QVC’s Revenue Rises 3 Percent, To $2.1 Billion, In 4Q

QVC fared better than rival HSN in the fourth quarter, posting a 3 percent increase in revenue to $2.1 billion, its parent Liberty Interactive Corp. reported on Friday. For the year, revenue rose 3 percent to $6.3 billion.

Those earnings compared to HSN’s results, reported earlier this week, of its net sales sliding 2 percent in the fourth-quarter last year, to $778.7 million, versus the year-ago period. And revenue rose 3 percent for 2015, to $2.5 billion.

Domestic QVC saw growth in all categories except jewelry (damn).

Units sold increased 4 percent, while the average selling price per unit (“ASP”) increased slightly to $61.89 and returns as a percentage of gross product revenue improved 98 basis points in the quarter.

For the year, the U.S. home shopping network saw gains in all categories except jewelry and electronics.

Units sold increased 4 percent, ASP increased 1 percent to $60.32, and the return rate improved 11 basis points for the full year.

E-commerce revenue increased 13 percent to $1.1 billion and rose to 52 percent from 48 percent of total U.S. revenue in the quarter. For the year, e-commerce revenue increased 12 percent to $3.1 billion and increased 49 percent from 45 percent of total U.S. revenue.

In the quarter, adjusted OIBDA increased 1% to $479 million, and adjusted OIBDA margin decreased 42 basis points. US margin performance primarily reflects lower shipping and handling revenue due to our reduced S&H fees and higher warehouse costs, which were partially offset by improved initial product margins and lower personnel and inventory obsolescence expense.

Additionally, we incurred $3 million of restructuring costs related to establishing a global business services center. Excluding this expense, adjusted OIBDA would have increased 2 percent for the fourth quarter.

For the year, adjusted OIBDA rose 3 percent to $1.5 billion, and adjusted OIBDA margin declined 15 basis points, primarily due to lower shipping and handling revenue, higher obsolescence, freight, personnel and warehouse costs, which were partially offset by improved credit card income, higher initial product margins and lower marketing expenses.

QVC President and CEO Mike George had this canned statement, where he referenced the company’s plans to move some operations to Krakow, Poland:

We entered 2016 from a position of strength. Our fourth-quarter results demonstrate the stability of our model, which distinguishes us from other retailers in this volatile environment.

In 2015, we created a stronger foundation for long-term success and industry leadership. We formed a new global structure to leverage the best of QVC worldwide.

We extended the reach and enhanced the capabilities of our digital commerce platforms. We entered our seventh market with the launch of QVC France. We delivered broad-based, local currency revenue growth, and with the addition of zulily, we expanded our reach to millennial shoppers.

We are excited to have created a new global organizational structure in 2015. As part of this new structure, we created an international division and we have aligned our reporting accordingly. As you can see, QVC now reports results as QVC US and QVC International.

QVC’s newly revised organizational structure is intended to allow the company to better leverage its global scale and capabilities, which is expected to enhance QVC’s competitive position and create operational efficiencies.

Going forward QVC’s public financial disclosure will mimic this operating structure. Management believes it is appropriate to provide public investors with financial disclosure that is consistent with the way the company evaluates its business performance and manages its operations.

LIberty Interactive President and CEO Greg Maffei gave QVC a shout-out.

“QVC generated another quarter of solid revenue growth, particularly QVC U.S., which we view as very strong given the backdrop of a soft U.S. retail environment,” he said.


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