Not a pretty picture. For QxH, the two home shopping networks combined, revenue decreased 8%, to $1.62 billion.
This is all the detail we got:
QxH revenue declined primarily due to a 12% decrease in units shipped, reflecting fewer customers and weakened consumer sentiment, as well as lower shipping and handling revenue. This was partially offset by a 5% increase in average selling price driven by an elevated product assortment and price increases.
QxH experienced a 6% increase in average spend per customer. QxH reported declines in home, electronics, accessories and apparel, partially offset by growth in beauty.
Operating income and adjusted OIBDA margin(4) decreased primarily due to higher administrative expenses from certain costs related to Project Athens, higher benefits expense and sales deleverage and, to a lesser extent, from increased commissions due to expanded distribution.
These pressures were partially offset by higher product margins, favorable fulfillment (warehouse and freight), lower obsolescence expense and lower bad debt expense. Product margins increased mainly due to higher initial margins, partially offset by unfavorable returns and lower shipping and handling revenue.
Fulfillment favorability was driven by less detention and demurrage costs and reduced volume, partially offset by higher freight and labor rates and fulfillment center rent expense due to sale leaseback transactions in the prior year.
In the second quarter of 2023, QxH received a final payment of $225 million of insurance proceeds related to the December 2021 fire at Rocky Mount, primarily business interruption proceeds, for an aggregate of $660 million proceeds received.
Qurate also reported that in the second quarter it incurred a $15 million write-down related to inventory at Rocky Mount included in cost of goods sold, and a $240 million gain on sale related to the modification of the lease of its Ontario, CA, distribution center
There were also another piece of news from the 2Q earnings. We were shocked to see that Qurate has divested Zulily, which it acquired only a few years ago.
Here's what the top honcho had to say about it all:
“In this quarter, we made meaningful progress on Project Athens, our multi-year plan to transform the company, expanding gross margins in our video commerce businesses for the first time in over 18 months and materially improving our cash flow,” said David Rawlinson, President and CEO of Qurate Retail.
“While our revenue was down, our topline results were in line with the discretionary retail industry, which was impacted by softer consumer sentiment and more promotional intensity particularly in the home categories. During the quarter, we also divested Zulily, which simplified our portfolio and improved our go forward liquidity. We finalized our insurance claims for the fire at our former Rocky Mount, N.C., fulfillment center and received $225 million of insurance proceeds.
“We continue our focus on cash flow, costs and margin growth in the near term and anticipate improved profitability in the second half of 2023. We believe we are on track to achieve our Project Athens objectives through 2024.”
Qurate's stock price has tanked, by the way. It's trading at $1. Q's stock was delisted earlier this summer because the price was below $1 for too long.
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