In the third quarter, Qurate suffered from declining consumer visits, as bricks and retail store openings tempted them back to physical store visits, and supply chain constraints, the company reported.
Qurate posted net income of $127 million, or 31 cents per share, versus $338 million, or 80 cents per diluted share, in the year-earlier period. Adjusted for one-time charges, net income was $123 million, or 30 cents per diluted share, versus adjusted net income of $238 million, or 56 cents per diluted share, in the quarter a year prior.
A MarketBeat-published analyst consensus estimate called for earnings per diluted share of 49 cents.
Qurate revenue decreased 7% to $3.14 billion from the previous-year period as eCommerce revenue decreased 6% to $2 billion or 63% of total revenue. In the quarter year over year, QVC and HSN division revenue decreased 8% to $1.81 billion, QVC International revenue decreased 3%, 4% in constant currency terms, to $699 million, Zulily revenue decreased 17% to $328 million and Cornerstore revenue increased 7% to $304 million.
Operating income decreased from $406 million to $274 million year-over-year in the period, with QXH operating income slipping from $274 to $219 million, QVC International operating income slipped from $114 million to $97 million, Zulily operating income turned from $3 million gain to a $40 million operating loss and Cornerstone operating income slipped from $28 million to $16 million. Unallocated corporate costs were a further negative, going from $13 to $18 million and adding to the total decrease in operating income.
QxH revenue declined primarily due to a 9% decrease in units sold, reflecting industry-wide supply constraints, partially offset by a 1% increase in average selling price, reflecting product mix and targeted pricing actions to counter cost inflation, Qurate indicated. QxH experienced a 6% increase in spending per customer and a 4% increase in items purchased per customer, offset by a decline in customer count compared to last year’s strong gains in the COVID-19 pandemic. QxH declines occurred primarily in home, electronics and beauty, partially offset by growth in apparel.
Zulily’s revenue decrease reflected supply constraints and reduced marketing effectiveness, partially offset by sustained growth from its factory direct business, Qurate maintained, while Ballard Designs and Grandin Road brand gains led Cornerstone revenue growth as strong demand drove sales in home décor, interior furnishings, bath and textiles, and, in the Garnet Hill segment, apparel. However, Cornerstone operating income took a hit from higher inbound freight costs and marketing expenses, partially offset by lower administrative costs.
“While there are near-term industry challenges to work through, I couldn’t be more excited about the long-term opportunity at Qurate Retail to accelerate growth and drive shareholder value,” said David Rawlinson, Qurate president and CEO, in announcing the financial results. “Our team is managing through current industry pressures while simultaneously working intently to accelerate growth initiatives and reimagine our strategic plan. Supply chain constraints and cost inflation are impacting our entire industry, and we have taken action to help mitigate the potential impacts. Since joining the company in early August and transitioning to CEO on October 1, I have met with countless customers, partners, thought leaders and entrepreneurs in our space, and Qurate leaders. These conversations reaffirmed the reasons why I joined Qurate. Our business is built on a solid foundation of long-standing relationships with highly engaged customers, expert hosts, compelling entrepreneurs, an established vendor network and our talented employee base. This is a solid foundation for accelerating our effort to humanize retail, in contrast to the scaled transactional players.”
