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Revenue Gains Drive Strong Q2 for Qurate Retail

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Qurate Retail Inc., citing market share gains and rapid shifts in merchandising and marketing to meet new consumer demands, saw net income rise to $220 million in the second quarter from $118 million in the year-ago period.

Revenues rose 10 percent to $3.42 billion from $3.1 billion a year ago. Adjusted operating income rose 10 percent to $565 million from $513 million.

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“Our team did an amazing job juggling many aspects of the business in a difficult situation and responding quickly to what the customer was telling us,” Qurate Retail’s president and chief executive officer Mike George told WWD on Monday, when the quarterly report was issued.

As a company with a diversity of categories and selling formats — and virtually no retail stores — “We are well positioned in a pretty tough time,” George said. “We saw huge growth in new customers, which was up 60 percent — a couple of million new customers,” George said, adding there also was 30 to 40 percent growth in reactivated customers.

“There was just a massive shift of what customers were buying. It struck us at how consistent that shift was around the world. There was a shift out of apparel, out of most fashion products, declines in jewelry, and an explosion of all things for the home. Our food business grew 100 percent and well over 100 percent internationally. We developed quickly a lot of new food offerings and really expanded our gourmet food programming.”

In addition to strong sales in floor care, air purifiers and sanitizers, also selling well were outdoor categories, particularly gardening; home office, particularly laptops; gaming, and other entertainment devices.

“We can change tomorrow items based on how they perform today,” said George. “We are constantly changing the programming.”

The ceo said Qurate pulled back on promotional activity after experiencing a greater demand than expected and seeing challenges in shipping higher volumes.

“We have been sort of surprised and encouraged by the resilience of the consumer,” he told WWD. “She is shifting her spending.” Noting a slight increase in the average retail price, George said, “She’s investing in good quality PCs for the home office and she’ll buy a good quality KitchenAid mixer for the kitchen.

“We recognize this is more about market share gain. Overall spending has been down through the pandemic but [the customer] has been willing to spend.

“As we look forward, it’s hard to know what fall/holiday season will look like,” though Qurate’s Christmas in July marketing saw “very strong results” in home decor and gourmet food. He said Qurate will benefit by the expected continuing surge of ecommerce and reluctance by some consumers to shop stores during the pandemic. He sees the company starting the Christmas push earlier this year.

During the quarter, e-commerce revenues grew 19 percent to $2.2 billion, representing 64 percent of total revenue; QVC and HSN increased 7 percent to $2 billion; QVC International increased 11 percent to $713 million; Zulily revenue increased 16 percent to $422 million, and Cornerstone gained 18 percent to $277 million.

The company anticipates about $262 million in pre-tax proceeds in August from the sale of a solar power facility, which has helped it to reinstate dividends.

To cope with the COVID-19 crisis, Qurate laid off 450 team members in July, incurring $20 million of severance costs in the quarter, and closed contact centers in San Antonio, Tex., and Chesapeake, Va., and the Zulily customer contact center and digital studio in Gahanna, Ohio, as work at home occurred. There were also inventory reductions, more conservative credit practices and changes in how the trade was paid.

Separately, Qurate’s “Small Business Spotlight” program launched last May in response to the pandemic entered a second phase, focusing on Black-owned businesses to promote diversity, equity and inclusion. The businesses are not current Qurate Retail vendors and will be featured across QVC, HSN and Zulily via digital, video, catalogue, streaming, home shopping and social media channels. The program is in collaboration with the NRF Foundation.

Phase two starts Wednesday and continues through mid-October, and includes video profiles, live appearances by the business owners, e-mails and edited collections. There is also a mentoring component.

The 20 businesses include Nutz about Popcorn, a store selling gourmet popcorn and other treats; Kahmune luxury footwear; Emily’s Heirloom Pound Cakes; Candid Art focusing on African visual culture, and indigenous design; Ethnicitees, cultural wearables apparel: Me & the Bees Lemonade; The Brown Beauty Co-op indie beauty retailer: Pooka Pure and Simple bath and body products; Lucky + Lovely apparel, accessories, drinkware; Boon Boona Coffee sourced from Ethiopia and Rwanda; She’s International Boutique clothing, jewelry, handbags and accessories; Moisture Love hair care; Brown Toy Box; KimBees, Inc. teas and gourmet sweets; Wandering Child Co. clothing; Brooklyn Granola healthy snacks; Chef Scott’s Creole BBQ; Custom Arts Studio; KYVAN Foods soul food, and Confidence by Gabby Goodwin natural hair products.

Another group of 20 small Black-owned businesses, currently being determined, will be spotlighted on QVC.com and HSN.com from Sept. 1 through Dec. 31.