Qurate Retail Profits Off Revenue Growth
Qurate Retail Inc., experiencing double digit revenue gains, reported $352 million in net income for the three-month period ended Sept. 30, compared to a loss of $755 million in the year-ago period stemming from a one-time charge.
Adjusted net income rose to $238 million from $177 million a year ago.
More from WWD
Revenues rose 10 percent to $3.38 billion, versus $3.09 billion in the year-ago period. E-commerce revenue grew 15 percent to $2.1 billion or 62 percent of total revenue.
The company also reported a 24 percent increase in third-quarter adjusted operating income to $566 million. That compares to the $456 million in the year-ago quarter.
The big loss in the third quarter of 2019 was due to Zulily incurring a $1 billion non-cash impairment charge related to its trade name and goodwill.
Last quarter, “The team just really delivered,” Mike George, the chief executive officer of Qurate Retail Inc., told WWD in an interview Wednesday evening. “There was strong new customer growth, 25 percent across Qurate. That speaks to the potential of this business. We have seen so many consumers engage with us in this stay-at-home environment. Large numbers of new customers have joined us and are coming back frequently. We believe we can maintain good sales momentum and customer additions as we continue to navigate these uncertain times.”
Asked about the presidential election’s impact on consumer behavior, George said, “Elections are always a little disruptive to consumer behavior, but we also see a consumer today that is more resilient than ever and finding a way to move forward despite the pandemic and all the election noise. We are pleased to see how she is engaging with all of our programming.”
Shopping, he added, can be like a “relief valve” for consumers, from major events in the world. “They enjoy learning about product and meeting people in the virtual community.”
Asked if Qurate’s growth rate will change once a vaccine against the coronavirus is distributed and people return to stores, George replied, “We can sustain sales growth going forward even if it isn’t at the Q3 level. In many ways, long before the pandemic, people were embracing a much more digital lifestyle, whether streaming movies on Netflix, shopping e-commerce or engaging on Instagram, TikTok or other social media. That would have happened without the pandemic. Things just just moved faster with that.”
George called out the culinary category as a particularly strong performer last quarter. “It continues to grow at a high rate, particularly gourmet food, but other things for the kitchen as well are selling, he said, citing electric kitchen gadgets and products for organizing in the kitchen. “It’s all things food and kitchen related, followed by home solutions, such as floor care, Tyson vacuums, iRobots and air purification. Also, home decor across the company has been strong. People are really engaged in holiday decorating. There’s been nice growth in buying early for Christmas. It all speaks to staying at home.”
Asked how apparel is performing, George said, “It’s doing a little better than Q2 but still pressured. As you would expect, there’s been a nice rebound in the comfort and casual side of apparel, good performance in activewear especially with our proprietary brands, sleepwear has been good, and Garnet Hill cashmere sweaters have been standouts. Tailored and dressy clothing and footwear have not been strong areas.…There are bright spots for sure but overall apparel is a little soft,” George observed.
Noting how Qurate managed to bring 1,000 brands this year so far on QVC and HSN, 30 percent more than in 2019, George said the company “really set a goal accelerating the process of introducing new brands to Qurate. Freshness and discovery is important to our growth.”
He also said the reorganization of the merchandising function brought greater resources into the initiative. “We launched programs to find great entrepreneurs and bring in more ideas,” via virtual trade fairs, and meeting a lot of vendors over Zoom. “On the one hand, we really miss being out there in person in the marketplace, but we have been seeing more new vendors and ideas than ever before,” virtually.
Of the 1,000 vendors, there will be some fallout, George acknowledged, though many will continue to be featured on the Qurate channels — TV, e-commerce, videos and social media. “Most will make it to next year.”
Summarizing the Q3 performance, George cited “strong growth in revenue, operating income before depreciation and amortization, free cash flow and new customers, reflecting the broad-based strength in home-related products.
“We are particularly pleased with our consolidated adjusted OIBDA up 24 percent and gains at all our business units,” he said. “We believe our strategic priorities and continued investments in innovation position us well to sustain our momentum in the long term. Qurate Retail offers a unique blend of media assets, particularly our leadership in livestreaming, and retail core competencies centered on curating appealing merchandise and building loyal customer relationships through highly engaging content.”
By division, QxH revenue increased 7 percent to $2 billion, QVC International revenue increased 11 percent to $723 million, Zulily revenue increased 10 percent to $395 million and Cornerstone revenue increased 26 percent to $285 million.
Citing innovations to improve performance, the company said more than 50 million homes were reached last quarter through its streaming service, primarily over Roku and Fire TV.
Last month Qurate launched on LG’s Shop Time app to 7 million users, providing the livestreams of Qurate’s two main networks, as well as on-demand programs, curated products, special deals and personality-led content.
Four months ago, the company began piloting an incentive tool that uses machine learning to inspire customers to purchase with personalized messages.
“We continued to grow viewership on traditional TV in Q3, with total minutes watched up and the number of homes tuning in daily were up,” the company said.
The home category continued to dominate demand, the company said.
Like many other retailers, Qurate expanded and accelerated key events and promotional periods related to holiday selling. At the beginning of October, the company staged a Black Friday “countdown” at QVC and Black Friday “jump-start” at HSN, and both brands launched fully into gift programming with a holiday look and feel for the broadcast and digital platforms in mid-October.
