QVC Posts 3 Percent Revenue Gain In First Quarter, Takes $24 Million Hit In Japan From Quake

QVC posted good first-quarter results, with its revenue rising 3 percent to $1.2 billion, the home shopping network’s parent Liberty Media reported Friday. But the company took a hit in its Japanese network because of the earthquake and tsunami.

In the United States, sales of electronics, beauty and accessories increased while jewelry sales declined.

The average selling price for QVC items in the first quarter increased 7 percent from $51.16 to $54.83, while total units sold decreased 3 percent to 24 million. Returns as a percent of gross product revenue decreased from 18.6 percent to 18.2 percent for the quarter.

QVC.com sales as a percentage of U.S. sales grew from 32 percent in the the year-ago period to 36 percent in the first quarter.

Adjusted OIBDA was relatively flat, negatively impacted by $10 million for the quarter due to the change in terms of QVC’s arrangement with GE Money Bank for its QCard that was effective in August 2010 as previously disclosed.

Excluding the negative impact of this arrangement, U.S. adjusted OIBDA increased 3 percent for the first quarter. The U.S. adjusted OIBDA margin decreased 77 basis points to 21.8 percent for the quarter primarily due to the previously disclosed change in our QCard arrangement and a decrease in initial margins due to growth in electronics.

QVC’s consolidated revenue, which includes its international channels, increased 4 percent in the first quarter to $1.8 billion and adjusted OIBDA decreased less than 1 percent to $363 million.

Here is QVC president and CEO Mike George’s canned statement:

QVC drove solid revenue growth of 4 percent against a challenging prior year comparison. While our consolidated adjusted OIBDA declined slightly from the prior year, this was driven by three extraordinary events: our Italy start-up, the change in our QCard program with GE Money Bank and the impact of the tragedies in Japan.

In the U.S., our 3 percent revenue growth in the first quarter contributed to a 14 percent two-year growth rate, placing us among the faster-growing large retailers in the U.S.

Exceptional revenue growth from new customers and eCommerce, inclusive of mobile, in the U.S., Germany and the UK, are the leading factors in this quarter’s performance. We are committed to creating highly immersive shopping experiences with differentiated products, engaging personalities, high levels of community involvement and simultaneous engagement over multiple platforms – an experience that cannot be replicated by either store based or Internet retailers.

A perfect example of this was March’s Red Carpet event celebrating the Oscars, where we engaged our customer over multiple platforms through the creation of behind the scenes video blogs, contests on Facebook and QVC.com and live streaming tweets.”

The March 11 earthquake and related disasters in Japan put QVC Japan off-the-air for 12 days. The distribution center suffered moderate damage. QVC maintains insurance coverage for property damage and certain business interruption circumstances, subject to roughly $12 million deductible.

QVC has not yet determined the complete financial impact of the property damage, the impact to its future operations or the value, if any, of a related insurance claim. Due to the nature of the events that caused QVC Japan to suspend its operations for a time in March, QVC estimates that about $24 million in revenue was lost based on prior-year revenue during the same period.

Since QVC Japan has resumed its broadcast, sales have been running about 10 percent below prior year sales, due to the disruption in the country.

“We cannot determine at this time when QVC Japan will return to sales levels we were experiencing before the earthquake and related disasters in Japan,” QVC said. “Additionally, management enacted a temporary employee pay policy to continue to pay employees during the off-air period, effectively causing QVC Japan’s variable labor costs to be fixed for a period of time. These events described above negatively impacted QVC Japan’s and QVC’s consolidated adjusted OIBDA margin.”

Despite the Japan tragedy, QVC’s international revenue increased 7 percent in the first quarter to $643 million including the impact of unfavorable exchange rates in Germany and Italy and favorable exchange rates in the UK and Japan. International adjusted OIBDA decreased 2% to $103 million for the quarter.

QVC Japan’s revenue and adjusted OIBDA decreased 9 percent and 19 percent, respectively, in local currency for the quarter due to the suspension of operations related to the earthquake and related disasters. In addition, the results were impacted by QVC’s decision to pay all employees during the off-air period and the negative leverage impact of QVC’s fixed fee broadcasting distribution arrangements. QVC Japan also contributed close to $2 million to local charitable restoration efforts.

Comcast, Past Owner Of QVC, Now Owns 17 Percent Of ShopNBC

Comcast, the Philadelphia cable cabal, is back in the home shopping business.

Comcast, which once owned QVC, now holds a roughly 17 percent stake in ShopNBC, as a result of its acquisition of NBC Universal, according to a filing the media giant made Monday with the Securities and Exchange Conmmission.

ValueVision Media, ShopNBC’s corporate name, had 37.7 million shares outstanding as of Jan. 5. NBCU, now part of Comcast, owns 6.4 million, or 17 percent, of those shares. Comcast/NBCU will be getting an additional 1 million shares in May as part of a licensing agreement that permits ShopNBC to continue using “NBC” in its name.

And 10 percent of ShopNBC’s common stock is owned by management.

QVC, once of Comcast CEO Brian Robert’s favorite assets, is now owned by cable cowboy John Malone’s Liberty Media.

QVC Parent Liberty Media To Release Fourth-Quarter Earnings Feb. 28

Liberty Media Corp., QVC’s parent, will release its fourth-quarter earnings Feb. 28 at noon, the company said Monday.

Liberty Media president and CEO Greg Maffei will host the call. He will discuss the company’s financial performance and outlook and may discuss the previously announced split-off of the Liberty Capital and Liberty Starz tracking stock groups.

Replays of the conference call can be accessed through 8 p.m. on March 7 by dialing (888) 203-1112 or (719) 457-0820 plus the passcode 7704326#.

In addition, the fourth quarter earnings conference call will be broadcast live via the Internet. All interested participants should visit the Liberty Media website at http://www.libertymedia.com/events to register for the webcast.

Dig These QVC Parent Liberty Media Dentures, Whoops We Mean Debentures

For those who think that our home-shopping coverage is frivolous, here’s some real financial news. But you have to be a CFO to figure it out.

QVC’s parent, cable cowboy John Malone’s Liberty Media, Tuesday announced a semi-annual payment to the holders of its 3.5 percent senior exchangeable debentures due in 2031. The amount of the payment is $17.50 per $1,000 of original principal amount of the debentures.

This semi-annual payment will result in the further reduction of the adjusted principal amount of the debentures. As previously announced, the principal amount of the debentures was reduced in the amount of $162.616 per debenture, resulting in an adjusted principal amount equal to $837.384 per debenture.

This adjustment resulted from an extraordinary distribution of cash that was paid to bondholders on January 10, 2007 in accordance with the indenture governing the debentures.

This extraordinary distribution arose from Freescale Semiconductor’s merger with an entity controlled by a consortium of private equity firms in exchange for cash.

At that time, Liberty announced that, in accordance with the indenture, the adjusted principal amount of the debentures would be further reduced on each successive semi-annual interest payment date to the extent necessary to cause the semi-annual payment on that date to represent the payment by Liberty, in arrears, of an annualized yield of 3.5 percent of the adjusted principal amount of the debentures.

The adjustments described above will not affect the amount of the semi-annual payments received by holders of the debentures, which will continue to be a rate equal to 3.5 per cent per annum of the original principal amount of the debentures.

The semi-annual interest payment and additional distribution are expected to be made on Jan. 18, 2011 to holders of record of the debentures Jan. 1, 2011.

QVC Parent Liberty Media To Present At The 2011 Citi Global Conference

Liberty Media Corp. president and CEO at Greg Maffei will be presenting at the 2011 Citi Global Entertainment, Media and Telecommunications Conference next Wednesday at 3:35 p.m. Mountain Standard Time at The Arizona Biltmore in Phoenix,the company said Wednesday.

Why should you care? Cable honcho John Malone’s Liberty Media owns QVC, that’s why.

During his presentation, Maffei may make observations regarding the company's financial performance and outlook and may discuss the previously announced split-off of the Liberty Capital and Liberty Starz tracking stock groups.

The presentation will be broadcast live via the Internet. All interested persons should visit the Liberty Media site at http://www.libertymedia.com/events to register for the webcast. An archive of the webcast will also be available on this website for 30 days.

QVC Parent Liberty Media Will Present At Deutsche Bank Conference

QVC’s parent, Liberty Media Corp., will be at the Deutsche Bank 2010 Media and Telecom Conference, presenting next Wednesday at 8:00 a.m., the company announced Wednesday.

Liberty Media president and CEO Greg Maffei may make observations regarding the company’s financial performance and outlook and may discuss the previously announced split-off of the Liberty Capital and Liberty Starz tracking stock groups.

The confab is at The Breakers Hotel in Palm Beach, Fla.

The presentation will be broadcast live via the Internet. All interested persons should visit the Liberty Media Corporation website at http://www.libertymedia.com/events to register for the webcast. An archive of the webcast will also be available on this website for 30 days.

Home Shopping Network QVC’s Revenue Increased 7 Percent, To $1.2 Billion, In Third Quarter

QVC’s domestic revenue rose 7 percent in the third quarter, to $1.2 billion, as its product mix continued to show steady growth in accessories, apparel and home and a decline in jewelry sales, the home shopping network’s parent reported Friday.

“We continue to leverage our programming assets through the launch of second channels in both Germany and the UK and the iPad app in the US,” QVC president and CEO Mike George said in a prepared statement. “Our pop-up store and studio in Rockefeller Center for Fashion’s Night Out generated positive press attention but more importantly engaged our customers through our live broadcasts, Facebook, Twitter, YouTube and QVC.com.”

Earlier in the week HSN posted a 6 percent gain in third-quarter sales.

QVC’s domestic adjusted OIBDA increased 8 percent to $261 million compared to the third quarter 2009, according to its parent, John Malone’s Liberty Media Corp. The average selling price increased 2 percent from $47.52 to $48.30 while total units sold increased 5 percent to 26.2 million.

Returns as a percent of gross product revenue decreased from 19.3 percent to 18.8 percent. QVC.com sales as a percentage of omestic sales grew from 28 percent in the third quarter last year to 31 percent this year.

The domestic adjusted OIBDA margin increased 22 basis points to 22.4 percent for the quarter primarily due to a lower inventory obsolescence provision as well as more efficient customer service operations partially offset by increased fixed costs primarily due to the non-recurrence of favorable franchise and sales tax audit settlements recorded in the prior-year period.

Overall, the domestic adjusted OIBDA results were negatively impacted by $5 million due to QVC’s new credit card agreement with GE Money Bank, which was effective Aug. 2. QVC entered into a new agreement with GE Money Bank, who provides revolving credit directly to QVC customers solely for the purchase of merchandise from QVC. Under the new agreement QVC receives a portion of the economics from the credit card program according to percentages that vary with the performance of the portfolio.

QVC also recovered its noninterest bearing cash deposit maintained in connection with the prior arrangement in the amount of $501 million. During the third quarter, QVC entered into a new bank credit agreement which provides for a $2 billion revolving credit facility and reduced bank borrowings by $745 million, lowering QVC’s leverage ratio below 2:1.

QVC’s consolidated revenue, which includes domestic and international sales, increased 7 percent in the third quarter to $1.8 billion; adjusted OIBDA increased 8 percent to $369 million and operating income increased 13 percent to $235 million.

“Every QVC market generated strong revenue growth in local currency, increased adjusted OIBDA margins and attracted more new customers in the third quarter,” George said. “Our consolidated adjusted OIBDA margin, excluding our start-up operations related to Italy and the negative impact of our new QCard arrangement, improved 105 basis points from a strong adjusted OIBDA margin last year. QVC expanded its global footprint through the successful launch of QVC Italy on October 1st.”

QVC’s international revenue increased 6 percent in the third quarter to $604 million from $569 million including the impact of unfavorable exchange rates in the United Kingdom and Germany and favorable exchange rates in Japan.

International adjusted OIBDA increased 9 percetn to $108 million and adjusted OIBDA margin increased 48 basis points for the quarter. The increase in the adjusted OIBDA margin was primarily due to the increased gross product margin in Germany, partially offset by $9 million of costs related to the Oct. 1 launch of QVC Italy service.

Excluding the effect of exchange rates, QVC’s international revenue and adjusted OIBDA both grew 8 percent. International djusted OIBDA increased 17 percent, excluding the effect of exchange rates and start up costs related to QVC Italy.

QVC Parent Liberty Media To Present At Goldman Sachs Communacopia XIX Conference

Liberty Media Corp., QVC’s parent, will do a presentation next Thursday at the Goldman Sachs Communacopia XIX Conference at 9:40 a.m. at the Goldman Sachs Conference Center in New York City.

Liberty Media CEO Greg Maffei may make observations regarding the company’s financial performance and outlook and may discuss the previously announced split-off of the Liberty Capital and Liberty Starz tracking stock groups.

The presentation will be broadcast live via the Internet. All interested persons should visit the Liberty Media website at http://www.libertymedia.com/events to register for the webcast. An archive of the webcast will also be available on this website for 30 days

It’s A Tough Job, But Someone From QVC Parent Liberty Media Has To Go To Newport Beach

Bring your surfboard to Newport, John

Liberty Media Corp. chairman and one-time cable cowboy John Malone will be presenting at the 2010 Bank of America Merrill Lynch Media, Communications & Entertainment Conference next Wednesday at noon at the Island Hotel Newport Beach in California, the company said Wednesday.

During his presentation, Malone may make observations regarding the company’s financial performance and outlook and may discuss the previously announced split-off of the Liberty Capital and Liberty Starz tracking stock groups.

The presentation will be broadcast live via the Internet. All interested persons should visit the Liberty Media website at http://www.libertymedia.com/events to register for the webcast. An archive of the webcast will also be available on this website for 30 days

Liberty Media Announces Refinancing Of QVC Bank Credit Facilities

It’s not sexy, but it’s all we’ve got today.

QVC and its parent, Liberty Media Corp., Thursday announced the refinancing of the home shopping network’s bank credit facilities with a new revolving credit facility.

The revolver provides a line of credit of up to $2 billion and replaces QVC’s existing credit facilities, set to expire between 2011 and March 2014. Of the $2 billion of capacity available on the revolver, QVC drew the USD equivalent of $1.83 billion at closing.

“We are pleased with the successful refinance of QVC’s bank debt,” Liberty Media CEO Greg Maffei said in a canned statemment. “The new facilities enhance QVC’s credit profile and further strengthen its balance sheet by providing additional financial flexibility and liquidity.”

The interest rate on the revolver is at a lower rate than the weighted average rate of the previous bank credit facilities and the revolver extends maturities to September 2015.

QVC’s maximum leverage ratio covenant under the Revolver is 3.5x (as compared to 3.75x currently), through September 2012 and 3.25x thereafter. The revolver is secured by the stock of QVC and certain of its subsidiaries.