The major domestic home shopping networks are having a tough year.
Liberty Interactive Corp., QVC’s parent, reported its second-quarter earnings on Friday. QVC did better than HSN, but gloomy honchos at the West Chester-based channel warned that sales really slowed down at the end of the quarter, echoing the challenges that brick-and-mortar retailers are facing.
“QVC continues forward in a choppy retail environment,” said Greg Maffei, Liberty Interactive president and CEO.
QVC’s U.S. revenue rose 2 percent to $1.4 billion in the second quarter versus the prior year. HSN, which reported its earnings on Thursday, saw its net sales for the quarter drop 3 percent, to $557.2 million.
“Beginning in early June QVC’s U.S. sales began to experience significant headwinds, which have continued,” Liberty said in its press release.
“The sales declines, as compared to prior periods, have averaged in the mid- to high- single-digit percentages. QVC has developed many initiatives intended to reverse the negative trends and QVC is optimistic, although there is no guarantee, that these actions will have a positive effect. However, even if these initiatives begin to reverse these trends, it is believed that QVC’s U.S. net revenue and adjusted OIBDA will likely experience negative growth rates for the third quarter.”
In other words, QVC’s sales will likely be down in the 3Q. QVC President and CEO Mike George had the same bad news.
“We reported solid second-quarter results, with good sales growth in most markets,” he said.
“Late in the quarter, we experienced a deceleration in demand in the U.S. that has continued. As a result, our near-term perspective is more cautious. Longer term, we remain well-positioned with our highly differentiated retail model, strong customer retention, and our ability to deliver compelling experiences across immersive commerce platforms.”
In the second quarter, QVC units sold increased 4 percent, average selling price per unit (“ASP”) decreased 3 percent to $56.60 and returns as a percentage of gross product revenue improved 82 basis points.
QVC saw growth primarily in the apparel and accessories categories, which was partially offset by declines in jewelry and electronics.
E-commerce revenue increased 11 percent to $727 million and grew more than 400 basis points to 51 percent of total U.S. revenue.
QVC’s international revenue increased 7 percent to $635 million in the second quarter.