Combined QVC-HSN 1Q Sales Drop 4%, to $1.9 Billion

QVC’s and HSN’s combined revenue slid 4% in the first quarter versus last year, to $1.9 billion, in a performance that even Mike George couldn’t put a good spin on.

The two domestic home shopping networks, merged in a unit named QxH by their parent Qurate Retail Inc., for the first time reported their sales as one entity.

“Our first quarter performance was disappointing amidst a changing retail and media landscape,” George, president and CEO of Qurate Retail, said in a canned statement.

“Our recent results have been more variable as we navigate the evolution of our business model and the integration of HSN, fine-tune our investments, and strike the right balance between sensible revenue growth, margin expansion, new customer acquisition and our strategic initiatives,” he said.

“We are taking a disciplined approach, investing in initiatives to drive high-quality customer growth and engagement, broaden and deliver our assortments, particularly across new digital platforms, and optimize our fulfillment network. Our customer fundamentals remain strong, including customer count, retention and purchase frequency. We are confident we are taking the right actions to deliver attractive operating margins and free cash flow for the long-term.”

So what happened?

QxH experienced sales declines in home, jewelry and beauty, which were partially offset by gains in electronics with modest growth in fashion (apparel and accessories), according to the first-quarter press release.

QxH enjoyed strong sales growth in off-air products; however, these gains were not sufficient to offset lower sales of on-air items.

“Operating income and adjusted OIBDA margin) contraction was primarily due to higher inventory management costs, fulfillment and marketing expenses, which were partially offset by lower TV distribution commissions and higher product margins,” the press release said. “Lower TV distribution commissions at QxH are in part due to the accounting treatment for certain renewed HSN carriage agreements (described below). Operating income also included higher amortization expense related to the amortization of HSN carriage agreements.”

Starting in the third quarter last year, HSN began renewing TV carriage agreements with several distribution partners, which provided multiyear upfront payments that are amortized over the life of the agreements, versus its previous convention of expensing quarterly payments as incurred, according to the press release.

This accounting change has a positive impact on QxH’s adjusted OIBDA with a corresponding increase in QxH’s amortization expense, which is neutral to operating income each period and cash neutral over the life of the agreements.
Roger that, if you have an accounting degree.

If you want to hear the juicy details, Qurate Retai President and CEO Mike George and Executive Chairman Greg Maffei, will discuss the earnings on a conference call which will begin at 8:30 a.m. (E.D.T.) on this Friday, May 10. The call can be accessed by dialing (800) 458-4121 or (323) 794-2093, passcode 3078914, at least 10 minutes prior to the start time. The call will also be broadcast live across the Internet and archived on our website.

To access the webcast go to Links to this press release and replays of the call will also be available on Qurate Retail’s website.

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8 Responses to “Combined QVC-HSN 1Q Sales Drop 4%, to $1.9 Billion”

  1. Angela Bedore Says:

    I said this 2 years ago: If they don’t figure out how to ship their merchandise in a quicker manner than they do now, they will go out of business! People on some of the FB groups told me I didn’t know what I was talking about. I repeat: If they don’t figure out how to ship their merchandise in a quicker manner than they do now, they will go out of business!

  2. Fran Says:

    Gee is this too hard too see, this ship is sinking and it ain’t coming back. Captain Mikey has destroyed the company, hasn’t innovated anything beyond changing a few graphics yet he will walk off with all the bootey at the end. What’s left ruined employees lives that should have formed a union years ago and kicked this sorry ass loser out of the company years ago. Oh well it’s the story of America the rich plunder on the poor and the poor let it happen. Well played Mike, well played.

  3. Carolyn Simpson Says:

    i think there is a lot of competition out there.Amazon is their big competition now

  4. Carrie W Says:

    Ha! Angela – I totally get what you’re saying. For the amount of money that is spent on shipping, I should get products at my day rather quickly but that doesn’t happen a lot of the time… I find myself shopping less and less on ALL channels and I don’t feel like I’m missing out on anything!

  5. Carrie W Says:

    What I meant to say above “I should get products at my home rather quickly but that doesn’t happen a lot of the time”.

  6. Margaret Duvak Says:

    .Need faster shipping and offers for reduced shipping charges to loyal customers.

  7. Rhonda Owens Says:

    I rarely shop there anymore due to slow shipping and cost to ship. They are missing lots of sales I believe due to poor delivery service.

  8. sara Says:

    I hope QVC loses big time as they are crooks! Over the last few years we always got my mom gift cards. I had phone them one day and said she had a few and she was getting confused when they asked her which cards she wanted to use. So I got on the phone and the sneaky azz rep said, let me just put them into an account for her to make it easier.. She took all the info need,, Sadly my mom passed last week and I phone them to ask what I had to do to close her account? After 20 different questions, they tell me her account had been closed! Well, we never authorized this and where in the world did all her money go?? So please don’t ever purchase their gift cards, I hope whoever took all that info that day, and the funds had a wonderful time. Stealing from and old woman, shameful….

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