Qurate Replaces HSN’s President, Snippets From The 4Q Earnings Call

Dang, we buried the lede on Qurate Retail’s fourth-quarter results: HSN has a new president, Stacy Bowe, replacing Rob Muller.

The CEO of Qurate, the parent of both HSN and QV, announced the news last week that Bowe, who has been serving as the chief merchant at QVC U.S. since joining the company in 2022, is hopping over to lead HSN.

David Rawlinson described Bowe as “one of the driving forces behind the improvement at QVC, including rapidly recalibrating our buying program, improving our inventory levels and bringing freshness and newness to the assortment.”

He said that prior to QVC, Bowe was at G-III Apparel Group and Macy’s.

“I would like to thank Rob Muller who has distinguished 23 years of extraordinary contributions to the company including serving for the last two years as president of HSN,” Rawlinson said.

Thanks for nothin’, we’re sure Muller was thinking.

“In summary, our business reached an inflection point in the third quarter of 2023,” Rawlinson said. “We have made substantial progress in stabilizing revenue and growing cash flow and profitability. We look forward to continuing to drive improved results in 2024 while preparing the business for its future of multi-platform growth.”

Welcome to the hot seat, Stacy!

For the die-hard fans, or masochists, among you, here are snippers from the earnings call. Want to know how much Barefoot Dreams sold on Cyber Monday? It’s here.

And BTW, here is the entire transcript for the call.

https://uk.finance.yahoo.com/news/qurate-retail-inc-nasdaq-qrtea-154203339.html

Snippets:

In March, self-taught cake artist and social media influencer, Yolanda Gampp who has 4.5 million YouTube subscribers and 2.8 million Instagram followers will introduce a new bakeware line. Many other celebrities will join us this year and we look forward to sharing more on future calls. And finally, we continue to provide value to customers through compelling product values, exposure to their favorite host and celebrities, and importantly our engaging programming. Our programming is enhanced by destination and mass events, especially around the holiday season. We hosted a 49-hour nonstop holiday party across channels and platforms with fun holiday shopping and special pop-in personalities. 680,000 customers shop the weekend, including more than 40,000 new customers.

The event generated 81 million views across social platforms. It features several live streams, including holiday guides to get together with Jimmy Garth, holiday head-to-toe style with experts, high chocolate cocktails and holiday recipes in 30 minutes with Fabio Pavani. We have also appeared on other powerful platforms to fuel engagement. QVC host presented gift ideas on popular talk shows including The Drew Barrymore Show and the Tamron Hall Show to promote our Holiday Giftathon. We remain excited about the value proposition that makes QVC and HSN unique and we’ll continue leveraging this model as we expand across platforms.

We are pleased that QxH grew market share as top line performance largely outpaced discretionary retail for the second consecutive quarter. Throughout the year, we have maintained focus on obtaining new higher-quality inventory that would excite our customers and provide them with value. We reinvigorated our programming and honed the special relationship our customers have with Host, which led to continued high engagement, growing total linear minutes viewed 15% compared to the prior year.

Consistent with historical averages, QxH existing customers made up half of total customer count that generated 90% of 2023 sales. They purchased 31 items in 2023 and spent $1,600 on average. The strength of engagement is even more evident, and our best customers in QVC US, who are defined as purchasing at least 20 times a year. They were 17% of the count which generated 76% of the sales in 2023. They purchased, on average, 76 items in the year and increased their average spend 9% year-on-year to $3,900.

Rather than growing the file with expensive-to-obtain and hard-to-retain transient customers for now we are concentrating on stabilizing our customer file, retaining our best customers and returning to new customer growth year-over-year that will contribute to customer file growth over time. We believe this is the prudent and profitable path and gives us the stability we need to continue to deliver on Project Athens in 2024. We also believe it sets us up nicely for customer file growth in 2025. Now I would like to touch again while Qurate’s business model is differentiated across retail and the value we bring to customers, vendors and celebrities. Starting with vendors. Our platform continues to be very attractive to both new and existing vendors.

We move meaningful volume and provide a scaled platform to connect with customers on a personal level and share product stories. We had impressive sell-through rates in Q4 across a range of price points and in particular on higher end products where we were able to demonstrate compelling value for unique products. For example at QVC, we offered Fire Light lab-grown diamonds from two carats to nine carats ranging in price from $1,300 to $5,000. The entire collection was well received selling out across sizes and products including a sold-out non-carat tennis bracelet. We also sold $5.7 million of Ninja Woodfire of electric smoker and outdoor grill moving 19,000 units priced at $300 a piece. At HSN, we sold out of a day [indiscernible] with a price point in excess of $1,000 over Black Friday weekend.

In Home Décor, we sold $6 million of Barefoot Dreams luxury throw on Cyber Monday. In Beauty, we sold 40,000 units of an Elemis cream in one day and 114,000 units of [indiscernible] velocity gift set in two days. The scale of this platform is very difficult to replicate and attractive to existing and new vendors. We debut a new brand in tights, Sheertex selling $2.4 million in just a couple of hours. We introduced a new leather handbag and luggage brand Hawkins that sold $340,000 in 11 minutes.

QVC and HSN have always been a home for celebrities engaging personalities and entrepreneurs. We welcome many familiar and new faces in the fourth quarter with a great pipeline planned for 2024. At QVC Lawrence Zarian launched BEAUTIFUL, an exclusive fashion collection of dresses, outwear and accessories.

In connection with the launch we conducted a satellite media tour with a nationally syndicated segment on Extra. At HSN, we teamed up with legendary singer Dolly Parton for the presale of our debut rock album Rockstar. Iconic Singer Chaka Khan launched her own perfume. Singer Katherine McPhee debut her jewelry line Radiance by Absolute. Erin Andrews launched her Sportswear line. Wolfgang Puck celebrated his 25th year with HSN with a new cook wear line. During his time with HSN, he has generated $600 million in sales.

Numerous other celebrities have teamed up with us recently and our 2024 celebrities lineup is fantastic. In January, Scarlett Johansson debuted a new beauty line called the Outset. Actress Christina Ricci came on air as the new brand ambassador for Lancer Skincare.

Believe QVC’s Competing Against TikTok? We Have A Bridge We Can Sell You

One of our favorite TV shows is quirky “Resident Alien” on SyFy, where the main character’s favorite phrase is “This is some bullshit.”

And that’s what we said after just finishing reading The Philadelphia Inquirer’s recent story on Qurate Retail, parent of QVC and HSN.

Every good story has a so-called “angle,” a hook that explains why the article is being written now. Here’s the “hede” and “deck” — as we’d say in our business — on the Qurate (stock trading for pennies) story and QVC’s financial woes:

QVC helped pioneer shopping from home. Here’s how the company is changing — and competing against TikTok.
Celebrity hosts have peddled clothes, electronics, home goods, and jewelry since the 1980s. Now they’re up against TikTok.

WTF? TikTok?

How many of us QVC shoppers think it’s main competition is TikTok? TikTok is for a younger demo, like our 24-year-old niece. She would not be caught dead watching QVC, let alone buying any clothing or anything else from it.

Amazon, briefly mentioned in the Inquirer story, is QVC’s problem. So is Target and Walmart, and T.J. Maxx and Marshalls. Any Maxinista knows you can pick up Patricia Nash and Dooney & Burke purses at fraction of what QVC charges at that off-price retailer. Same for many of the shoe brands that the home shopping network hawks. And the same for many other products.

QVC shipping charges are ridiculous, while others ship free. That’s not a problem?

Qurate CEO, David L. Rawlinson II, is one cool cucumber when he downplays QVC’s problems. He must be a great poker player. He sure knows how to shovel the sh-t.

The Inquirer story is behind a paywall, but we were able to get past it. We hope you can, too.

https://www.inquirer.com/business/qurate-qvc-rawlinson-malone-maffei-20231124.html

Here’s a graf from the article.

With traditional TV services like Comcast Xfinity losing customers, Qurate has lately launched QVC and its smaller, Florida-based HSN channel through services such as Roku, Amazon Free, and Vizio Smart TV, and are also available through Qurate’s new livestream app Sune. The company says that more than two-thirds of its revenues now comes from computer and smartphone shoppers.

Folks, hate to tell you but just because you’re on Roku doesn’t mean your sales will spike. You have been available to the world online for years, and your sales are still slipping!

And here’s another gem from the story.

Today QVC, the West Chester-based core of Qurate Retail Inc., which includes clothing brands and small U.S., Western European and Japanese shopping channels, is struggling to cover its costs. It’s competing in a new world where it can be surprisingly cheap for energetic individuals working from home to reach millions of consumers through fast, slick product posts on TikTok (which QVC also uses) and other smartphone-based media.

Yep, TikTok — not the savvy retailers we mentioned — is QVC’s big competition and problem.

Not.

But after all, Rawlinson isn’t exactly a QVC expert. He described host David Venable as a celebrity chef on a recent earnings call.

QVC, HSN See 3% Revenue Dip In Third Quarter

Qurate Retail, owner of QVC and HSN, reported its third-quarter earnings last week, and revenue was down for the two home shopping networks.

It decreased 3%, to $1.62 billion from $1.66 billion in the same year-ago period, according to Qurate, which doesn’t break out individual figures for the two channels.

“QxH [QVC and HSN] revenue declined primarily due to a 3% decrease in units shipped, which was partially offset by a 1% increase in average selling price,” Qurate said. “QxH experienced a 6% increase in average spend per customer. QxH reported declines in electronics, apparel and beauty, with growth in accessories, jewelry and home.”

Click to access QRTE+Q3-23+Earnings+Slides_vF.pdf

The parent company also said, “Product margins increased primarily due to mix shift to higher-margin products and fewer clearance items as a result of improved inventory health and initiatives to increase initial margin. Inventory obsolescence declined due to an improved mix of inventory. These gains were partially offset by higher administrative expenses from certain costs related to Project Athens, including outside services, and to a lesser extent from increased commissions.”

Quarate’s stock has tanked, but the company’s head honcho made it sound like things were just great.

“We are delivering on our Project Athens transformation as planned and have made tangible progress toward building a materially stronger profit and cash flow profile,” said David Rawlinson, president and CEO of Qurate Retail, said in a statement . “We produced strong Adjusted OIBDA growth of over 50% as reported with increases at each of our businesses, sustained gross margin gains in our core video commerce businesses and grew free cash flow, all while moderating the decline in revenue compared to the first half of the year.

“While we have meaningful work still ahead of us, our third quarter results strengthen our confidence in our ability to navigate the current challenged environment and to meet our Project Athens objectives. We reiterate our expectations for a double-digit CAGR on Adjusted OIBDA and free cash flow with stable revenues through 2024 compared to 2022.”

QVC, HSN Second-Quarter Revenue Drops 8%, Parent Company Dumps Zulily

We were swamped at work last week and away in Atlantic City this weekend, so we didn’t get a chance to check out the second-quarter results for Qurate Retail, the owner of QVC and HSN.

Not a pretty picture. For QxH, the two home shopping networks combined, revenue decreased 8%, to $1.62 billion.

This is all the detail we got:

QxH revenue declined primarily due to a 12% decrease in units shipped, reflecting fewer customers and weakened consumer sentiment, as well as lower shipping and handling revenue. This was partially offset by a 5% increase in average selling price driven by an elevated product assortment and price increases.

QxH experienced a 6% increase in average spend per customer. QxH reported declines in home, electronics, accessories and apparel, partially offset by growth in beauty.

Operating income and adjusted OIBDA margin(4) decreased primarily due to higher administrative expenses from certain costs related to Project Athens, higher benefits expense and sales deleverage and, to a lesser extent, from increased commissions due to expanded distribution.

These pressures were partially offset by higher product margins, favorable fulfillment (warehouse and freight), lower obsolescence expense and lower bad debt expense. Product margins increased mainly due to higher initial margins, partially offset by unfavorable returns and lower shipping and handling revenue.

Fulfillment favorability was driven by less detention and demurrage costs and reduced volume, partially offset by higher freight and labor rates and fulfillment center rent expense due to sale leaseback transactions in the prior year.

In the second quarter of 2023, QxH received a final payment of $225 million of insurance proceeds related to the December 2021 fire at Rocky Mount, primarily business interruption proceeds, for an aggregate of $660 million proceeds received.

Qurate also reported that in the second quarter it incurred a $15 million write-down related to inventory at Rocky Mount included in cost of goods sold, and a $240 million gain on sale related to the modification of the lease of its Ontario, CA, distribution center

There was also another piece of news from the 2Q earnings. We were shocked to see that Qurate has divested Zulily, which it acquired only a few years ago. It was sold to Los Angeles-based Regent, a global investment firm that owns and operates several international consumer brands including Club Monaco, DIM Paris, La Senza, Escada and DiamondBack.

“Zulily serves an important role for moms by offering a fun shopping experience, with brand names and special finds at incredible prices. We are confident Regent is the right partner for Zulily to continue serving its customers, while benefiting from Regent’s depth of operational and strategic expertise in the retail and apparel sectors,” David Rawlinson, President and CEO of Qurate Retail, said of the sale several weeks ago.

“We are in the midst of a turnaround at Qurate Retail,” he said. “This divestiture will allow our management team to better focus on our core video commerce assets, QVC and HSN, and the Cornerstone Brands, while preserving liquidity to further strengthen our balance sheet. I would like to thank Terry Boyle and the entire Zulily team for their continued hard work and commitment amidst a challenging retail environment.”

Here’s what that top honcho had to say about the second-quarter earnings:

“In this quarter, we made meaningful progress on Project Athens, our multi-year plan to transform the company, expanding gross margins in our video commerce businesses for the first time in over 18 months and materially improving our cash flow,” Rawlinson said.

“While our revenue was down, our topline results were in line with the discretionary retail industry, which was impacted by softer consumer sentiment and more promotional intensity particularly in the home categories. During the quarter, we also divested Zulily, which simplified our portfolio and improved our go forward liquidity. We finalized our insurance claims for the fire at our former Rocky Mount, N.C., fulfillment center and received $225 million of insurance proceeds.

“We continue our focus on cash flow, costs and margin growth in the near term and anticipate improved profitability in the second half of 2023. We believe we are on track to achieve our Project Athens objectives through 2024.”

Qurate’s stock price has tanked, by the way. It’s trading at $1, down from a 52-week high of $4.23.

Updated: QVC Veteran Hosts Gracie And Hughes Are Out, Along With HSN’s Two Shannons

We learned the names of some of the 400 QVC and HSN employees who were swept out in the layoff massacre on Tuesday, and they are some very familiar faces.

QVC hosts Carolyn Gracie and Dan Hughes were pink-slipped, and both HSN hosts Shannon Smith and Shannon Fox met the same fate at their network. These were veterans of their jobs, and their fans didn’t take the news too well. Gracie was at QVC for nearly two decades. Hughes was at QVC for 33 years. Smith was at HSN for nearly 30 years. Fox was there for nine years. We just learned about her and updated this blog.

All three ex-hosts posted the news of their departures on Facebook, very graciously. We’ve been laid off, and could never muster the ability to be gracious about it.

Hughes was pretty honest.

“They say all good things come to an end … It’s okay. It stings a bit, but I fully understand the business and am nothing less than thankful for our customers and those who I have worked with for many years,” he wrote.

His sidekick Gracie expressed her thoughts, as well.

“I have some bittersweet news today,” she wrote. “After 19 years, I am no longer working at QVC. I have loved every minute of my time there, especially the opportunity to get to know all of YOU.”

Shannon wrote, “It is with thanks and gratitude that I am sharing the next chapter in my life … you are truly family to me.”

And Fox posted, “Let’s finds out what’s behind Door #2 … Today, I close the door on my 9 year adventure as a host at HSN.”

Needless to say, their fans were livid and threatened to boycott QVC and HSN. One woman said she was in tears.

We get it. We know that QVC and HSN fans get emotionally attached to hosts. We do. Of course, there are also a few that we wish would have been canned instead of these three.

So why did the owner of QVC and HSN, Qurate Retail, swing the ax? On Wednesday the company reported its fourth-quarter earnings, and it was not pretty. Revenue for the two home shopping networks combined dropped 11% in the quarter and for the full year, to $2.26 billion and $7.36 billion, respectively.

https://www.qurateretail.com/investors/news-events/press-releases/detail/599/qurate-retail-inc-reports-fourth-quarter-and-year-end

Here’s what Qurate said in its press release regarding QxH, which is QVC and HSN, and which posted a $1.82 billion operating loss last year (Can we be reading that right?):

QxH revenue declined in the fourth quarter and full year, primarily reflecting an impact on demand of supply chain constraints in the first half of 2022 and inventory and receipt management in the second half of 2022, as well as downstream impacts from the December 2021 fire at its Rocky Mount, NC fulfillment center, weakened consumer sentiment due to macro-economic factors and a decrease in shipping and handling revenue in both periods.

Units shipped decreased 9% in both periods. Average selling price declined 3% in the fourth quarter and 2% in the full year, reflecting inventory reduction actions in the second half of 2022 and a mix shift away from higher price point home and electronic categories in the first half of 2022. QxH reported declines in all categories for the quarter and full year.

During 2022, QVC, Inc. (“QVC”) took actions to reduce inventory and planned a workforce reduction that takes effect in 2023. QVC recorded restructuring charges of $24 million at its QxH operating segment related to severance, which is included in Restructuring and fire related costs, net of (recoveries) in the consolidated statement of operations during the year ended December 31, 2022.

Operating loss for the full year 2022 was primarily driven by a $2.7 billion non-cash impairment charge related to QxH goodwill and the HSN trade name, partially offset by $520 million of gains related to the sale and leaseback transactions. Operating income in the fourth quarter of 2022 was impacted by $24 million of costs related to workforce reductions, described above. Adjusted OIBDA margin(3) decreased in the fourth quarter and full year primarily due to lower product margins reflecting inventory reduction and promotions, higher administrative expense, deleverage of fulfillment (freight and warehouse) costs, and higher marketing and commission expenses.

QVC completed sale and leaseback transactions for six US properties in 2022. The annual rent expense impacting Adjusted OIBDA from these transactions was $23 million in 2022 and is expected to average approximately $47 million in future years.

Lots of retailers had a difficult fourth quarter, and it looks like QVC and HSN were not exceptions.

What did the head honcho have to say about all this?

“2022 was a challenging year for the company,” David Rawlinson, Qurate president and CEO, said in a statement. “We faced downstream impacts from the December 2021 fire at our Rocky Mount fulfillment center throughout the year, while also experiencing macro pressure that impacted consumer demand.”

He added, “We have taken action to strengthen the balance sheet, improve execution and aggressively cut costs, including meaningfully reducing excess inventory and undergoing a structural reorganization. These efforts are part of a multi-year strategic plan for financial and operating improvement that will begin to materialize in the coming quarters. Today, we announced Bill Wafford as Chief Financial Officer of Qurate Retail Group and have the management team in place to execute. We believe we are entering 2023 in a healthier position with operating discipline to achieve our financial targets.”

Tell that to the folks who were laid off.

No Easy Pays: QVC Sells West Chester HQ, Studios And Several Warehouses For $443 Million

Our real job is writing about retail real estate for a $1 billion company called CoStar News. And to our surprise, we recently did a story on QVC.

We can’t give you a full link to our story, only those who have subscriptions to CoStar’s database can have access to it. But here’s the deal.

https://www.costar.com/article/1783343573/qvc-sells-headquarters-studio-and-distribution-centers-for-443-million-to-oak-street

QVC sold its QVC Studio Park facility, which includes its global headquarters and studios in Pennsylvania, to a Chicago-based company called Oak Tree for $443 million. The transaction also include QVC warehouses in South Carolina, Virginia and Tennessee.

That doesn’t mean that QVC is moving out. The deal was a so-called sale-leaseback. That means a company sells a building but then agrees to lease it back from the new owner. A number of retailers, including Bed Bath & Beyond and Lane Bryant, have done similar deals.

What’s the point?

Well, it allows the retailers to raise cash. What’s the tradeoff? Now those companies will have to pay rent to the entity they sold their buildings to.

For public companies, and QVC is part of one, this is a way to improve their financials for shareholders during tough financial times.

QVC, HSN Parent Company Warns Of Lousy Fourth-Quarter Results For Home Shopping Networks

Qurate Retail, the owner of QVC and HSN, is warning investors that preliminary financial results for its fourth quarter are not good.

In a press release last week, Qurate said it “experienced lower-than-anticipated demand in the fourth quarter, negatively impacting expected sales.” QxH, the division that includes both home shopping networks, saw its revenue drop an estimated 6.5% to 7.5%.

“Additionally, as previously disclosed, there was a tragic fire at the company’s QVC Rocky Mount fulfillment center in North Carolina on Dec. 18, 2021,” Qurate said.

“Revenue performance at QxH deteriorated throughout the fourth quarter, deviating from initial trends indicated on our third-quarter earnings conference call,” Qurate’s new President and CEO David Rawlinson said in a statement. “We are not pleased with these results and are actively taking steps to improve our long-term performance across business units. We are looking forward to a new leadership approach at QxH and Zulily and the ongoing development of our long-term strategy.”

The company will report its official fourth-quarter earnings on Feb. 25.

“Our hearts go out to our team members and the local community affected by the Rocky Mount fire, and we remain engaged in supporting the team members and residents,” the CEO said. “We are still assessing the impact of the tragic fire in coordination with our insurance carriers.”

Qurate Retail has property and business-interruption insurance coverage, and is still in the process of assessing damage to the warehouse and inventory. It said it is submitting insurance claims to determine the recovery of certain fire-related costs in connection with the Rocky Mount fire.

QVC received an advance of $100 million from its insurance provider related to initial fire-related costs. Following the fire, QVC diverted incoming fulfillment orders to its other fulfillment centers and will continue to leverage its existing fulfillment center footprint in the near-term to mitigate the impact to business operations.