Third Quarter: QVC Sales Up a Smidgen, HSN Down

Last week Qurate Retail, the parent of QVC and HSN, reported its third-quarter results. They are a bit complicated, because of an accounting change in the way Qurate accounts for revenue.

Here’s as best as we understand it: Qurate has adopting a new accounting standard, so QVC and HSN are now recognizing credit-card income for their branded credit cards as part of their net revenue “rather than as an offset to selling, general and administrative expense.”

That change will positively impact Qurate Retail’s revenue for 2018.

Here’s the deal: QVC’s revenue in the third quarter as up 3 percent — to $1.42 billion — when you include the $26 million in credit-card revenue. But it only rose 1 percent without it.

In HSN’s case, its revenue was down 4 percent — to $514 million — including its $3 million from credit-card revenue. But revenue dropped a whopping 5 percent without that added addition of funds.

Before we provide the official third-quarter details, we can also report back on what Qurate head honcho Mike George had to say on the third-quarter conference call with Wall Street analysts.

For those who were shocked to see QVC standards like Dooney & Bourke and Judith Ripka on HSN, expect more of such QVC-HSN crossovers, George said.

But so-called proprietary brands, like QVC’s Isaac Mizrahi, will not be making their way to HSN, according to George.

He also said that 100 new products are heading to HSN, and that the home shopping network will be getting its own new proprietary lines developed by the merged QVC-HSN department that will work on such projects for both channels. Previously at HSN, Joy Mangano’s company was devising a lot of that home shopping network’s own brands, like Iman.

And as reporters, we sympathized with the Wall Street analysts who asked a lot of questions but didn’t get many answers from George. For example, HSN apparently just did a new carriage deal with a distributor. Under questioning, George wouldn’t identify who that cable or satellite provider was.

Yet even as he ducked answering their queries, these analysts kind of groveled and thanked him for his non-answers.

As for the results that Qurate would talk about, in the third quarter QVC saw sales gains in accessories, beauty and electronics, which were partially offset by declines in home and jewelry.

“As noted last year, QVC US experienced a systems outage late in the second quarter of 2017, which resulted in an estimated 1 percent shift in net revenue to the third quarter of 2017,” Qurate said in its press release. “This outage negatively impacted revenue by approximately 1 percent in the third quarter of 2018 due to the comparability of results.”

Over at HSN, which will see its ranks decimated by layoffs that QVC announced last month, in the third quarter its “sales mix shifted to home, accessories and beauty from apparel, jewelry and electronics and resulted in an improved return rate,” according to Qurate.

HSN also paid $12 million in severance costs in the quarter.

“In the third quarter of 2017, HSN’s results were impacted by Hurricane Irma,” Qurate said. “At that time, HSN estimated that revenue was negatively impacted by approximately $13 million and adjusted OIBDA was negatively impacted by approximately $5 million.”

And here’s the big deal that George was so secretive about.

“Beginning in the third quarter of 2018, HSN is operating under a renewed carriage agreement with a certain distribution partner,” Qurate said. “This agreement provided for improved channel placement and broadcast in high-definition. Based on the terms of the renewed multi-year carriage agreement, HSN capitalized the upfront payment and is amortizing the amount over the life of the agreement, versus its previous convention of expensing the payment associated with the contract terms each quarter.”

“Our solid third quarter results demonstrate continued execution of our strategy to engage our customers with compelling products across multiple shopping platforms,” George said in a canned statement.

“We grew revenue and profitability at QVC US, improved HSN’s sales trend and customer engagement trends … We’re taking steps to more fully leverage the power of our US video commerce platform and accelerate our digital initiatives by combining QVC US and HSN into a new business unit, QXH, a move that we believe will yield new revenue opportunities and improved customer service, as well as operating efficiencies and incremental cost synergies. Qurate Retail is focused on leveraging its unique video commerce model in a retail market that increasingly values engaging mobile and social shopping experiences.”

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8 Responses to “Third Quarter: QVC Sales Up a Smidgen, HSN Down”

  1. homeshoppingista Says:

    test

  2. Jan Says:

    The crossover of vendors between HSN and QVC is annoying and disappointing. And it is going to increase? I’ve mostly been a shopper on HSN, I’ve always felt QVC was a little boring and very over-priced. I did buy a few things from QVC, and I expect HSN vendors to be on HSN, and QVC vendors to be on QVC.
    With the recent announcement of Jennifer Stallone’s departure from HSN, I’m tuning OUT.
    I’ve been shopping more and more on Evine, having discovered them when they were ShopNBC. Better variety, better quality, better prices. And I think it’s time to take HSN and QVC off my remote. They should be separate, not together. And this is why the numbers are going down. Mike George is a greedy idiot…a dangerous combination to be.

  3. Marilyn Says:

    i always shop at QVC. I do not buy from a lot of vendors, Valerie Parr Hill,Kirk’s Folly ,Dell and the Irish hosts and a few home products.
    Marilyn

  4. Susan Says:

    I wish QVC(Qurate) would be as creative in their programming and choosing merchandise as they were with creative math and in their speeches!!! QVC is more and more repetitive in products and programming, in their previous Quarter it was 4% increase in revenue (3% without the new accounting procedure)…so the results are definitely NOT going in the right direction at QVC as more long time customers are getting bored and watching and buying less as you can see from the results

    • Deb Says:

      I agree, Susan. And also with Jan, which is why I never was a big QVC shopper, either. And now, I’ve lost all interest in HSN. They used to have simple, sparse sets, so you could really focus on what they were selling. For the last 14 years (give or take) they’ve been showing things on crowded sets, like QVC always has.
      I don’t want to feel like I’m going into their home, it should feel like they’re coming into mine. I don’t want to see huge pieces of furniture, fireplaces, tables and decor. Remember when Diane Von Fursternberg had a collection on HSN? The sets were beautiful. There were a couple chairs, or a sleek loveseat and chair, for DVF and the host. A simple table and simple wood floors, and a spacious, clutter free area for the models to show off the clothes. All their sets were like that and less costly, too. And so much easier to focus on the products.
      Anyway, there are many reason sales are down, and the powers that be, hello Mike George, should be listening to their shopping viewers to make things better. I, too, Jan, am over on Evine now. And done with HSN/QVC.

  5. Judy Says:

    Deb: I find Evine sets cluttered, too, and too much going on, talk talk talk saying the same things over and over again. Five models, a blabby vendor and a host showing handbags. And their shipping costs are usually higher than HSN/QVC. I remember the days of one host and one model but too much competition now.

    • Jerri Says:

      Judy

      Although Evine is the only one I’d consider buying from, I agree. They all have adopted the cluttered sets look. I agree with Deb, the old days HSN sets were great. I think the cluttered look was a QVC original, and then others copied it. And yes, ALL the hosts yammer on and on and on. And you’re right- one model is enough.
      I still watch occasionally, but it isn’t the same. I was actually a pretty good HSN customer back in the day. Time Marches on, and usually takes with it things we like.

  6. Charles Snitchler Says:

    HSN signed a new carriage deal with DirecTV in August and added the HD channel,which is available on two channels,240 and now 70-1,next to QVC on 70.

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