ENGLEWOOD, Colo. – Qurate Retail Group expected the third quarter to be its toughest of the year, but business turned out to be worse.
Sales at the video commerce company underperformed even the lowered expectations, taking a bite out of the bottom line, leading to a net loss of $15 million vs. net income of $12 million in the year-ago quarter.
“Despite this, we were able to hold consolidated gross margin flat with disciplined cost management and reduced operating expenses,” said David Rawlinson, president and CEO. “We also continued our proactive balance sheet management, completing an offer in which 89% of QVC’s 2027 and 2028 notes were tendered which improves the QVC credit profile with reduced debt and an extended maturity profile.
Revenues Fall in All Divisions
In the company’s QxH division (QVC/HSN), revenue declines were driven by a 6% drop in units shipped as well as lower shipping and handling revenue. Sales declined in all categories of business. Home accounted for 40% of total revenue, the division’s largest category. That was up slightly from 39% of total revenue in the year-ago quarter.
At Cornerstone – which comprises Ballard Designs, Frontgate, Garnet Hill and Grandin Road –the company attributed the revenue decrease to softness and competitive promotional pressure in the home sector. Qurate is implementing a “transformation plan” to improve Cornerstone’s revenue and profitability amid continued challenges in the housing sector.
QVC International’s constant currency revenue decreased primarily due to a 3% decrease in average selling price, partially offset by a 1% increase in units shipped and favorable returns. The division generated constant currency growth in home and accessories, but saw sales decline in apparel and beauty.
Total company revenue fell 5.4% to $2.3 billion. E-commerce generate $1.5 billion, accounting for 62% of total revenue.
Qurate is nearing the end of its multi-year Project Athens initiative, which focuses on improving margin and free cash flow.
“The team has materially improved the business, becoming a more profitable, leaner and more nimble organization,” said Rawlinson. “We are transitioning to the next phase of our strategic growth as we enhance our capabilities to reach aggregated audiences on primarily social and streaming platforms.”
See also:
