Home Qurate Sees Progress Despite Difficult Q2 Comps
August 9, 2021
Qurate Sees Progress Despite Difficult Q2 Comps
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By Mike Duff

Contributing Editor

Qurate Retail in the second quarter ran up against tough year-over-year comparisons that can be traced to the COVID-19 pandemic, but the company still had positives to cite in the period.

Company net income was $222 million, or 52 cents per share, versus $220 million, or 53 cents per share, in the year-previous quarter, Qurate stated. Adjusted for one-time items, net income was $232 million, or 54 cents per share, versus $226 million, or 54 cents per share, in the year-before quarter.

Qurate adjusted earnings per share beat a MarketBeat-published analyst consensus estimate of 53 cents.

Revenue advanced 2%, or 1% in constant currency, to $3.5 billion versus the year-earlier quarter. Operating income gained 7%, or 5% in constant currency, to $433 million, in the period year over year.

QxH revenue, from QVC and HSN, slipped 1% to $1.99 billion, the company reported, while Zulily revenue decreased 6% to $397 million, and Cornerstone revenue increased 18% to $327 million versus the 2020 quarter. QVC international revenue increased 11%, or 5% in constant currency, to $791 million from the year-past period.

According to Qurate, the QxH revenue decline in the quarter year over year reflected a 6.1% slide in average selling price mostly offset by a 4.5% increase in units sold. QxH enjoyed a 15% increase in units purchased per customer and an 8% advance in spend per customer, offset by a decline in customer count versus strong gains in the 2020 period. Growth in apparel and accessories was offset by a decline in electronics, beauty and home.

The Zulily revenue decline reflected comparisons to strong growth in the year-prior quarter, as well as supply constraints and reduced marketing effectiveness partially offset by sustained growth from its factory direct business. Cornerstone generated record second-quarter results, with the revenue gain primarily due to strong demand in-home brands Frontgate, Ballard Designs and Grandin Road while Garnet Hill grew revenue on the strength of apparel and home textiles. 

In the quarter, Qurate announced that David Rawlinson would become the company’s next president and CEO effective October 1.

In a conference call, said Mike George, outgoing CEO of Qurate Retail called out several highlights that contributed to second-quarter results including the QxH customer visit and purchase figures which he said reflect high engagement from Qurate’s best customers and double-digit growth in apparel and accessories, offset by declines in higher price point electronics, beauty and certain home products. He said Qurate held on to much of the new customer increase from the peak of the pandemic. New customer numbers declined versus 2020 but grew 17% from 2019, George said, adding that company 12-month retention rates increased slightly compared to the prior year.

 

The quarter played out largely as we expected, with our businesses responding effectively to customers’ evolving needs while managing continued supply chain headwinds and a tight labor market. We delivered strong increases in apparel and accessories, and growth from our best customers at QxH sustained momentum across our international businesses and had record second-quarter performance at Cornerstone Brands.

-Mike George, outgoing CEO of Qurate Retail

George pointed out that sales of items featured on-air gained significantly, indicating high engagement across the customer base with Qurate’s full video experience and sustained growth in traditional TV viewership. In addition, he said business is more balanced across categories with the home segments now representing a larger portion of the mix than they have for many years prior to the pandemic even as apparel and accessories recovered from the sales erosion from the start of the pandemic, with higher revenue than generated in the 2019 quarter. Underlying consumer demand in home and fashion was stronger than Qurate managed to capture, George asserted, because of product shortages.

In announcing the financial results, George said, “The quarter played out largely as we expected, with our businesses responding effectively to customers’ evolving needs while managing continued supply chain headwinds and a tight labor market. We delivered strong increases in apparel and accessories, and growth from our best customers at QxH, sustained momentum across our international businesses, and had record second-quarter performance at Cornerstone Brands.”

George added that the second-quarter financial results “demonstrate that we are a stronger business today than when we entered the pandemic, with an expanded loyal customer base, leadership across multiple product categories, more extensive distribution and reach of our digital and video content, including the launch of our streaming service on Comcast, and an outstanding durable financial position. We’re well-positioned for growth, poised to take advantage of the accelerated trends toward online shopping, video streaming, social media, and all things for the home.”

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