Sorry We’re Late, But QVC’s Revenue Grew 3 Percent In The Second Quarter To $1.2 Billion

OK, we realize we’re a month late, but better late than never.

It appears that we simply missed or never get the press notice that announced that Liberty Media, QVC’s parent, was doing its second-quarter earnings call Aug. 9. We dunno which.

But here’s the story.

“QVC had a solid quarter, with revenue growth in all markets,” Liberty uber honcho Greg Maffei said in a canned statement. “We were impressed that Japan was back to growth so quickly after the tragedies of the spring.

QVC’s domestic revenue increased 3 percent in the second quarter to $1.2 billion and adjusted OIBDA increased 1 percent to $305 million compared to the second quarter 2010.

“We are excited about our strong product and programming line-up for the third quarter as we expand our presence in New York’s Fashion Night Out this September with the exciting premieres of John Hardy jewelry and Heidi Klum accessories,” QVC president and CEO Mike George said in canned statement.

“In addition, QVC will broadcast live, select programs from the LA Live complex, featuring a range of QVC personalities and brands, enabling us to provide a localized look and feel for our West Coast audience during their prime television viewing hours,” he said.

The product mix continued to show a steady growth in accessories, apparel and home and a decline in jewelry sales. The average selling price increased 8 percent from $48.10 to $52.02 while total units sold decreased 4 percent to 25.7 million.

Returns as a percent of gross product revenue remained relatively consistent to the prior year period at 18.5 percent.

QVC.com sales as a percentage of U.S. sales grew from 32 percent in the second quarter of 2010 to 35 percent in the second quarter of 2011. Overall, the U.S. adjusted OIBDA margin decreased 64 basis points to 24.8 percent for the quarter due to the previous disclosed change in our QCard arrangement which negatively impacted adjusted OIBDA by about $9 million.

Excluding the negative impact of this arrangement, U.S. adjusted OIBDA increased 4 percent for the second quarter with a slight increase in adjusted OIBDA margin primarily driven by favorable product margins.

QVC’s consolidated net revenue, which includes its international networks, increased 8 percent in the second quarter to $1.9 billion, adjusted OIBDA increased 4 percent to $418 million and operating income increased 4 percent to $281 million.

“We continue to build momentum even in these uncertain economic times with consolidated second quarter net revenue growth of 8 percent,” George said. “Each market experienced net revenue growth in local currency including Japan, which has rebounded nicely after the tragic events experienced in late March.”

He sent on, “Excluding our QVC Italy start up operations and the previously discussed change in our QCard program with GE Money Bank, our adjusted OIBDA growth would have been 8 percent and operating income would have been 11 percent. We continue to see strong global new customer net revenue growth and our global eCommerce revenue now represents 30 percent of our worldwide revenue.

QVC’s international revenue increased 18 percent in the second quarter to $666 million from $565 million including the impact of favorable exchange rates in each of our markets. International adjusted OIBDA increased 13 percent to $113 million and adjusted OIBDA margins decreased 73 basis points for the quarter.

QVC’s international second quarter results include $13 million of adjusted OIBDA loss compared to $5 million in the prior year related to QVC Italy operations that launched in October 2010. Excluding the effects of QVC Italy, international adjusted OIBDA and adjusted OIBDA margins would have increased 20 percent and 51 basis points, respectively, for the quarter.

QVC UK’s revenue grew 4 percent in local currency in the second quarter due primarily to increased sales in apparel and most home categories. These increases were partially offset by declines in fine jewelry.

QVC UK’s average selling price in local currency decreased 1 percent and units sold increased 5 percent for the second quarter. QVC UK’s adjusted OIBDA increased 4 percent and the adjusted OIBDA margin increased 59 basis points due primarily to a favorable inventory obsolescence provision and freight costs offset somewhat by higher distribution costs associated with the QVC Beauty Channel, QVC UK’s second channel, being launched part time on the Freeview DTT platform.

QVC Germany’s revenue grew 7 percent in local currency in the quarter driven by increased sales of apparel, jewelry, and nutrition products. QVC Germany’s average selling price in local currency increased 1 percent for the second quarter and units sold increased 11 percent.

QVC Germany’s returns as a percent of gross product revenue increased 251 basis points from the prior period due in part to a product mix shift to higher return categories including apparel and jewelry. QVC Germany’s adjusted OIBDA increased 21 percent in local currency and the adjusted OIBDA margin increased 199 basis points due to favorable product margins and inventory obsolescence.

QVC Japan’s revenue grew 1 percent in local currency in the second quarter due to increased sales primarily in apparel. QVC Japan’s market has rebounded after the tragic events experienced in March with positive year over year growth achieved in May and June.

QVC Japan achieved growth of 13 percent in units sold for the quarter with the average selling price in local currency declining 10 percent. QVC Japan’s adjusted OIBDA in local currency declined 2 percent and the adjusted OIBDA margin declined 72 basis points due to lower product margins and higher commission expense.

QVC Italy continues the trend from the first quarter – sequential sales growth following a softer than anticipated launch. These sales are primarily in the home and beauty product areas. In the quarter, QVC Italy began to invest in a strong marketing campaign to build awareness and accelerate new customer acquisition, and it plans to monitor these and other fixed costs as they grow into their cost structure.

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