Posts Tagged ‘QXH’

Combined QVC-HSN Sales Slip 1%, to $1.87 Billion, in Second Quarter

August 9, 2019

This is an interesting turn of events: Qurate Retail is no longer breaking out separate financial figures, such as sales, for QVC and HSN. And the nets have a new honcho.

Qurate, parent of the two top home shopping networks, reported its second-quarter earnings Thursday. And it only broke out info for QxH, its goofy name for the umbrella company that runs and oversees the two channels. So we don’t know, at least from the 2Q press release, how QVC did versus HSN, just the combined data for QxH.

So QxH saw its revenue dip 1%, from $1.9 billion to $1.874 billion, in the second quarter compared with the year-ago quarter.

QxH reported sales declines in apparel and jewelry, which were partially offset by gains primarily in accessories and electronics, according to Qurate’s press release.

Operating income margin contracted and adjusted OIBDA margin was flat, reflecting gross margin pressure mainly from higher fulfillment (freight and warehouse) expense, which was partially offset by higher product margins, if you can make any sense of that.

QxH also incurred higher bad debt and marketing expense, according to its parent. These factors were offset by lower TV distribution commissions and customer service expense.

Lower TV distribution commissions were due in part to the accounting treatment for certain renewed HSN carriage agreements, as well as renegotiated rates at HSN and growth in off-air sales. Operating income included higher amortization expense related to HSN carriage agreements.

Beginning in the third quarter last year, HSN began renewing TV carriage agreements with several distributors — meaning cable and satellite companies — which provided multiyear upfront payments that are amortized over the life of the agreements, versus its previous convention of expensing quarterly payments as incurred. 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.

That’s too much accounting mumbo-jumbo for us, but maybe you can make sense of it.

And here’s the exciting statement from Qurate President and CEO Mike George.

“We made good strategic and operational progress, evidenced by the sequential improvement in revenue and adjusted OIBDA margin at QxH and the double-digit, year-over-year adjusted OIBDA growth at QVC International in constant currency,” George said.

“These gains were partially offset by deterioration at Zulily. We are encouraged by the resiliency of our businesses and our ability to generate high levels of adjusted OIBDA and free cash flow in a dynamic and highly competitive environment. We resumed share buybacks, repurchasing nearly 12 million shares at an average price per share of $12.88 following our last earnings call. Going forward, we remain focused on building on the collective strengths of QVC and HSN, realizing synergies and stabilizing Zulily.”

Qurate also said that it had appointed Leslie Ferraro, a former Walt Disney Co. executive, as president, QxH, effective Sept. 16.

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

May 9, 2019

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 http://ir.qurateretail.com/events-and-presentations. Links to this press release and replays of the call will also be available on Qurate Retail’s website.

Integrated QVC-HSN, Dubbed QXH, Means 2,000 Layoffs

October 18, 2018

When QVC’s parent company acquired HSN last year, everyone knew it would mean massive changes and eventually, massive layoffs. Well, that other shoe dropped Wednesday. We’re still not sure where “Miracle Mop” creator Joy Mangano ends up in all of this.

Here is the lengthy press release:

http://ir.qurateretail.com/news-releases/news-release-details/qurate-retail-group-announces-initiatives-deliver-long-term

So no, the QVC and HSN TV networks will not be merged into one. But they will be placed under one business unit, called QXH. Catchy, huh?

The new unit was part of Qurate Retail Group’s announcement about a massive restructuring that calls for integrating not only QVC and HSN’s fulfillment centers but also its buying organizations.

The end result? Some 2,000 people will be out of jobs, about 350 coming mainly from HSN’s HQ in St. Petersburg, Fla., which will remain open, and the rest from three fulfillment centers that Qurate will be closing.

The company also plans to lease space in a new warehouse facility, a honking 1- million-square-foot logistics center in Bethlehem, Penn. There will be 1,200 to 1,500 new jobs there, if you are looking for a silver lining.

Here’s the send-off that Mike George, Qurate president and CEO, gave to workers losing their jobs, including some folks who apparently had worked at the home shopping networks for 25 years.

“Today’s initiatives are the next step in our ongoing review of how to best continue the integration of HSN and QVC,” George said in a statement.

“With a focus on driving digital transformation, these efforts will extend our leadership in social, digital, and video commerce. I want to thank the many dedicated team members who will be impacted by these changes. Their commitment to HSN, QVC, and our customers, in some cases spanning 25 years or more, has been instrumental to our success. Our excitement today over the positive impact of these changes is tempered by the loss of many valued team members.”

The consolidation will result in streamlining that “will ensure an aligned approach to the U.S. market and better leverage the combined scale and resources of the two organizations, while still maintaining the unique identity of each brand and the St. Petersburg, Fla., campus for HSN,” Qurate said in its press release.

“The QXH name reflects the continued importance of the QVC and HSN brands, the multiplying power of bringing these brands together to maximize performance in the US market, and the engaging customer experiences we will offer across our five HSN, QVC, and Beauty iQ networks and digital properties,” George said.

OK, know we get it: QVC times HSN = QXH.

There will no be only one buying team for HSN and QVC, which to us seems it will make it hard to keep distinct identities for each network.

“HSN and QVC US buying organizations are being combined and structured around seven strategic category groups: Apparel, Accessories and Jewelry, Beauty, Kitchen Electronics and Cookware, Home Innovations, Home Style, and Consumer Electronics,” Qurate’s press release said. “Category leaders will be responsible for developing and driving strategies to maximize growth in the US market, across both the QVC and HSN platforms.”

The release goes on, “This integrated buying organization is expected to provide several benefits, including: increased speed to market with the best brands, products, ideas and entrepreneurs; optimized product assortments across QXH’s five US networks and multiple web and social platforms to maximize customer choice; a more aggressive pursuit of white space opportunities; and better alignment with our vendor partners.”

As for merging fulfillment operations, Qurate said it will be far more efficient and mean we customers will get our packages sooner. Right now Qurate operates four HSN and five QVC fulfillment centers, with many of them dedicated to specific categories, such as hard goods or apparel.

Over the next three to four years Qurate plans to combine HSN and QVC fulfillment centers so that they carry “the full product assortments” of both brands, in order to combine shipments to the customer and lower operating expenses.

“Once completed, the integrated fulfillment network is expected to: increase average delivery speeds to customers by two days; enable more items to be consolidated into single shipments to improve customer convenience; and deliver significant savings in freight and fixed costs,” Qurate said.

The press release also has possible ominous news about Ingenious Designs, inventor Joy Mangano’s company, which is part of HSN and home to the Miracle Mop and Huggable Hangers.

“HSN is closing its Ingenious Designs facility in Long Island, NY, shifting the design and sourcing of those product lines to QRG’s (Qurate’s) in-house design and sourcing team,” the parent company said.

Does that mean that Mangano is losing her own design team, and control of her company? Will she be staying on-board?

There are a couple of winners in this QVC-HSN scenario.

Mary Campbell, chief merchandising officer for Qurate and chief commerce officer for QVC U.S., will be responsible for QXH merchandising, marketing, brand and digital strategy and the QVC U.S. digital, content and broadcast operations. She will have primary responsibility for the development and growth of the QVC brand.

HSN President Mike Fitzharris who will be responsible for QXH video platform expansion and distribution and the HSN digital, content and broadcast operations. He will have primary responsibility for the development and growth of the HSN brand and oversight of the St. Petersburg campus.

They will both report to George.

QVC U.S. President Steve Hofmann is being kicked to the curb. His position is being eliminated, and his last day is Friday.

To sum up, some of us were surprised to see veteran QVC jewelry vendor Judith Ripka appear on HSN a few days ago. Expect to see a lot more of that QVC-HSN crossovers.

As someone who has been laid off twice, with the first time more devastating than we could ever explain to you, we certainly feel for those who are getting pink slips. But we lost our jobs during the Great Recession, the worse economic period since the Great Depression.

The U.S. economy is booming now, with unemployment at record lows, so we know you HSN and QVC folks will find new jobs a lot faster than we did. We wish you the best.