Posts Tagged ‘The Beatles’

Believe It Or Not, Rachel Zoe, Michael Jackson And The Beatles Helped Drive QVC’s First Quarterly Sales Growth Since Early Last Year

November 9, 2009

QVC reported its best quarterly earnings Monday since early last year, with officials giving celebrity stylist Rachel Zoe, Michael Jackson and the Beatles some of the credit. But the picture for the last nine months wasn’t so rosy.

During a third-quarter conference call for QVC parent Liberty Media, QVC president and CEO Mike George said that the No. 1 home shopping network is seeing the benefit of cost management and “and what appears to be some stabilization of consumer spending in the U.S.”

He also claimed that QVC is taking marketshare from a broad array of retailers, in part by drawing in new customers with big names like Zoe.

QVC domestic posted $1.098 billion in revenue the third quarter, a 2 percent increase from $1.073 billion in the year-ago period and “our first positive sales growth since early last year,” George told analysts on the call for John Malone’s Liberty.

Nonetheless, QVC’s domestic revenue in the first nine months ended Sept. 30 dropped 4.3 percent, to $3.308 billion from $3.430 billion, compared to the prior-year period, according to the 10-Q Liberty Media filed Monday.

In the third quarter QVC’s strongest gains were in the categories of beauty, accessories, consumer electronics, and cooking and household goods, according to George. As in prior quarters, jewely and apparel sales remained soft, but the rate of decline in jewelry has moderated as the weakness QVC has seen in gold jewelry was partically offset by stronger sales for lower-priced fashion jewelry lines, George said.

Adjusted OIBDA at QVC domestic was $244 million in the quarter, a 10% gain from $221 million a year ago. The 10 percent increase is “our strongest profit growth since the fourth quarter of 2006,” George told analysts.

QVC was particularly encouraged by the new customers it gained in the third quarter, a 9% increase, “our highest rate of new-customer growth in the last seven years,” according to George.

More importantly, the total spending of new customers increased 18 percent, he said.

Answering questions from analysts, George said that QVC’s improved results and jump in new customers was a result of: the shifting of its product mix, to more fitness and consumer electronics versus jewelry and apparel; popular entertainment offerings like CD sets and other Jackson merchandise and a remixed Beatles set,; more aggressive marketing; and the addition of high-profile names such as Zoe, the celebrity stylist who has a show on Bravo.

The QVC chief also cited the network’s deal with Liz Claiborne. QVC will sell the Liz Claiborne New York line and has forged a partnership with the clothier’s creative director Izaac Mizrahi, formerly with Target.

Mizrahi, who like Zoe has a show on Bravo, is doing a premium line of apparel and home goods for QVC that will debut Dec. 4, George said. Mizrahi’s program is “The Fashion Show,” while Zoe has “The Rachel Zoe Project.”

QVC has also been helped by gaining better channel positions on cable lineups, a second slot on DirecTV, and the addition of its HD network, which essentially gives it two slots. The HD service has 25 million subscribers.

“We’re confident that we will emerge from the current economic turmoil in a much stronger position, having made significant gains in our strategy to build a unique multimedia shopping experience,” George said. “We believe our focus on offering compelling, exclusive products and programming – while avoiding destructive price competition – is helping us drive accelerating share gains against the broad retail market while also protecting margins.”

QVC has gained share in consumer electronics, beauty, accessories and handbags, and retained its marketshare in jewelry and apparel, its CEO said.

The network has “built a prestige beauty business,” according to George.

Liberty Media president and CEO Greg Maffei led the conference call.