The No. 1 home shopping network, QVC, recorded a 4 percent increase in second-quarter revenue, to $1.23 billion, its parent Liberty Interactive Corp. reported Wednesday.
HSN last week also reported a 4 percent increase in second-quarter revenue, to $501.9 million.
QVC’s U.S. gross product revenue increased 5 percent as a result of strength in beauty, electronics and apparel products. But that was reduced to a 4 percent increase overall due to an increase in second-quarter returns as a percent of gross product revenue of 117 basis points, primarily due to increased return rates in apparel, health, beauty and jewelry due to the mix of products within those categories, according to QVC.
Mmmmmm, seems like QVC had a problem with returns, which is perhaps the reason why we got a warning letter about our returns this week. We’ll be blogging about that letter in the next few days.
Average selling price (ASP) for QVC items increased 5 percent from $52.02 to $54.84, while units sold remained flat compared to the prior-year second quarter.
“QVC’s performance was driven by another strong quarter of eCommerce and mobile purchasing, a trend that continues to accelerate across our global markets,” QVC president and CEO Mike George said in a canned statement. “Our customers are embracing QVC’s unique digital shopping experience, fueled by great values on distinctive products across each of our growing platforms.”
In the second quarter, eCommerce revenue increased 15 percent to $498 million and grew to 39 percent from 35 percent as a percentage of total U.S. revenue. Adjusted OIBDA increased 3 percent to $315 million, with adjusted OIBDA margin decreasing slightly due to lower product margins.
QVC’s consolidated revenue, which includes the domestic and international networks, increased 4 percent, to $2 billion.
“QVC continues to produce solid results despite a challenging macroeconomic environment,” Liberty Interactive CEO Greg Maffei said in a canned statement. “We were pleased we received government approval in China and finalized our joint venture with China National Radio in July. “We have a stockholder vote later today and expect our new Liberty Ventures tracking stock to begin trading on August 10. We continued our share repurchases reinvesting $257 million.”
QVC’s international revenue increased 4 percent in the second quarter to $694 million. The second-quarter results included the negative impact of the strengthening of the U.S. dollar against the Euro and U.K. Pound Sterling that was somewhat offset by the positive impact of the weakening of the U.S. dollar against the Japanese yen.
International adjusted OIBDA increased 9 percent to $123 million and adjusted OIBDA margin increased 76 basis points in the second quarter.
QVC Japan’s revenue grew 13 percent in local currency in the second quarter primarily due to increased sales in home and apparel as well as the earthquake and related events experienced last March. QVC Japan’s ASP in local currency increased 3percent and units shipped increased 12% in the second quarter.
QVC Japan’s second-quarter returns as a percent of gross product revenue in local currency increased by 144 basis points primarily due to higher return rates in apparel, jewelry and home due to the mix of products within those categories.
QVC Japan’s adjusted OIBDA in local currency increased 16 percent and adjusted OIBDA margin increased 65 basis points in the second quarter. The increase in adjusted OIBDA margin was due primarily to lower commissions expense as a result of contract renegotiations and fixed commission fee revenue leverage as well as a higher absorption of warehouse and call center costs due to increased revenue. Product margins also increased primarily due to higher product margins in the beauty category.
QVC Germany’s revenue declined 1 percent in local currency in the second quarter primarily due to decreased sales in health and fitness and apparel, somewhat offset by increased sales of beauty products.
QVC Germany’s ASP in local currency decreased 3 percent and units shipped declined 1 percent in the second quarter. QVC Germany’s second-quarter returns as a percent of gross product revenue in local currency improved by 219 basis points and was primarily due to a shift in mix from apparel to beauty.
QVC Germany’s adjusted OIBDA in local currency increased 7 percent and adjusted OIBDA margin increased 127 basis points in the second quarter. The improvement in OIBDA margin was driven by a reversal of earlier bonus accruals to better reflect current business results, along with expense management and lower returns volume.
QVC UK’s revenue increased 4 percent in local currency in the second quarter primarily due to sales increases in beauty and apparel products. QVC UK’s ASP in local currency increased 3 percent and units shipped increased 1 percent for the second quarter. QVC UK’s second quarter returns as a percent of gross product revenue in local currency increased by 37 basis points primarily due to a product mix shift to apparel.
QVC UK’s adjusted OIBDA in local currency decreased 16 percent and adjusted OIBDA margin decreased 342 basis points in the second quarter. The decrease in adjusted OIBDA margin was primarily due to higher duplicate running costs including an existing lease cancellation accrual associated with the transition to the UK’s new headquarters in June.
QVC Italy continued the trend upward with a 21 percent sequential sales growth in local currency over the first quarter of 2012. QVC Italy’s sales were primarily from the home, beauty and apparel product categories.