on everything we can do to bring her fresh, exciting products and try to engage her interest. We are - on the other dimensions you mentioned, we're continuing to invest in expanding our marketing, we're mindful of the returns on that marketing spend.

So we don't want to invest beyond what the returns would tell us. But did take a marketing spend in Q3 and expect to continue to invest in that that has a little more benefit on new customer acquisition than on overall sales.

So it's a little more of a long term play. It doesn't help as much in the short term.

And then finally, we are continuing to look at having the right sorts of promotional offers, which for us is about use of our easy pay and flex pay tools along with shipping and handling promotions. We just had a big shipping and handling promotion this past weekend, as an example.

We're trying to get our vendor partners to support those where we can and do those in the right way. So we'll tackle all those initiatives still trying to do it in a way where we feel like we're getting healthy volume and volume that’s sustainable overtime as opposed to overly promotional in nature.

Thank you. And then on the balance sheet, can you just remind us what the current tax liability on the exchangeables is and what the impact is from the MSI transaction?

We’ll take that here, Brian, do you have that number?

Yes, it's $1.071 mm at quarter end.

Now, remember, that number will grow as we receive - as we take incremental deductions, but we will also get the benefit of an effective interest free loan for the period until they're retired. So there, it's a continuing increase in that liability offset in part by earnings we can make on that interest free loan.

Does the liability come down with the payment?

It did, yes, yes.

Okay. All right, great.

Thank you.

But that was subsequent quarter end in part.

Got it, thank you.

Thanks for taking the question. Two maybe.

Mike, it's been about a year now, since you talked about leaning in on performance marketing channels and trying to engage with new and existing customers in different ways. I wanted to know, if we could look back and sort of get a better sense of what you've learned from those efforts, how much they've been a benefit to growth on the customer side over the last year and what sort of it might do to inform you're spending on marketing going forward?

And then second question if I could, did you guys call out the benefit to adjusted EBITDA from the carriage renegotiations with HSN. I think I missed it, but I just want to make sure if you did call it out so we didn't miss that.

And maybe I think the synergy longer term from carriage agreements probably a topic for next week, but just wanted to take that up if you are willing to address that as a topic. Thanks so much.

Thanks, Eric. I'll take the first and ask Jeff to weigh in on the second.

So I would say in the year since we've been talking about it more actively, you are seeing us increase our performance marketing about 30% on a year-over-year, each quarter. It's typically have been in that range.

Keep in mind the absolute number is still fairly modest in the kind of 1% of revenues area, but grow over prior year. We found about that level of step up enables us to invest that money in ways to get to attractive returns and we measure the return as the number of new customers that we're bringing in and the value that those new customers bring us over their subsequent couple of years.

So it's an investment that's negative in period, but has a sort of within the year payback, as we start to see that new customer repeat. So we feel good that we know how to increase it, we know how to measure it with high integrity.

We - it is bringing in more new customers, so I mentioned that about 30% of new customers came in through performance marketing. So, we do think new customer growth would be negative if we didn't have that investment in performance marketing.

We don't tend to ascribe a lot of benefit to performance marketing to our existing customers, we may be being conservative in that, but viewed primarily as an acquisition tool. I would say we're learning more and more about what channels are most effective and as you'd expect those channels evolve over time.

We know that paid social, while a very high cost channel for us isn’t one where we're most likely to find those new customers who go on to become real super users of QVC, or HSN. So we're trying to kind of spread the dollars across higher cost channels that bring in a very attractive type of customer, along with the channels that just bring in more volume of - still good customers.

So, we feel good about the program, we would love to be growing it even faster. So we're going to, I would say in this coming year accelerate our investment in marketing technology tools, as well as resources.

So we get ourselves into a position where if we're getting attractive returns, we're in a better position to scale up faster with a higher level of technology to support to be confident in that investment. Jeff, you want to…

Yes, Eric you're exactly right. For a point of brevity I didn't go through in the individual points.

There's a page in the presentation that we post of the IR website. The commissions sort of support for the quarter was a total of 95 basis points, about two thirds of that was really associated with the MSO change.

So the delta, if you will, is really the portion that is attributed to the synergies associated with the carriage for both Q&H.

Thanks, guys.

Yes, good morning, guys. Thanks, Mike for all the additional details on the QxH business.

If - I know you don't break it out anymore, but maybe you could talk a little bit about the difference between QVC U.S. and HSN how the performance was in the third quarter?

Thanks, Oli. Yes, we don't - as you know, we don't break it out anymore, in large part because we're really trying not to manage the business in that way and so our feeling is to try to parse out QVC versus HSN performance can be a misleading signal because we want to be investing our resources where they get the best return across the platforms.

So I don't want to say much other than that we’re highlighting both brands and challenges in both brands. There were some issues that were a little more specific to HSN like the pressure we're having, with the Ingenious Designs, a business that we've exited.

But on the flip side, we've been encouraged, for example, that we've been able to - part of how we're able to grow the beauty business in a tough cycle is because we felt the beauty was substantially under penetrated at HSN. And so we've seen nice growth over the course of the year, as we've leaned into the beauty business at HSN.

So, we're trying to be thoughtful about how to optimize each category across the two brands, in ways that makes sense, relative to where those two brands are.

Got it. Thanks.

And then maybe on the free cash flow side, as you mentioned, it's still - free cash flow is still very strong, but with declining sales that might be going forward some pressure on free cash flow. And you also mentioned that CapEx is going to be peaking in or relatively high in 2019 with a level down in 2020.

So maybe if you could maybe capital allocation strategy going forward, do you have a leverage ratio that you're aiming at or when we could see maybe free cash flow or sorry - buybacks going to more of a normalized level? Thank you.

I think - go ahead, Jeff, and I'll comment on top.

Very good. I was just going to comment on the first portion of the question with respect to - if your leverage ratio, our focusing commitment right now is continue managing the business in the range of the 2.5 times area at the operating company level.

We continue to look for ways to be very diligent with respect to our capital allocation with respect to expenditures as it relates to our network optimization and other areas within our technology platforms. But I'll leave the rest with respect to share buyback.

Greg, you want to maybe address that.

Yes. Thanks, Jeff.

So, I think we have been tried to be consistent over the last several quarters with the view that our capital allocation philosophy, which has been primarily focused on share repurchase over the last several years, has been somewhat disappointing in light of the results we've had in the performance of the stock. So we've tried to become more opportunistic and buy less on an absolute basis and more on an opportunistic basis and try and find attractive entry points for that.

And also do some things as we've talked about to reduce other liabilities like the deferred tax liability, the DTL through taking out the MSI bonds and hedging a portion of that. So we're going to continue to look at those alternatives for non - for balance sheet and capital markets related alternatives.

We're going to continue to look at those over the next several quarters and see what is the most attractive in our minds.

Thank you very much. Good luck.

Hey, good morning guys. And thanks for taking my question.

I guess just first a broader question, the company has had kind of ongoing merchandising issues going back, I think even before Doug Howe left but maybe even its accelerated since then. I guess as you step back and think about this, if it’s beauty, if it’s apparel.

Do you think it's been tactical missteps, or do you think there's been kind of a structural way and maybe the consumer changes the way they shop and maybe haven't been as responsive as you could have been? And then second, as you think about kind of the Q&H Merchant organizations, I know that there's been a lot of volatility there.

What changes have you implemented to kind of smooth that process out and maybe where did you change HNS merchandising philosophy that in hindsight maybe can be course corrected? Thank you.

Thanks. Great question.

Let me try to pine on it for a moment. I think we have an extraordinary merchant team.

I don't say that in a defensive way. I just think this is a team that does miraculous things every day.

So really don't characterize it as so much tactical missteps. And by that, I mean, we have this very unique mission that pretty much no other retailer in the world can do, which is to identify a handful of items every day that can drive extraordinary volumes and attract mass audiences in a highly fragmented world and just continued to be in exceeding and how they try to do that and try to add creativity and energy and new ideas to it on an ongoing basis in ways that both delight the new customer, but also meet the needs of all of our existing and long standing customers.

I would say, our challenge has been and our learning on reflection has been that probably as a leader team we haven’t moved fast enough to evolve the structure of our merchandising capability to respond to just how fast the product cycles are evolving in the world. And, that's definitely on us, on our leadership team.

And so one of the things we're doing now having done the heavy lifting of bringing the Q&H organizations, merchant organizations together, so that we could take more of a holistic category view of our opportunities and combine these really talented resources. Now, the next phase of that, now that we're largely stabilizing that organization is to really invest in more specialized capability to be out in market more often, to take all the administrative activities off of the backs of our buyers to get them out in the market to build more product incubation and development capabilities within the merchant team.

Said differently, it's just all about trying to now take this world fragmenting consumer tastes and rapid brand proliferation, and give our merchants more structural resources tools and capabilities to move that much faster. So again, I think the misstep has been that we just have been a little behind in the pace of change we needed relative to an environment that's changed even faster than we anticipated it would.

So as pressured as the business has been, I'm encouraged by the work of the team to start to define that organization merchant organization of the future start to put it in place. And I think that's going to really be an enabler as we start to move through next year.

On your question about Q&H integration and philosophy, I would say we're feeling pretty good. We try to be thoughtful about kind of putting together the best capabilities and approaches of both the Q&H organizations and teams and philosophies.

Always adjusting always course correcting continuing to evaluate when it makes sense to share brands across Q&H, when it makes sense to keep the brands unique. So I would characterize it more as just kind of continuous learning and fine tuning, but not any kind of major change in direction relative to what we’ve put in place over the last several months.

Great, thanks so much. Thanks.

Thanks, Ed.

Great. Thank you very much for taking my question.

I wanted to ask about the closure of Ingenious Designs. If I'm interpreting your comments correctly, Mike, it sounded like the products were selling well, but the business behind it wasn't very efficient.

Can you just give us a little bit more color on why you made the decision to close that subsidiary? And then just looking out at your other proprietary brands across both Q&H or are there any other brands that stand out as perhaps having businesses that that aren't great that are either an opportunity to do some restructuring behind the scenes are or perhaps are at risk of also getting closed?

Yeah, thanks, Alex. I would say there's nothing else that's kind of parallel to Ingenious Designs.

So I don't think there's any learnings or risk from Ingenious Designs that apply more broadly across the business. There's a very unique situation where HSN had a wholly owned subsidiary that was operating as a separate business located in New York with a very high cost structure.

And quite frankly under resourced for the products it was developing relative to our own existing proprietary development capabilities. And so we had a business structure that was uneconomic and then also we had a wonderful partner in Joy [ph] who's been a very important part of the QVC story and HSN story for many years.

But, discussions with her she was ready to move on. And we were just sort of collectively felt a need to make a change.

So fairly unique situation, a lot of the products will continue by being developed internally as opposed to through the subsidiary. So good, unique situation we anniversary at the end of the year, don't think it has a lot of application beyond Ingenious Designs.

Okay, that's helpful. Thanks.

And then just thinking about the shorter shopping period this year between Thanksgiving and Christmas is that something that you can share with us just historically, how much of a headwind it's been when we’ve made that full week leap in the calendar?

We certainly looked back at every seven years or so when this happens six or seven years. And I would say it's hard to - the world changes so much that I think it's very hard to extrapolate what the impact will be.

Last time it happened, just the whole dynamics around Black Friday week were radically different than they are today. So we don't know what the impact will be.

We just are prepared trying to get as much demand in as we can and hopefully the impact will be modest, but we haven't been able to find a good historic analog that will would be ethical, relevant reference points, given how much has changed.

Sure that makes sense. Thanks very much.

Thank you.

I think I heard in your prepared remarks, you've reiterated your long-term synergy targets, but I was just wondering [Technical Difficulty] it was about 80 million?

Jason, we blipped you there for a little bit. Maybe you could repeat your question.

Oh, sure. So I heard you maintain - you said you're going to maintain or exceed your long term synergy targets.

But I was just wondering if you could give us an update on where we are as of the third quarter I think as of the second quarter it’s about $80 million of net synergy realization and we're looking for maybe $135 million for the full year?

So through the third quarter we’re now at $110 million, for the year our - we were anticipating $165 million to $170 million gross. That would have been - there were approximately $24 million to $25 million of onetime costs that would have been associated in order to get to that $165 to $170.

Basically on where we are today, we feel as if we are able to accomplish our 2019 goal for this year.

Okay, very helpful. Thank you.

Great, thanks for taking my question. So, Mike, I want to know if you could comment on the comparison in conversion rates for some of your digital engagement versus legacy.

So TV versus qvc.com versus Facebook Live versus Roku? Thanks.

Thanks, Tom. Yes, that's a tough question because it's obviously hard to truly measure conversion across these platforms, keep in mind that we can’t associate a TV viewer to a sale.

We have TV viewership data, but it's all anonymized. So, I guess, I would characterize the overall conversion funnel as we have an enormous volume of people watching QVC or HSN TV at any point in time, the vast majority actually not customers.

So we even in today's world, that pool of non-customer shrinks a bit with core cutting, but even with core cutting, we still have this enormous opportunity to engage that non-customer as well as obviously engage the customer. We've talked a little bit about the fact that that it feels like the sort of immediate translation of TV viewing moment to a sale feels like it's not quite as tightly correlated, as its historically been.

I think that's I don't want to overplay that point. But I think there is some truth to that just because, folks will take their time to go check it out on the website and do other forms of research.

So there can be some other intervening steps that might not have been historically there. We have very high conversions when we get traffic to our website.

So even though again, most of our traffic to our website is also non-customers, the power of that TV signal is such that our conversion rates on the websites are absolutely industry leading or typically north of 5% conversion rates, which is, two to three times what the other folks would have, just because of the power of the overall ecosystem. Still early days on platforms like Roku.

So, if you just thought about the number of homes that Roku was in, I would say we convert a relatively small number of those homes to a sale. But if we can get them - if we can market to them, get them to download the app, get them to engage in the experience, then we can start to see attractive return conversion rates.

So we're in a learn mode on those platforms, but like the power of those platforms to create a more interactive experience for the customer.

Thank you, Mike.

Thanks, Tom.

Hey, guys. So, Mike, you talked about, I guess, the foremost headwind for the business is really just a choppy retail environment.

Is there any relieving sight for that? Or has this just a sustained norm?

And second on Zulily, you talked about the low marketing spend efficiency we talked about for quite some time now. I know some other companies in the space have kind of called out there are changes that Google has made either on the mobile side or on the desktop as well.

Maybe you could just give us a little bit more detail in terms of what's driving that marketing spend efficiency? And at a higher level for Zulily, is there any sort of structural, I guess, issue with the model that's probably contributing to I guess the decelerating growth that we've seen in the business?

Thanks.

Thanks for the questions. So on the QxH side on the choppy retail environment.

I don't think that's a new norm. I do think we're in an unusually tough cycle with apparel, accessories and footwear in negative growth territory.

They were not a negative territory last year. So we live in this funny year where we see the growing separation and performance of different retailers heavily driven by what segment of retailing your area.

But clearly folks that are in the sort of mid-tier, fashion and - mid to upper tier fashion and beauty business. We're in a tough cycle.

Do I think that cycle continues forever? I don't.

When does it evolve? When does it change?

I don't know, it looked different last year. I suspect it will look different in the future.

I separate that from just the - I talked about both the choppy retail environment and the sort of change in industry context. The change in industry context is ongoing, was that core cutting or price competition and we need to win in that changing context.

But in terms of the sort of current shop, it feels a bit exaggerated from what we normally see it feels like an unusually adverse cycle. We by no means use it as an excuse for our performance, we need to do better even in average cycles, but I do think that can come around overtime.

On the Zulily side, you hit on one of the issues, so I would oversimplify it, I would say there's kind of a couple of real marketing related pressures at Zulily. One is just that our e-mail has historically been a very powerful platform for Zulily to engage its 50 million, 80 million, 90 million prospect base.

And that has become increasingly difficult, especially with the kind of filters that exist on Gmail, it’s just harder to consistently get to those customers. We know that we've been working for multiple years, but in an accelerated way for the last year to find other ways to reach our customers beyond e-mail, certainly getting them to download our apps and engage with our apps on a daily basis, engage with Facebook Messenger, some of these other platforms are rising in importance.

And we have one of the highest - our percentage of sales done on apps is one of the highest in the industry at Zulily also quite high in QxH we think that's a real strength, but it hasn't fully offset the pressure we see in e-marketing. And then the other big pressure we see is more on the acquisition front, where Facebook is just become a much more costly channel less effective for us.

And we have been working diligently all year to try to mix to more favorable channels and just haven't quite found that formula. And so we do believe as we look forward, given the depth of the pressures at Zulily that we're not going to be able to market our way to back to health.

We can do better in marketing than we're doing now. But we think these pressures are such that we can't rely on marketing in the same way we've relied on it in the past.

And that's where we got to work harder on product freshness. And we got to work harder on customer experience.

And by doing that, do a better job of engaging our existing customers, reduce the churn rate of our existing customers. And so I think to your question about is there a structural pressure?

I think some of the formula that works so well in the early years bringing in a lot of new customers on the basis on this very unique experience, we’ve got to round out that experience, as we move to close the broader groups of customers and grow our existing customer base. We have to have a better sort of everyday store, which the team is working on in addition to our daily events.

We have to do better with returns and shipping times, and the team has a good plan for doing better with returns and shipping times. We have to again build up this message of transparency and trust which we’re doing with our Best Price Promise.

And we got to round out the price assortments, and so having pilots like Nike on the platform is a real wild factor for our consumers. So it’s not a short term fix, there’s a number of things we need to do, we do believe the intrinsic importance of the plan, what it represents, the amount of customers that engage with it, that these are all addressable issues and we can get back to growth having had a very pressured year, but we need a number of things to work together well.

So, with that I think that was our final call, so our final question. So thanks to everyone for joining us today, we appreciate your continued interest and support in Qurate and look forward to seeing you at our Investor Day, next week.

Thank you.