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#Really we talked about the biggest impact on the gross margin line for the quarter was the level of closeout sales.
So closeout sales typically carry a lower gross margin as they come through.
And they also carry lower advertising and all other costs, so there's not a lot of promotion around them and things like that.
So while you see it in the gross margin line, that's why you see our operating profit did increase from up percentage standpoint.
Because it impacted that, but not [the way down].
So that, size-wise, was the biggest impact.
The next biggest impact was less favorable hedges that we had on inventory we purchased in the second quarter this year versus a year ago.
And we said at Toy Fair that that was going to impact our full-year gross margin, and that overall we expect our full-year gross margin to be down a bit from the full-year 2016.
So those are really the two big items, and they offset the positive product mix that you mentioned earlier.
Yes, Disney Princess ---+ yes, I looked at it.
Disney Princess together would be up, year to date.
And I'm not going to size it, but it's up in both the quarter and year to date for us.
And, look, there's a lot of great entertainment that's been supporting that brand: in Moana, in the electronic sellthrough and DVD windows, Beauty and the Beast.
So yes, it's been up.
And we would expect, with the kind of entertainment we have coming in the second half, and Olaf's Frozen Adventure to contribute to our both Princess and Frozen business for the full year.
Well, we really set our hedges so we can put predictability in our pricing.
So, based on the hedges we have, we've been able to set pricing for the year and give our retailers confidence in maintaining that pricing, as well as understanding what our gross margin is.
So, if I think about the rest of the year, last year for full-year we were about 74% of our total cost was hedged.
This year, I think we're about 73%.
We're right around that range.
So to the extent we haven't hedged, we should get some benefits from it.
But on a full-year basis we ---+ again, we really hedge to protect the pricing that we offer to our retailers.
Well, I think we'd expect a nominal shift in revenues between third and fourth quarter.
We're not suggesting that it's seismic, but just a nominal shift as a result of all these entertainment initiatives that are happening toward the back half of the year, and particularly in the fourth quarter as Star Wars comes out in December.
On online, what I had said was that our cost of business was very similar.
The difference is, as we develop our expertise in online, we have some initial costs over the first couple years as we set ourselves up for future growth, and that we would expect those costs over time to begin to diminish.
That has to do with the kind of packaging we use and the way we create master cartons and the way that we go to market, the kinds of content we're creating.
But we're ---+ over time, we will amortize those startup or learning curve costs; and that we would expect that to continue to be, over time, accretive to our business.
But today, comparable cost of business to omni-channel or brick-and-mortar.
Really, Germany was really around the quarter, and we don't expect that to continue for the full year.
It's really the UK and Brazil that we're seeing most of the economic issues in.
Yes, overall, the games category was up 20% in the quarter.
And then if you look at Hasbro gaming was up 6%.
But I think it's important to note that in the second quarter, globally, our games POS was up 27%.
So we're seeing a tremendous sellthrough of our games business.
Similarly in US, our games POS was up quite considerably.
So what we're seeing is really a matter of games selling very well; shipments a little bit behind the sellthrough; a lot of new games introductions coming later in this quarter for the second half.
Dungeons & Dragons is performing at a very high level.
I think Dungeons & Dragons is back, and the team has done some very expansive marketing around that.
It's involved in e-sports, and Twitch; new gaming launches coming throughout the year.
And then, of course, you also see our digital gaming business growing considerably, with Transformers: Earth Wars performing quite well, DragonVale performing well.
So Backflip Studios is really contributing as well in the quarter.
So it's both digital gaming as well as face-to-face gaming performing well in the quarter.
So that's both in the gaming segment and then overall performing quite well.
Magic on a full-year basis, it really ---+ the business continues to resonate.
We're making a lot of progress in Magic Online and our Digital Next ---+ looking forward to showing you more in the Digital Next development at our Investor Day.
But Magic Online is performing very well, holding up quite well.
And you're seeing more concurrent launches, like Amonkhet was a concurrent launch between our card set as well as our online.
And we continue to connect with players.
We're seeing great new player engagement as well as conversion; continue to see the kinds of tournament play and e-sports play and viewership that really gives us good signals for that brand long-term.
I'm sorry, go ahead.
So if you look at Princess, we had said from the beginning that the investments would begin before the revenues; then the investments continued in early days as we've launched that brand.
We continue to invest in the brand, and we do continue to see profit improvement over time.
And we had said then, and continue to reiterate that we would see profit improve over a two- to three-year period, and begin to approach Company average operating profit margins for our partner brands over that period.
And that's still the case.
And as far as capital allocation, as we say, we want to return excess cash to shareholders.
And indeed, most of it was through dividends this quarter.
And we repurchase shares subject to market conditions and available US cash.
We also put 10b5-1s in place in our close windows.
And our stock price had quite a bit of movement in this past quarter.
So we still have about $300 million left in our share repurchase authorization, and still plan right now to purchase $150 million on a full-year basis; it will just be more back-half-weighted at this point.
The overall industry, it grew just under ---+ about 4%.
Obviously, our growth is outstripping that growth.
In the US, the team has done a fantastic job with double-digit growth.
We continue to see the opportunity to grow that business, continue to engage in it with a number of retailers, continue to expand and stretch our channel management.
And through that channel management strategy, we're getting to new and differentiated retailers with different types of products and offerings.
The online business continues to be a disintermediary for us.
For example, if you look at our online sales in the quarter, particularly focused on the US, you see very strong double-digit gains for all of our franchise brands.
And that's quite heartening to see that My Little Pony and Littlest Pet Shop performing well as we start to introduce new product where the audience can find those brands online at their liking.
So I'd say, overall, we continue to expect that the US business, the North American business, can grow.
We've certainly seen that growth, and expect that the retail calendar with entertainment continues to stretch to be more a full-year calendar.
And we have a number of initiatives for the second half of the year that set us up quite well for a full year.
And also into 2018 we're seeing a number of entertainment initiatives, including our own, that set us up for 2018 to be a very good year as well.
So that's what I think about the US business.
I think if you look at it, our developed economies business in the first quarter grew 12% while emerging markets grew 7%.
And for the first half, our developed countries business grew over 5% while emerging markets grew double digits.
And so I would say that we're continuing to see very good growth both in developed economies and emerging markets.
In the quarter we've seen very good performance from Monopoly.
We've seen good performance from Transformers.
We've seen good performance in Magic.
I think Pony was off just a bit in the quarter.
And as we set up and tee up the second half around the movie, again on the full-year basis, we think My Little Pony will perform quite strongly.
And remember what <UNK> said earlier, that the consumer products royalty income comes in the quarter after the sales occur.
So I think that a lot of what has gone on in consumer products is just related to timing.
It was just some ---+ well, first of all, we've seen great growth in [a certain] number of markets where we have longer dating.
In Latin America, for example, Mexico has seen great growth.
And the dating there is a bit longer.
Yes.
In India, we just started opening our own business in India, so it's really just a function of timing for us.
And we also talked about closeouts.
Some of those sales, as I mentioned, they are at a lower rate, but they don't carry any allowances or things like that that may reduce receivables further.
So, it really is about timing for us this quarter.
Inherently, our receivables are in great shape.
Our collections are good.
And through last week, we collected almost 20% of our receivables.
I think I'd looked at it Wednesday, and we were already at that point.
So we're in good shape on receivables.
It's really just about timing.
Our global POS in the second quarter was up 13%, and year-to-date is up about 14%.
And then our ---+ I said games POS globally was up 27%, and the US was even more stronger, 33%.
And you've seen double-digit growth across a number of categories.
Where we have a breakdown, franchise brands were up double-digit.
Partner brands was up strong single-digit.
And gaming, as I mentioned, was up.
Online sales I talked about being up more than 20%.
And then of course I also earlier ---+ in Europe, we saw the double-digit POS gains, and very strong gains in a number of markets.
And as I mentioned, the UK was the only place where the POS was flat.
And we're holding our own in an industry category that's down a bit.
That's our measurement at wholesale.
That's what we have as POS.
Yes, we don't ---+ the retail data, we don't get that retail data by all those markets.
We get wholesale data by all those markets (multiple speakers)
Thank you, Rob, and thank you, everyone, for joining the call today.
The replay will be available on our website in approximately 2 hours.
Management's prepared remarks will be posted on our website following this call.
As <UNK> mentioned, we look forward to seeing you at our Investor Day on Thursday, August 3, at our West Coast offices in Burbank, California.
And finally, Hasbro's third-quarter earnings release is tentatively scheduled for Monday, October 23.
Thank you.
