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Qurate Retail Posted Disappointing Q1 Results as it Continues to Evolve the Business

Qurate Retail Inc. has been busy integrating its HSN businesses into the QVC platform, some of which–such as the shutdown of its Improvements catalog–has impacted revenues for the year. The company posted revenue declines in its four businesses. That said, Qurate continues to evolve its business model.

In a Nutshell: While QVC in the U.S. and HSN saw decreases in the home, jewelry and beauty categories, these dips were offset by gains in electronics and modest growth in apparel and accessories. QVC International was hurt mostly by exchange rate fluctuations. It also closed its television and digital platforms in France on March 13, 2019. Zulily revenue fell because of lower unit volume from lower frequency of purchases by existing customers and a decrease in the number of new customers. Cornerstone was impacted by the shutdown of the Improvements catalog business in December.

Mike George, president and chief executive officer, said, “Our recent results have been more variable as we navigate the evolution of our business model and the integration of HSN, fine-tune our investments, and striking the right balance between sensible revenue growth, margin expansion, new customer acquisition and our strategic initiatives.”

Net Sales: Total revenues fell 4.5 percent to $3.09 billion from $3.23 billion in the year-ago quarter. The company said e-commerce sales were 59 percent of the total, or $1.8 billion.

Revenues from QxH, the division that includes QVC in the U.S. and HSN, saw a 3.7 decline in revenues to $1.93 billion, while those at QVC International slipped 5 percent to $676 million. Zulily revenues were down 5 percent to $419 million, while Cornerstone–its Frontgate and Grandin Road brands–saw a 10 percent drop to $207 million.

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Earnings: Net income was $55 million, or 13 cents a diluted share, versus $384 million, or 30 cents, a year ago. On an adjusted basis in connection with Qurate’s acquisition of several brands, including QVC, HSN, Zulily and Cornerstone, as well as mark-to-market accounting requirements, net income was $151 million, or 35 cents a diluted share. That compares with adjusted net income of $204 million, or 42 cents, in the same year-ago quarter. The company Dec. 31 completed a restructuring of HSN and its subsidiaries of QVC Inc. to better facilitate cross-platform operations between the two businesses.

CEO’s Take: According to George, “We are taking a disciplined approach, investing in initiatives to drive high-quality customer growth and engagement, broaden and deliver our assortments, particularly across new digital platforms, and optimize our fulfillment network. Our customer fundamentals remain strong, including customer count, retention and purchase frequency.”