Q Talk

[Spurt]

Some interestesting reading regarding QVC's Financial Results for the second quarter 2015........

http://ir.libertyinteractive.com/releasedetail.cfm?ReleaseID=925878

Here are some of the key points from the report.....

• QVC.com revenue as a percent of total US revenue increased to 47%, a 309 basis point increase
• • QVC US mobile penetration was 48% of QVC.com orders, a 1,013 basis point increase
• QVC consolidated mobile penetration was 49% of QVC.com orders, a 951 basis point increase

QVC's consolidated revenue decreased 1% in the second quarter to $2.0 billion.  (This includes both QVC USA and QVC International).

US revenue increased 4% to $1.4 billion in the second quarter. Units sold increased 4%, average selling price per unit increased 3% to $58.51 and returns as a percentage of gross product revenue were virtually flat. The US experienced growth in all categories except electronics.

Despite the business' investment in new shipping and handling policies, adjusted OIBDA (operating income before depreciation and amortization) increased 7% to $349 million and adjusted OIBDA margin increased 78 basis points to 24.8%. These gains were primarily due to improved product margins, higher credit card income and lower bad debt and marketing expenses, which were partially offset by lower shipping and handling revenue.

QVC's international revenue decreased 11% to $592 million, adjusted OIBDA decreased 12% to $100 million and adjusted OIBDA margin declined 33 basis points in the second quarter, reflecting the aforementioned unfavorable exchange rate fluctuations. On a constant currency basis, international revenue increased 6% and adjusted OIBDA increased 5%. QVC France launched its TV broadcast on August 1, 2015. The second quarter included $6 million of costs related to the launch of QVC France. Excluding the costs related to QVC France, international adjusted OIBDA increased 9% on a constant currency basis in the quarter.

QVC Germany's revenue in local currency increased 4% in the second quarter. Sales increased in local currency in every category except electronics. Adjusted OIBDA in local currency increased 10%, and adjusted OIBDA margin in local currency grew 88 basis points primarily due to customer service and warehouse efficiencies and lower bad debt expense, which were partially offset by higher marketing expenses.

QVC Japan's revenue in local currency increased 6% in the second quarter. QVC Japan experienced sales gains in local currency primarily in home, jewelry and beauty, which were partially offset by a decline primarily in apparel. Adjusted OIBDA in local currency increased 2%. Adjusted OIBDA margin in local currency decreased 74 basis points primarily due to higher information technology, commission and marketing costs, which were partially offset by customer service efficiencies.

QVC UK's revenue increased 7% in local currency in the second quarter. Sales increased in local currency primarily in home and jewelry, which were partially offset by a decline in beauty. Adjusted OIBDA in local currency increased 16% and adjusted OIBDA margin in local currency increased 164 basis points primarily due to fixed cost leverage, which was partially offset by lower product margins and unfavorable inventory obsolescence expense.

QVC Italy's revenue increased 4% in local currency in the second quarter. Sales increased in local currency primarily in beauty, apparel and accessories, which were partially offset by a decline in jewelry. Adjusted OIBDA deficit in local currency decreased 8% and adjusted OIBDA margin in local currency improved 44 basis points primarily due to lower freight and inventory obsolescence expense, which were partially offset by lower product margins.

CNR Home Shopping Co., Ltd. ("CNRS"), QVC's joint venture in China, increased local currency revenue 14% in the second quarter. CNRS' adjusted OIBDA deficit in local currency increased 100% primarily due to lower product margins and higher commissions, warehouse, freight, marketing and customer service expenses as the business continues to grow its presence in this nascent market. In early July, CNRS added the strategically important Shanghai market to its TV distribution, bringing its current reach to approximately 107 million homes. This joint venture is being accounted for as an equity method investment, and as a result, QVC reported a $3 million reduction in net income for the quarter.

[millieshops]

Any idea how their results compare to their counterparts?  I don't, but I do know taking any of these figures in isolation from what else is going on in the business/retail world doesn't tell me enough to form an opinion that's worth very much.

[Spurt]

My thoughts on QVC's financial results for the 2nd Quarter 2015.  Keep in mind the second quarter (April, May, June) included Easter, Mother's Day, and Father's Day.

Perhaps I missed it becasue I'm watching QVC less these days, but where was the hoopla when QVC France was opened on August 1st......which BTW was pushed back, since the opening was supposed to take place in the second quarter of 2015 originally....With the exchange rate hurting QVC International, what a perfect time to open in another country(rolling eyes)......And one more thought on the International QVC....with current news reports reflecting a slow down in China's economy, it will be interesting to see how this will impact QVC's China operation. 

Also, maybe I've been out too much in the hot sun, but with an average selling price per unit increase of 3% to $58.51, and units sold increased 4% shouldn't the revenue results be higher???????......And if the prices had remained the same, would that mean their revenue would have only increased 1%---YIKES!!!  Thoughts anyone, anyone???.....Or is this where QVC's  revised shipping policies are hurting them????????.....JMHO but with QVC no longer offering reduced shipping on the same item ordered in multiples sent to the same address, and their $10 "try me fee", $6.95 return postage charge, plus losing the original shipping cost on the ordered returned ( unless the merchandise was returned due to defective merchandise or QVC error in which upon contacting customer service the original postage will be returned).......But from what I've read on the Forum, customers are being pickier on their Q purchases due to the revised shipping rates.

And the increase in sales could be new customers making a one time purchase, and who knows if the new customers will even return to shop with QVC.......

Interesting in U.S. all categories increased EXCEPT ELECTRONICS yet QVC continues to market electronics in mass and fill their programming ad nauseum!!!! 

And note to QVC's Jewelry Buyers  it appears that Italians which QVC tauts as knowlegeable jewelry consumers, doesn't like the jewelry you are offering as much as some their American customer counterparts..... 

And notice the ecommerce ordering continues to increase, is this a way for customers to tell QVC that they are going online to order merchandise from QVC rather than watching the on-air repetitive and boring programming, and sometimes unwatchable hosts perhaps????--QVC CHANGE IS NEEDED!

[Spurt]

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@millieshops wrote:

Any idea how their results compare to their counterparts?  I don't, but I do know taking any of these figures in isolation from what else is going on in the business/retail world doesn't tell me enough to form an opinion that's worth very much.

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@millieshops

Here is Zulily's results-keep in mind no TV channel ....

http://www.marketwatch.com/story/zulily-announces-second-quarter-2015-results-2015-08-05

Here's Amazon's results---

http://www.thestreet.com/story/13230515/1/3-biggest-takeaways-from-amazon-s-impressive-second-quarte...

Walmart is expected to release their 2nd quarter next week....same with Target

Evines second quarter results won't be released until August 26.

Here is HSN's results

http://www.hsni.com/releasedetail.cfm?ReleaseID=926269

http://globenewswire.com/news-release/2015/08/06/758516/10144724/en/HSN-Inc-Reports-Second-Quarter-2...

HSN-  note HSN increased their prices by 1% versus QVC's 3%, and HSN's units shipped increased 2% versus QVC's 4%. 

HSNi's net sales grew 4% over the prior year to $885.6 million. HSN's net sales increased 3% to $572.3 million, including 11% growth in digital sales.

Second Quarter 2015 Results vs Second Quarter 2014 Results

• HSN's net sales increased 3% to $572.3 million with strong sales growth in apparel & accessories and electronics, offset by decreases in jewelry and home.  Digital sales grew 11% with penetration increasing 310 basis points to 40.3%. The return rate improved 70 basis points to 18.0% primarily due to changes in product mix. Units shipped increased 2% and average price point increased 1%. 

[Sooner]

They don't have many new products to offer (especially in the kitchen area), they have increased their prices a lot in comparison to other higher priced but better clothing manufacturers, and you are penalized for trying something out--so a lot of folks aren't ordering.  Most of their products can be had cheaper on Amazon as well.  Their prodct line is so heavy with tired old same-olds. 

[handygal2]

Are we able to determine the answer to the burning question: "Did the new S&H policy help their bottom-line, hurt it, or have no effect?" ?

[gardensla]

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@handygal2 wrote:

Are we able to determine the answer to the burning question: "Did the new S&H policy help their bottom-line, hurt it, or have no effect?" ?

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My take is that as this was a revenue stream for them, the lower s/h costs are inpacting the bottom line. To compensate they appear to have raised prices (in many cases, by a lot) and put the sqeeze on vendors for larger margins thereby keeping more of the net per item. 

Happy to see that consumers are taking their business for electronics elsewhere; QVC is uncompetitive in this category and it shows in sales. 

[handygal2]

@gardensla: That sounds like a plausible explanation. Many of us were hoping that they would return to the original S&H policy if they saw that this one isn't working, but l guess that won't be happening yet. 

[TY]

So QVC's growth mainly comes from the U.S. customers as the individual price of the average item has increased. Their international divisions are taking a hit due to their foreign currencies tanking against the U.S. dollar or in other words, the U.S. dollar has appreciated too much.

I would expect that QVC isn't going to be seeing better revenue results going forward either. QVC I will bet is paying their foreign suppliers that manufacture for them in U.S. dollars too.

[MacDUFF]

Hi @Spurt

Help me out...I'm no marketing/economics genious, but a quick read of the OP indicated an overall increase in all the areas discussed, except for a decrease of 1% when the numbers included international.  This seems like a very good, encouraging, healthy 2nd q report...no? 

If no, then I apologize...I must have read it all wrong.

If yes, I'm afraid it means that Q will do absolutely nothing to change their business practices, and, indeed, might double-down on what they are currently doing.

What am I missing!?