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Respected Contributor
Posts: 2,431
Registered: ‎07-12-2010

Qurate Q1 2022 Financial report

[ Edited ]
Respected Contributor
Posts: 2,431
Registered: ‎07-12-2010

Re: Qurate Q1 2022 Financial report

“We took important first steps in our turnaround, with a focus on stabilizing our core US vCommerce business and setting the foundation for accelerating growth in streaming. We restructured the organization and leadership of the QVC US and HSN brands, formed a new dedicated streaming business unit and attracted a proven leader at Zulily,” said David Rawlinson, President and CEO of Qurate Retail.

 

“Our first quarter results reflect the continued challenges of operating amidst extreme supply chain disruptions. We don’t believe this quarter’s results reflect the long-term underlying health of our businesses. In addition, heightened inflationary pressure and the situation in Ukraine led to depressed consumer sentiment, and we experienced a larger-than-expected operational disruption related to the December fire at our Rocky Mount, NC fulfillment center. While our turnaround will take time, and progress may be not be a straight line, we are starting from a position of strength with scale in our television and streaming reach, a strong financial profile, and core competencies in building consumer engagement.” 

 

QxH

QxH revenue declined primarily due to a 12% decrease in units shipped, reflecting supply chain constraints and product scarcity for home and electronics items, as well as weakened consumer sentiment due to inflation and the invasion of Ukraine and a decrease in shipping and handling revenue. Average selling price was flat as price increases primarily in apparel were offset by mix shift away from higher price point categories including home and electronics. Although total customer count declined compared to the first quarter of 2021’s solid gains, QxH experienced a 7% increase in average spend per customer and a 6% increase in items purchased per customer. QxH reported declines primarily in home, electronics, accessories and beauty, partially offset by growth in apparel.

 

Operating income and adjusted OIBDA margin(3) decreased primarily due to deleverage of fulfillment (freight and warehouse) and operating expenses (customer service, commissions and credit card fees) and higher fixed costs, inventory obsolescence and bad debt expenses. These pressures were partially offset by higher product margins due to favorable category mix shift into apparel. Operating income was further negatively impacted by the $80 million in write-down of inventory remaining at the Rocky Mount facility, described below.

 

On December 18, 2021, QVC experienced a fire at its Rocky Mount, NC fulfillment center. Rocky Mount was Qurate Retail’s second-largest fulfillment center, processing approximately 25% to 30% of volume for QVC US and serving as QVC US’s primary returns center for hard goods. QVC has made a decision not to rebuild the facility; however, it is still in the process of determining future plans for the property. Excluding Rocky Mount, QVC operates eight fulfillment centers in the US. QVC has taken steps to mitigate disruption to its operations including diverting inbound orders, leveraging its existing fulfillment centers and supplementing these facilities with short-term leased space as needed. While the Company has taken steps to minimize the overall impact to its business, it experienced elevated warehouse and logistics costs during the three months ended March 31, 2022 and anticipates these increased warehouse and logistics costs to continue during 2022.

 

During the year ended December 31, 2021, QVC recorded $229 million of fire related costs for which recovery was deemed probable and received $100 million of insurance proceeds. During the first quarter of 2022, QVC incurred an additional $2 million in fire related costs, net, primarily related to personnel costs and legal fees, that will not be reimbursed by QVC’s insurance policies and are included in operating income, and $14 million of other fire related costs for which recovery was deemed probable based on the Company’s insurance policies. While there can be no assurance, based on the provisions of QVC’s insurance policies and discussions with insurance carriers, QVC determined that recovery of certain fire related costs is probable, and has recorded an insurance receivable with a balance of $143 million as of March 31, 2022, net of $100 million of insurance proceeds received in advance 

 

Qurate Retail is still in the process of assessing the extent of damage to property and recoverability of inventory and submitting relevant insurance claims. During the three months ended March 31, 2022, QVC recorded an $80 million write-down related to Rocky Mount inventory which was included in cost of goods sold in the quarter. Due to the circumstances surrounding the write-down of the inventory, this write-down has been excluded from adjusted OIBDA. These write-downs are expected to be submitted as part of QVC’s business interruption insurance claim; however, there can be no assurance they will be recovered. QVC expects to continue to record additional costs and recoveries until the property damage and inventory recoverability assessment is completed and the insurance claim is fully settled.

Honored Contributor
Posts: 14,932
Registered: ‎03-13-2010

Re: Qurate Q1 2022 Financial report

LOTS of "excuses".......   I wonder how that will sit with the shareholders......

♥Surface of the Sun♥
Trusted Contributor
Posts: 1,423
Registered: ‎12-27-2010

Re: Qurate Q1 2022 Financial report

I guess this is important info if one has stock in this company. I personally dont wade through all stuff when its posted here. Static noise.

Respected Contributor
Posts: 2,431
Registered: ‎07-12-2010

Re: Qurate Q1 2022 Financial report

@Desertdi  Yes, one of those excuses is that "the situation in Ukraine led to depressed consumer sentiment." I'm not sure where they're getting that information. I've seen posters on this board saying they were going to buy something but reconsidered due to the shipping charge, or that they don't even watch because of the annoying hosts, but I never saw one person state that the situation in Ukraine influenced their decision to buy or not buy.

Esteemed Contributor
Posts: 6,113
Registered: ‎09-05-2014

Re: Qurate Q1 2022 Financial report

[ Edited ]

 

 

Slide Deck Draft.

 

Interesting. 

 

Wow.  That slip up was corrected with great haste!

Honored Contributor
Posts: 25,215
Registered: ‎05-10-2010

Re: Qurate Q1 2022 Financial report

I'm not a shareholder so I really don't care 

Esteemed Contributor
Posts: 7,649
Registered: ‎03-09-2010

Re: Qurate Q1 2022 Financial report

Thanks for posting. I like reviewing these reports.

Honored Contributor
Posts: 14,329
Registered: ‎03-09-2010

Re: Qurate Q1 2022 Financial report

@Desertdi   I'm not a shareholder, but if I were at all interested in buying similar investments, the first thing I would do is research companies that offering similar categories of products.   

 

As it is, I don't much care whether the company from which I de ide to buy a top is making its shareholders happy.  

Esteemed Contributor
Posts: 6,113
Registered: ‎09-05-2014

Re: Qurate Q1 2022 Financial report

But if that company were performing so poorly that it might go out of business and file Chapter 11 you might care?......a little?