Article appeared in Philadelphia Business Journal
Kennedy Rose, Digital Producer, Philadelphia Business Journal
May 7, 2020, 4:41pm EDT
Quarantine shopping got off to a slow start for the parent company of QVC and HSN, but the company is experiencing an uptick as consumers are buying even more online and through its television networks while stuck at home.
Qurate Retail is seeing new and reactivated customers across all business units in every market. CEO, however, said Thursday the progress made in recent weeks cannot serve as an indicator for the coming months because it's hard to predict how consumer behavior will evolve as the economy begins to reopen.
Stay-at-home orders are resulting in more shoppers, but they're looking for products that are cheaper. Qurate's biggest powerhouses, West Chester-based QVC and HSN, saw revenue drop in the first quarter despite leading company sales. That decline was partially driven by customers seeking products that carry lower profit margins — like home goods and sanitation products — rather than Qurate’s higher margin bread and butter: clothing and jewelry, George said.
Englewood, Colorado-based Qurate is focused on capitalizing on the current momentum and spending more to attract new customers while increasing retention, George said.
George believes the move will serve Qurate well in a constantly changing world for retail.
“We believe we’ll be among the winners,” said George, who is based in West Chester.
J. Crew and Neiman Marcus filed for bankruptcy this week, signaling a grim future for traditional brick and mortar retailers as the pandemic keeps stores closed and millions out of work. Qurate (NASDAQ: QRTEA, QRTEB) was not immune to the impact of Covid-19, reporting on Thursday a $20 million loss for the first quarter, compared with a profit of $55 million in the year-ago period.
Qurate saw revenue decrease 5% year-over-year to $2.9 billion, with online shopping accounted for most of its sales. The company reported supply chain disruption, closure of retail stores, and constrained fulfillment capacity resulting in the delay of shipments of customer orders until the second quarter.
Ecommerce accounted for $1.7 billion, or 59% of total first-quarter revenue. Most of the markets where Qurate saw significant declines in sales in the immediate weeks after the Covid-19 lockdown have since rebounded, George said QVC and HSN drove the highest sales but revenue decreased year-over-year by 4% to $1.79 billion.
Demand is up for culinary tools, home fitness equipment, vitamins, video calling devices, arts and crafts, home decorating and more — shopping practices linked to the millions of people under stay-at-home orders.
Keeping those customers will be the challenge for Qurate, George said. Nearly half of Qurate’s customers in March were new or reactivated buyers, but they accounted for only 13% of shipped sales, according to a presentation from the company.
On-air hosts for Qurate’s televised brands like QVC and HSN have been streaming online and engaging consumers through home recipes, tutorials and more, George said. Qurate is boosting its spending on paid social media posts to draw eyes to its online platforms while people spend more time on the internet and watching TV. The company is also offering financial incentives to bring first-time customers back for a second buy. The goal is to turn the pandemic’s new buyers into lifetime customers, George said.
Qurate is forging ahead with launching some new brands, including a maternity brand on Mother’s Day. The retailer is continuing to offer options that appeal to people staying at home, like athleisure apparel, George said.
“We continue to assess what this new normal will be,” George said in a statement. “At the same time, we have moved quickly to lean into favorable early second quarter trends, and we will continue to utilize our agile business model to adjust our consumer offerings.”
Qurate now has more than 10,000 employees of its 25,000-member workforce working from home. Late last month, the company dedicated $29 million to supporting its employees and a number of Covid-19-related relief organizations.
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