Ladies and gentlemen, thank you for standing by. Welcome to the Signet Jewelers Fiscal 2016 Second Quarter Financial Results Call and Webcast. During the call, all participants will be in a listen-only mode. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time. Please note that this call is being recorded today, August 27, 2015 at 8:30 AM Eastern Time. I would now like to turn the meeting over to your host for today's call, James Grant, VP of Investor Relations. Please go ahead, James.

Good morning, and welcome to our second quarter fiscal 2016 earnings call. On our call today are Mark Light, CEO; and Michele Santana, CFO. The presentation deck we will be referencing is available under the Investors section of our website, signetjewelers.com. During today's presentation, we will in places discuss Signet's business outlook and make certain forward-looking statements. Any statements that are not historical facts are subject to a number of risks and uncertainties, and actual results may differ materially. We urge you to read the risk factors, cautionary language, and other disclosures in the Annual Report on Form 10-K that was filed March 26 with the SEC. We also draw your attention to Slide number 2 in today's presentation for additional information about forward-looking statements and non-GAAP measures. And now, I'll turn the call over to Mark.

Thank you James, and good morning everyone. In the second quarter, we delivered strong top line and solid bottom line results which exceeded guidance. Signet comps increased by 4.2% and adjusted EPS was at $1.28, which was a 19.6% increase over the prior year adjusted EPS. Our success in the second quarter of fiscal 2016 was broad-based, with sales and profit growth coming from virtually all of our store concepts, across various geographies, with contributions across our selling channels and from several functional areas. We continue to outperform our industry driven by our competitive strengths. And importantly, we're increasingly confident about our integration synergies. In addition, we're making excellent progress against each of our Vision 2020 strategic pillars. Before it gets to the second quarter and once it comes for the back half of the year, I wanted to make a few comments about our space in the jewelry industry. We have a five-year compounded annual growth rate of 12% in total sales. Signet has been gaining and continues to gain market share profitably. We consistently outperformed the jewelry market and the total retail market. And based on results to-date, we appear poised to deliver another year of industry outperformance. Given the fragmented jewelry industry, we believe we have many years of profitable market share gains ahead of us. Our brands, our scale, and our people give us a sustained competitive advantage. Our leading position in the jewelry marketplace has been driven by progress against each of our strategic pillars, specifically in Best in Bridal, which leads me to review our second quarter sales drivers. From a merchandise perspective, diamond jewelry was strong. Bridal, a strategic focus of ours, grew faster than Signet's overall rate of growth, and therefore, gained relative share. Bridal brands such as Neil Lane, Vera Wang…

Thank you Mark, and good morning everyone. So, let's start with our second quarter sales performance. Signet's total sales increased 15.1% and comps increased 4.2%, above our guided comp range of 2% to 3%. So let me share with you some additional color on our sales and comp performance by division. So in our Sterling division, total sales increased 5.9% to $858.5 million, which included a same-store sales increase of 3.3%. Sales increases were broad-based across store banners, product brands, and non-brands, as well as omni-channel. Bridal and diamond jewelry also were particularly strong. The average transaction price in Sterling increased by 4.2% and the number of transactions decreased by 2.5% due to merchandise mix. Our Zale division total sales were $389.3 million for the quarter, which included a same-store sales increase of 5.8%. We saw a particular strength in branded bridal and branded diamond fashion. Sales increases were also favorably impacted by our continued integration initiative around sales associate training, targeted promotional events, and new marketing creative. Also, keep in mind that the prior year quarter had 26 fewer days due to the acquisition occurring on May 29, 2014. At our UK division, total sales decreased 2.3%, but increased 6.4% on a constant exchange basis. Sales were $159.1 million with a comp sale increase of 5.1%, and that was driven primarily by Ernest Jones. Both UK store concepts reflected strong results in bridal and watches. The average transaction price increased 4.3% and the number of transactions also increased by 1.8%, driven by merchandise mix. As mentioned in our earnings release this morning, the second quarter comp sales were favorably impacted by 60 basis points associated with an operational change that we made to align Sterling's extended service plans or ESPs with Zale's, in which we viewed Zale as having…

Thank you, Michele. In conclusion, we're seeing terrific collaboration throughout all of Signet. Our business continues to gain momentum. Current trends are strong and we are increasingly confident in our ability to achieve our synergy targets. In fact, we're already starting to see the benefits of synergies impact our operating results. And I want to congratulate and thank all of the Signet team members for a great second quarter. We are well positioned for the second half of the year and for profitable long-term growth as direct result of the passion and the dedication of our Signet team. And with that, we'll now take your questions.

Your first question is from Oliver Chen with Cowen & Company. Your line is open. Oliver Chen - Cowen & Co. LLC: Hi. Congratulations on a really spectacular momentum and all the efforts ahead. Mark, on the products side, you had a lot of great announcements with ALEX AND ANI and Star Wars and the Must Have jewelry item. How do we prioritize which ones will be the biggest drivers for the newness on holiday on a year-over-year basis? And do you guys expect a similar kind of composition in comp between the mix impact and number of transactions as we look forward to holiday?

First of all, thank you, Oliver, for the kind words. As far as prioritizing the newness, they all are just part of what's going to get us to have a wonderful fourth quarter. We're obviously very excited about partnering with ALEX AND ANI, it's a test. But our new Must Have program is something that is a first for us and we think this will really move the dial also and is something that would – is going to cross all of our national brands. So we're very excited about that. And as I mentioned in my prepared comments, this is the most we've invested into one launch in the history of our company from a marketing perspective. So the new exciting Must Have program is definitely something that we're all excited about. We're excited about all of our new – some programs could increase traffic and some can just increase average sale. We're just excited about all of them. As far as the...

Yeah. In terms of the comp mix between your average transaction – price and transaction, our goal and our view of the pipeline of product innovation that Mark talked to is that it's going to drive both of those. Oliver Chen - Cowen & Co. LLC: Okay. The favorable commodity cost side, I know in the past, you can use that strategically to also reinvest in the business or engineer product differently, but we're seeing continued good trends there. What's the – what should we model going forward for how that may impact your gross margin?

Sure, Oliver. So again, I'll just start with – and I feel like a broken record, because I think I say this every quarter on the call – we don't give guidance in terms of our gross margin, or break down that gross margin in terms of what the expectations are from lower commodity costs. But what I would tell you is that we expect and we'll continue to see a benefit from the lower commodity prices rolling into our gross margin rate. The other thing I would just add to that is, remember that we are on an average cost method, so benefits don't always immediately drop to the P&L, but what we're seeing with this longer sustained gold – particularly as it relates to the gold commodity cost, we should continue to expect to see benefits coming in from commodity pricing. The other thing I would just add real quick on that, Oliver, is when you look at – and this was really exciting for us – when you look at our gross margin, particularly on the Zale side, we're also being impacted by all the great synergy initiatives that we have been and the teams have been working so hard on. So, we're really seeing that take root in terms of a gross margin. I know Mark and I have previously talked about discount controls, we have that up and running. So, besides the commodity pricing which will definitely take the benefit of that, we're really reaping the rewards from our synergy initiative. Oliver Chen - Cowen & Co. LLC: Okay. And just finally on that topic, why did you – what would you say as has made you increasingly confident in the synergies, it feels like a more optimistic tone and I guess it's because you've been experiencing more about what's possible. I just wanted to get a context for the upticked optimism in the synergies.

Sure, Oliver . If you think about it, as we've said, Zales has just now comped one year. And so, the more and more we get to, A, know the Zales business; and B, our team – we have a team that we call a transformational leadership team, is getting their arms around all the opportunities and our teams across our organization is just getting more and more confident and seeing more and more opportunities. And the more we get our systems to enable us, just gives us that more confidence. So, yes, we feel more confident about hitting our synergy goals for a lot of the above reasons, our team members, the benefits of technology and us, just to understand the business that much better every month.

Yeah. And I would just add to that really quick, Oliver, that the other thing that's also increasing that confidence and albeit it was still relatively immaterial for the quarter, but we are starting to see those synergies flow a little bit faster into our financial results than we originally expected. So, everything that Mark said combined with that is really giving us this increasingly confident view. Oliver Chen - Cowen & Co. LLC: Thanks. Thanks, Michele. Thanks, Mark. Congratulations and best regards.

Thank you.

Thank you, Oliver.

The next question is from Lindsay Drucker Mann with Goldman Sachs. Your line is open. Lindsay B. Drucker Mann - Goldman Sachs & Co.: Thanks. Good morning, everyone.

Good morning. Lindsay B. Drucker Mann - Goldman Sachs & Co.: I wanted to ask about your – the improvement in comp momentum in Sterling, specifically in Jared, if you could just maybe give a little bit more detail on what drove some of the sequential acceleration. I know that, particularly against an industry backdrop that seems like it's struggling a little bit more, and maybe some detail on how the cadence of comp was across the quarter? Thanks.

Thank you, Lindsay. First of all, we're very happy with the momentum of our Jared business. As good retail merchants do, we investigated everything what's going on in our Jared business, as we do with all of our business, and we're able to test certain different programs. As we stated in the last call, we tested new radio marketing vehicle, it seems to be doing well, as I mentioned in my prepared comments. We have new products that we've been testing, whether it be the Vera Wang Love that I shared with you or the Miracle Links that I shared with you. And in our business, it's always about the people, and our operational team came up with a focused, targeted effort as it relates to in-store customer experience and they were spending more times in the stores. And lastly, we have tested some targeted promotions that were more targeted to dealing with the customers in Jared. So a combination of all of the above is why we believe that Signet's Jared division is continuing to do well. And we feel pretty good about the Jared business going into the fourth quarter also. Lindsay B. Drucker Mann - Goldman Sachs & Co.: And would you be able to provide any detail on the cadence of comp across the quarter? And then, just a follow-up question I have is, it's exciting to hear about the ALEX AND ANI testing, can you help put into context, you said 108 Jared stores, maybe how when you've tested prior initiatives, whether it's Vera Wang Love or even when you started with PANDORA, how those testing – how that testing looked in comparison, and how, as you ultimately went to full rollout, what we should think of in terms of timing of getting those in stores and incrementality of comp? Thanks.

Sure. First of all, Lindsay, we don't comment on the cadence of our comp increase, so I can't talk to you about that. As far as the ALEX AND ANI test, first of all, the test begins in our Jared stores, 108 of our Jared stores in September, so we have no data as of yet. But I will tell you that 108 stores out of our Jared portfolio of roughly 250 stores is a pretty healthy test for us, and we feel pretty good about ALEX AND ANI. But again, it's a little bit less than half of the portfolio of Jared, but we feel good about it. We're excited about the opportunities of our team members to work with ALEX AND ANI, and we're looking forward to seeing some new millennial customers walking at our door, looking for this fashionable product that's something we really haven't offered in the past. So, we're very excited about the test and we'll update the market on this when we get to the season. Lindsay B. Drucker Mann - Goldman Sachs & Co.: Great. Thanks so much.

Thank you.

Your next question is from Lorraine Hutchinson with Bank of America Merrill Lynch. Your line is open.

Hi. This is Stephen Albert on for Lorraine. I just wanted to get a little bit more. On the fashion-wide launch, the channel-wide fashion launch that you're planning for, for holiday. How has the initial test been going for that? And then also a second question on the synergies, you mentioned you're seeing them rolling in faster, how much did you recognize of the 20% this year in the quarter? And then, how about a breakdown across gross margin and SG&A.

Okay. I'll take the question about the fashion launch, and Michele will talk to the synergies and the gross margin. As far as the fashion launch, you need to understand that we've done a lot of research. And so we had first started with customer research as it relates to the product and the concept behind the product, and our research was just phenomenal as well as any research that we saw and – than that we've had seen in the past. Then we put certain items in the stores and a good test in all of our stores, it was tested very well. So, from our perspective, both from the research perspective and from the in-store test perspective, we think we've got a real winner here for the fourth quarter. And as I stated earlier, it will be announced to the public by the end of October or so. Michele, you want to talk to...

Yes, so in terms of the synergies and again, you're correct, what's made us much more confident in terms of our view of our synergies is we are starting to see those benefits roll in a little bit faster than we had originally anticipated. It's still overall, I'd say, relatively immaterial to the quarter as a whole. And on a net basis, the guidance we gave for our fiscal year 2016 was about $30 million to $35 million range, or 20% of the $150 million to $175 million. So that is largely to come between the Q3 and Q4 quarters, and we would anticipate that the realization of those synergies over those quarters would be somewhat proportionate to the size of those quarters. The breakdown of what we're seeing at this point in time within the quarter has primarily been a lot of the benefits are coming in on the sales and the gross margin side. And the initiatives surrounding our training, targeted promotions, cross-selling, on the growth margin side, a lot of the work that the teams have been doing over the merchandise assortment, the discount controls that we talked about, a lot of those are really taking root. Now, on the SG&A side, we're not yet quite seeing those benefits there, because what we're doing is making a lot of investments back into the Zale division to kind of support the sales and gross margin initiatives. So, these investments include what I talked about on the call, the advertising, the IT support. So, right now, there's a little bit of a lag between those investments that are sitting in SG&A and when we get the leverage on the sales side coming through.

Thank you.

You're welcome.

Next question is from Rick Patel with Stephens. Your line is open.

Thank you. Good morning and congrats on the strong results in a tough environment.

Thank you.

Thank you.

Lots of new products this fall. I guess what are you going to deemphasize in order to make room for these new initiatives? And then can you also remind us how much of the assortment represents branded products today, and how that's going to change going forward and also the margin implications of that?

Thanks, Rick. As far as what we're going to deemphasize, I wouldn't target anything specifically, it's just a matter of what we're going to focus on and we're going to react to what the consumers react to. So, I don't want to say that we're deemphasizing any of our product categories. It's just how we determine what goes on air and on TV and what is advertised in print. So, I don't want to say there's anything we're deemphasizing, I want to say there's a lot of exciting new programs that we will be emphasizing.

Yeah. And in terms of the composition of our branded portfolio, it's about 32% on the Sterling side and then Zale, it's somewhat lower than that, which represents the opportunity and part of the initiatives that we've been working on over the past course of the year to increase that branded portfolio. We talked about the introduction that we made with the Unstoppable Love. So we'd expect to see that portfolio increase on the branded side.

And then also a question on supplementing Zale's credit program. So based on the initial work you've done, can you put into context how many more credit transactions you might be able to capture versus what ADS is able to cover, any color on what that opportunity would be like going forward?

Yeah. So, this is really exciting for us. Again, I have to give kudos to our team, because they've really have done a great job in order to get everything up and running, in order to start the test pilot that we'll be doing in October. I can't really give you context in terms of how many more credit transactions. What we do know is ADS, they are actually able to approve at yet a deeper level than our current credit provider in Zale. With our in-house credit team, we're able to yet approve even at a deeper level over ADS. So, there is some benefit in terms of us becoming a second look provider to the Zale, so I would leave it at that.

That's great. Thank you very much.

Thank you.

Thank you.

Next question is from Simeon Siegel, with Nomura. Your line is open.

Congrats. Great results.

Thanks, Simeon.

Thank you.

So, anything you can share on the new Jared concepts, the new stores? Looks like there was a nice uptick in the new store productivity there. So, any color on how those are doing. And then just two quick clarifications from me. Mark, did you say that – in the prepared remarks, did you say comps improved throughout the quarter? And then Michele, just wanted to confirm that the current third quarter guidance doesn't include any ADS benefit? When did you say that should start hitting the P&L? Thanks.

As far as the new Jared concepts, the Jared Vaults are doing very well. It's a Jared outlet concept and we're very happy with the performance of Jared Vault. Our Jared Jewelry Boutiques, we still have about, I think eight of them, still too soon to tell, and we're still watching the results of those. And we just opened up a Le Vian by Jared in Roosevelt Field up in New York and again, that just opened, it's too soon to tell. So, of the three Jared concepts, we're very happy with Jared Vault and we're still watching Jared Jewelry Boutiques and Le Vian by Jared.

And then, Simeon, just point of clarification, because we have a lot of acronyms that are flying around. Did you say ADS or the extended service plans?

The Alliance. Yeah, yeah, sorry, the Alliance – the Alliance Data.

Okay, okay. I just want to make sure that I heard the question correctly.

And also, Simeon, I did not talk to increasing comps during the quarter. So, I don't know where...

We just said our comps had improved throughout the quarter.

Throughout the quarter. We weren't specific about the cadence.

Yeah. So, what I would say is, the guidance that we provided into Q3 incorporates any consideration of us doing the in-house second look program. And then as I mentioned in my prepared remarks, the Alliance Data Systems, that will kick in towards the end of the year.

Great. Thanks a lot guys. Best of luck for the rest of the year.

Thank you, Simeon.

Thanks, Simeon.

The next question is from Joan Payson with Barclays. Your line is open.

Hi. Good morning, everyone, and congratulations on the great result this quarter.

Thank you, Joan.

Hi, Joan.

I was hoping you could talk a little bit about bridal, because it sounds like that continues to outpace the total, especially at Sterling. It's half of the business now, but how high do you think it could ultimately be in terms of mix? And also, is that bridal growth of product of the overall market and category, or is Signet taking share at a faster rate than the overall business?

Well, thank you for recognizing our bridal growth. We see bridal as a – our bridal category growth as a journey and something that we don't have a ceiling on. And we believe, and I've said this before, that in our business, it's the closest thing that we have as to a necessity, and that our bridal business continues to grow with enhanced customer service behind the counter, understanding how to connect with the customers as it relates to our bridal sale, which is very unique. We continue to have new and exciting bridal brands that continue to do well with Vera Wang Love and Neil Lane continues to do well and Tolkowsky continues to do well. And we're always testing new bridal service both in our branded and our non-branded products. And we just believe that the bridal category for us is something that is a journey and that we will not have a ceiling. As it relates to the market, the weddings have been pretty constant, not growing a lot, and what we're seeing is we believe we're gaining market share. And we believe we're gaining market share both from a unit perspective, but we're also seeing our average selling price of engage rings going up, and believe part of that is due to the consumers are getting engaged at an older age and it's benefiting us, and that we're selling a higher average bridal engagement ring, and we think that's something that'll continue going into the future.

Great. And also could you talk a little bit about whether there has been any recent changes to the overall jewelry category momentum in the U.S. and maybe the promotional environment as well?

As far as the promotional environment, Joan, we're not seeing getting more promotional. I know as it relates to our business, what we're trying to do is take our promotional dollars and be more thoughtful and more targeted in how we are using those dollars and it's working. So as an overarching answer we're not seeing the industry being more promotional, and at Signet, we're being more targeted with our promotions.

Okay. Thank you, Mark and Michele. Have a great day.

Thank you, Joan. You too.

Thanks, Joan.

The next question is from Scott Krasik with Buckingham Research. Your line is open.

Yeah. Hi, everyone. Let me add my congratulations.

Thank you.

Just a couple questions, I guess. First, the portion of the synergies that you had always targeted relative to sales synergies. Are we seeing that now in terms of the introduction of Vera Wang Jewelry at Jared, are there other major things that we're going to see in 2016, and maybe talk about how you quantify that and how you're tracking to it?

Sure. So let me start, and Mark, if you have any additional comments you want to add, feel free. So, we are starting to realize, as I mentioned, the benefits. I would say right now, a lot of it does relate to the cross-selling initiatives we put in place, and these synergies work both ways, right? So, particularly as we look at the Vera Wang, a lot of the initiatives we had on the Vera Wang side surrounding our marketing creative, the product assortment, we're seeing a benefit on Zale side of that. We're also, as Mark had indicated, on the Jared side with the cross-selling they are rolling that out to all of our stores. So, we're definitely well on our way as it relates to the cross-selling synergy goals that we had in place. We expect that that will continue in terms of our cross-selling initiatives throughout the remainder of the year and going into next year. The other big element as it relates to synergies on the sales side that we had talked about was on the repairs. So, that is one that we're still working through that initiative as it relates to our repair sales, which there in a lot of underlying systems support that we really need to get that initiative up and running. So, there's been a lot of work that we've done to-date on that, and I think that's one that you would expect to see probably more so in FY 2017.

And just to pile on, on Scott, the selling that Michele talked is definitely, exactly appropriate. Also, as it relates to selling, it's just – the synergies that we're sharing best practices in selling behind the counter is very important. Some of our best practice, relates to engaging with our team members, leadership conferences, career development schools, training, those are all the type of synergies that we're sharing with the Zales team, and we cannot talk enough about what's going on in our gross margin line. You saw what happened in the second quarter, our gross margins are a big part of our synergies. We talked about discount control. We talked about some mix factors. We talk about commodities. So, gross market is also a big part of our synergies going forward, and as you said starting off in the second quarter.

Yeah, and which is that one other thing I would just pile on is targeted promotions. So, this has been another great sharing best practice in collaboration among our divisions, relating to what we've referred to as our preferred customer or guest service event or event – sales events. So, we've had a lot of great learnings and synergy initiatives, and realizing the sales synergies associated with these targeted promotional events.

And to pile a little more, because we are excited about this, because this needs to be said. What another nice thing that we're learning, speaking about promotions and other aspects of the business, is we're learning a lot from the Zale business. They've had some unique promotions that we're testing in Sterling, which is working well as we talked about the ESP operational changes, so it's going both ways from Sterling to Zale, and we're sharing that with our UK business. So, we are excited about the opportunities in the synergy area and feel very confident about those.

Awesome. And then, just last. Michele, I think you were maybe trying to temper expectations in terms of the pace of improvement in the Zales operating margins as we get into next year. But you said you're getting synergies maybe a little earlier than expected and you have this opportunity to be a second look provider, which will contribute something for Zale. So, maybe are you a little bit more optimistic in terms of the pace of the improvement in the Zales margins versus June?

I – so, what I would say, I mean I was very optimistic in June, when I talked about our medium-term and long-term operating margin opportunities associated with Zale, and that medium term being low-teens or call it 12% and long-term being 15%. I was very confident then and I remain extremely confident on our ability to achieve those goals.

Okay. All right. Well, thanks and good luck.

Thank you, Scott.

Thank you.

The next question is from Janet Kloppenburg with JJK Research. Your line is open.

Good morning, everyone. Congratulations on a nice quarter. Just a couple of follow-on questions. With regard to ALEX AND ANI, I assume that's an exclusive assortment that you'll be marketing? And I'm wondering Mark, if it is successful, which I assume it will be, will that be a brand that could be transferred across other concepts in your brand portfolio? I also was wondering about the platform launch for October, what the ASP and margin profile of that, I believe it's a fashion jewelry launch, but I'm wondering if it would tally higher ASPs and margins that could potentially help to benefit the P&L more than we are expecting at this time? And lastly, Michele, on the commodity pricing, we're seeing gold pricing being pretty soft on a go-forward basis. So I'm wondering if that should provide some favorable input pricing for you next year in terms of gross margin gains? Thanks so much.

Thank you, Janet. First, I'll make it very clear, I didn't say anything about an exclusive assortment from ALEX AND ANI. What I said was, we're testing ALEX AND ANI in 108 of our stores. I did not mention any type of exclusive assortment. As I've said, we're really excited about...

Mark, I was asking whether or not they were developing a line exclusively for you or if it was product that was currently in their line?

It is a pride to working with ALEX AND ANI as in our stores, there's nothing that's exclusive and as of yet, and while working with ALEX AND ANI, we'll see how the test goes, and we're we are very excited...

Okay.

...about that opportunity. As far as the must-have product that we're going to have in the fall that we're kicking up at the end of October, we are very excited about it. We're not going to share price points or gross margins because we don't do that, but obviously, we see the benefits in getting incremental sales. And so, we're excited about the opportunity to bring in new customers and existing customers to find a new must-have products that will benefit on the top line, that's what we're looking for.

Yeah. And then, in terms of the commodity pricing, yeah, assuming that we still have sustained softening in the gold price, we'll continue to be able to reap the benefits of a lower input or commodity cost going into the back half of this year and that would continue as we look forward into next year.

Great. Thanks so much and good luck.

Thank you, Janet.

Thank you, Janet.

The next question is from Bill Armstrong with C.L. King & Associates. Your line is open. William R. Armstrong - C.L. King & Associates, Inc.: Good morning, Mark and Michele. On the commodity costs, we know diamond prices has been under pressure. In general, if diamond prices are down, just take a number, 10%, does that have a kind of umbrella set on other precious gems as well – rubies, emeralds, et cetera? So in other words, do they tend to trend in the same direction?

Okay. Let me start with the tail end a bit. No, they do not. Rubies and emeralds and sapphires, others semi-precious or precious gems do not have any indication on diamond pricing, they're not interconnected, and so let's start with that. So let me give you a little bit of background of what's going on with the – in the diamond market. First of all, the diamond prices that – has been reduced, and what's happening with the diamond market is primarily what's happening with the – kind of the slowdown of what's going on in Asia and the Middle East. And the diamonds that are heavily sold in the Asia and the Middle East are higher quality diamonds than we sell at Signet. They're VS quality from a GIA terminology and better. And our quality of goods is not – as a whole, we sell VS – as a whole, we don't sell that higher tier of quality of diamonds. So the opportunities where diamond prices are lowering is really more in the higher-end rough and the higher-end polished goods. It doesn't mean there may not be an opportunity for us. But for right now, what's happening in the diamond market, those lower-priced opportunities are in the higher-end price or higher-end quality of goods. Now, also remember that we're, on a cost averaging perspective, that I'm sure Michele will talk about soon, so when and if we see opportunities to increase savings on our diamond purchasing, it takes a while to get through the system, I don't know you want to talk to that...

Yeah, yeah, I mean just to add a second, when you think about our averaging cost method, we don't immediately recognize the benefits of lower commodity pricing, it also works inversely the same if there is higher commodity prices that doesn't immediately manifest itself in our P&L because of our average costing method. It's really – it's when we get into the sustained lower pricing or a sustained change in pricing that we start to see it come through the P&L, which is really the case on the gold side. We've now, for a good year now, we've been seeing the lower gold cost, and that is driving the benefits in our income statement. William R. Armstrong - C.L. King & Associates, Inc.: Right, right, I understand the average costing method. So, just to be clear then, when you're talking about getting the benefits of lower commodity costs, in your case, we're really looking at gold and metals rather than stones?

Yeah, yeah, that's absolutely correct, Bill. William R. Armstrong - C.L. King & Associates, Inc.: Okay, okay. Okay. And then, just the one other quick follow-up on the ESP ring sizing adjustment. I think you said you had a $0.05 per share benefit in Q2, and we should see about $0.03 in Q3. Should we also see something like that in Q4 and Q1, and then it will anniversary after that?

Yeah. So, in terms of the impact that we talked in the prepared remarks, as you said about the Q3 impact – the modest impact there, when you think about the Q4 impact, we would anticipate again a modest impact on our earnings per share related to the extended service plan change. What I would say is, given that Q4 is our biggest sales quarter, that impact will be higher than what we guided in the Q3, but proportionately, it will be lower to EPS at a $0.07 impact. William R. Armstrong - C.L. King & Associates, Inc.: Got it. Okay. And then – again, you – once we get to Q2 of next year...

Yeah. William R. Armstrong - C.L. King & Associates, Inc.: ... then we're anniversary and we're on an even footing?

Correct. That... William R. Armstrong - C.L. King & Associates, Inc.: And if...

And that's definitely correct, Bill. William R. Armstrong - C.L. King & Associates, Inc.: Got it. Okay. All right. Thank you.

Thank you.

The next question is from Jeff Stein with Northcoast Research. Your line is open.

Congrats on the quarter. And – so a couple of questions. Just to follow-up on Bill's question, is the expected savings from the – or the expected benefit from the ESP change in Q4 going to be larger, likely to be larger than it was in Q2? And secondly, is the expense impact of that embedded in gross margin or SG&A?

Yeah. So let me address that. As I just mentioned with Bill, we would anticipate the impact in Q4 would be slightly larger than Q2, just given the size, the higher sales volume we have in Q4, but in proportionate to EPS, would be substantially lower at $0.07 of an impact. In terms of the expense, that does fit in gross margin.

Okay. Great. And the delay in the ADS contract, given the fact that you expect $22 million benefit on an annualized basis, should we just assume that there will be a negative $5.5 million impact roughly in Q4? And this is what we've been modeling.

Yeah. So, not that we're ready to give Q4 guidance, but just to help you out on that front, Jeff, in terms of the prepared remarks though we talked about is, yes, ADS will be affected in January versus what we originally anticipated in October, and the financial virtues remain the same with a $22 million annual benefit related to the lower merchant cost. What we have done though is, with these second look credit actions that we're going to be taking in October with the plan that that will roll out before the holiday season, that would mitigate any deferral of impact from that ADS.

Perfect.

Does that help, Jeff?

Yeah. That does. Couple of other ones real quickly. This transaction drop at Sterling of 2.5%, you alluded to mix. Can you amplify on that a little bit?

Yeah, sure. So, let me – in terms of the transaction when I referenced mix, again, what we are seeing is more transactions in terms of our bridal and our higher selling price items and that, from a transaction standpoint, is someone offset by lower ticket transactions.

Okay. And were your bridal units up in the second quarter, number of units sold?

I'm – let me just double-check and we'll get back to you on that one. I want to say, yes, that would be the case, but I don't have that information at my fingertips.

Okay. And final question on marketing. For your new fashion product, are you putting out incremental marketing dollars or is this going to take away at all from other collections that you would normally spend X millions of dollars on it?

Our impressions as a whole for all Signet in the United States will be up. And what we're doing is we are investing dollars in this new program that this is going to first time we'll cross over all three of our national brands. So, our impressions will be up, and will lead to determine what we put on TV, we make a very thoughtful decision as it relates to categories. And so, we feel very good about our portfolio in putting on TV and advertising this year.

Thank you.

Thank you, Jeff.

Thanks, Jeff.

We have no further questions at this time. I will now turn the call back over to Mr. Light.

Yes, thank you. And thank you all for taking part in this call. Our next scheduled call is on November 27, where we'll review our third quarter results. Thank you all again, and goodbye and have a nice day.

Thank you, ladies and gentlemen. This concludes today's conference call. You may now disconnect.