QVC reports continued US sales decline

Tom Paine

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QVC (Liberty Interactive, NASDAQ: QVCA) reported 3rd quarter earnings yesterday. US revenue was down 6% to $1.3 billion. QVC's consolidated group revenue decreased 3% in the third quarter to $1.9 billion.

This follows a 2nd quarter report that noted:

"Beginning in early June QVC’s US sales began to experience significant headwinds, which have continued. The sales declines, as compared to prior periods, have averaged in the mid to high single digit percentages."

That pattern largely persisted throughout the third quarter.

QVC's US average selling price per unit ("ASP") decreased 7% to $54.75. eCommerce revenue increased 1% to $684 million and grew 342 basis points to 51% of total US revenue. Operating income decreased 18% to $175 million.

QVC had taken cost reduction steps to offset the sales slowdown, including cutting 100 jobs at Studio Park near West Chester in September.

QVC CEO Mike George addressed the TV retailer's challenging environment in Liberty Interactive's (QVCA) earnings conference call:

"Since our last call, there has certainly been a great deal of speculation about whether the sudden decline we experienced in June reflected a structural change on the long-term outlook of our business or more short-term and addressable challenges."

"We are confident it is the latter and while we're certainly not happy with the speed of the turnaround, we are nonetheless encouraged by some positive trends we're beginning to see. We do believe this slowdown reflects a kind of perfect storm of unrelated challenges across a number of categories, coupled with difficult macro pressures."

QVCA (representing a tracking stock within media giant Liberty Media) has been slimmed down to the point where it is essentially a pure play for QVC, plus zulily which it acquired last year. zulily revenue grew 14% to $359 million in the quarter.

QVCA closed up 7.3% yesterday.

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