Qurate Retail, Inc. Reports Fourth Quarter and Year End 2023 Financial Results
“2023 was a transformational year for
Fourth quarter and full year 2023 operating results:
-
Qurate Retail revenue decreased 4%(2) in Q4 and 5%(2) in full year in both US Dollars and constant currency(3) - Qurate Retail Adjusted OIBDA(4) increased 46%(2) in Q4 and decreased 3%(2) in full year in constant currency
-
Qurate Retail reported diluted EPS of$(0.70) in Q4 and$(0.37) in full year-
Adjusted diluted EPS(4) of
$0.22 in Q4 and$0.24 in full year
-
Adjusted diluted EPS(4) of
- QxH revenue decreased 4% in Q4 and 5% in full year
-
QVC International revenue increased 2% in Q4 and decreased 3% in full year- In constant currency, revenue was flat in Q4 and decreased 1% in full year
- Cornerstone revenue decreased 12% in Q4 and 11% in full year
Corporate updates:
-
Reduced
Qurate Retail principal amount of debt by$956 million in 2023 -
Delivered redemption notice on
February 27, 2024 to redeem remaining outstanding QVC 4.85% senior secured notes due 2024 onMarch 28, 2024
Discussion of Results
Unless otherwise noted, the following discussion compares financial information for the three months and year ended
FOURTH QUARTER 2023 FINANCIAL RESULTS |
||||||||||||||
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(amounts in millions) |
4Q22 |
|
4Q23 |
|
% Change |
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|
% Change
|
|
|||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|||
QxH |
$ |
2,258 |
|
|
$ |
2,159 |
|
|
(4 |
) |
% |
|
|
|
|
|
666 |
|
|
|
679 |
|
|
2 |
|
% |
|
— |
% |
Cornerstone |
|
348 |
|
|
|
305 |
|
|
(12 |
) |
% |
|
|
|
Total Qurate Retail Revenue (excluding Zulily) |
$ |
3,272 |
|
|
$ |
3,143 |
|
|
(4 |
) |
% |
|
(4) |
% |
Zulily(b) |
|
254 |
|
|
|
— |
|
|
NM |
|
|
|
|
|
Total Qurate Retail Revenue (as reported) |
$ |
3,526 |
|
|
$ |
3,143 |
|
|
(11 |
) |
% |
|
(11) |
% |
|
|
|
|
|
|
|
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|
|
|
|
|||
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
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|||
QxH(c) |
$ |
28 |
|
|
$ |
(193 |
) |
|
NM |
|
|
|
|
|
|
|
85 |
|
|
|
80 |
|
|
(6 |
) |
% |
|
(6) |
% |
Cornerstone |
|
(14 |
) |
|
|
18 |
|
|
NM |
|
|
|
|
|
Unallocated corporate cost |
|
(10 |
) |
|
|
(8 |
) |
|
20 |
|
% |
|
|
|
Total Qurate Retail Operating Income (Loss) (excluding Zulily) |
$ |
89 |
|
|
$ |
(103 |
) |
|
NM |
|
|
|
NM |
|
Zulily(b) |
|
(47 |
) |
|
|
— |
|
|
NM |
|
|
|
|
|
Total Qurate Retail Operating Income (Loss) (as reported) |
$ |
42 |
|
|
$ |
(103 |
) |
|
NM |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Adjusted OIBDA (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|||
QxH(c) |
$ |
150 |
|
|
$ |
221 |
|
|
47 |
|
% |
|
|
|
|
|
97 |
|
|
|
99 |
|
|
2 |
|
% |
|
2 |
% |
Cornerstone |
|
(7 |
) |
|
|
27 |
|
|
NM |
|
|
|
|
|
Unallocated corporate cost |
|
(7 |
) |
|
|
(7 |
) |
|
- |
|
% |
|
|
|
Total Qurate Retail Adjusted OIBDA (excluding Zulily) |
$ |
233 |
|
|
$ |
340 |
|
|
46 |
|
% |
|
46 |
% |
Zulily(b) |
|
(36 |
) |
|
|
— |
|
|
NM |
|
|
|
|
|
Total Qurate Retail Adjusted OIBDA (as reported) |
$ |
197 |
|
|
$ |
340 |
|
|
73 |
|
% |
|
73 |
% |
________________________________________ |
||
a) |
For a definition of constant currency financial metrics, see the accompanying schedules. |
|
b) |
|
|
c) |
In the fourth quarter of 2022, QxH incurred |
FULL YEAR 2023 FINANCIAL RESULTS |
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(amounts in millions) |
2022 |
|
2023 |
|
% Change |
|
|
% Change
|
|
|||||
Revenue |
|
|
|
|
|
|
|
|
|
|
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|||
QxH |
$ |
7,359 |
|
|
$ |
6,995 |
|
|
(5 |
) |
% |
|
|
|
|
|
2,528 |
|
|
|
2,454 |
|
|
(3 |
) |
% |
|
(1) |
% |
Cornerstone |
|
1,313 |
|
|
|
1,165 |
|
|
(11 |
) |
% |
|
|
|
Total Qurate Retail Revenue (excluding Zulily) |
$ |
11,200 |
|
|
$ |
10,614 |
|
|
(5 |
) |
% |
|
(5) |
% |
Zulily(b) |
|
906 |
|
|
|
301 |
|
|
NM |
|
|
|
|
|
Total Qurate Retail Revenue (as reported) |
$ |
12,106 |
|
|
$ |
10,915 |
|
|
(10 |
) |
% |
|
(10) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Operating Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|||
QxH(c) |
$ |
(1,820 |
) |
|
$ |
275 |
|
|
NM |
|
|
|
|
|
|
|
306 |
|
|
|
370 |
|
|
21 |
|
% |
|
26 |
% |
Cornerstone(e) |
|
48 |
|
|
|
35 |
|
|
(27 |
) |
% |
|
|
|
Unallocated corporate cost |
|
(36 |
) |
|
|
(33 |
) |
|
8 |
|
% |
|
|
|
Total Qurate Retail Operating Income (Loss) (excluding Zulily) |
$ |
(1,502 |
) |
|
$ |
647 |
|
|
NM |
|
|
|
NM |
|
Zulily(b) |
|
(539 |
) |
|
|
(57 |
) |
|
NM |
|
|
|
|
|
Total Qurate Retail Operating Income (Loss) (as reported) |
$ |
(2,041 |
) |
|
$ |
590 |
|
|
NM |
|
|
|
NM |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Adjusted OIBDA (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|||
QxH(c) |
$ |
750 |
|
|
$ |
746 |
|
|
(1 |
) |
% |
|
|
|
|
|
358 |
|
|
|
325 |
|
|
(9 |
) |
% |
|
(6) |
% |
Cornerstone(e) |
|
78 |
|
|
|
67 |
|
|
(14 |
) |
% |
|
|
|
Unallocated corporate cost |
|
(25 |
) |
|
|
(23 |
) |
|
8 |
|
% |
|
|
|
Total Qurate Retail Adjusted OIBDA (excluding Zulily) |
$ |
1,161 |
|
|
$ |
1,115 |
|
|
(4 |
) |
% |
|
(3) |
% |
Zulily(b) |
|
(97 |
) |
|
|
(41 |
) |
|
NM |
|
|
|
|
|
Total Qurate Retail Adjusted OIBDA (as reported) |
$ |
1,064 |
|
|
$ |
1,074 |
|
|
1 |
|
% |
|
2 |
% |
________________________________________ |
||
a) |
For a definition of constant currency financial metrics, see the accompanying schedules. |
|
b) |
Zulily was divested on |
|
c) |
For the year ended |
|
d) |
For the year ended |
|
e) |
For the year ended |
FOURTH QUARTER AND FULL YEAR 2023 NET INCOME AND ADJUSTED NET INCOME (4) |
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(amounts in millions) |
4Q22 |
|
4Q23 |
|
|
|
2022 |
|
2023 |
|
||||||||
Net income (loss) |
$ |
(51 |
) |
|
$ |
(273 |
) |
|
|
|
$ |
(2,594 |
) |
|
$ |
(145 |
) |
|
Adjusted net income (loss)(a) |
$ |
(18 |
) |
|
$ |
87 |
|
|
|
|
$ |
58 |
|
|
$ |
94 |
|
|
|
|
|
|
|
|
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Basic weighted average shares
|
|
381 |
|
|
|
389 |
|
|
|
|
|
380 |
|
|
|
387 |
|
|
Potentially dilutive shares |
|
1 |
|
|
|
1 |
|
|
|
|
|
3 |
|
|
|
1 |
|
|
Diluted WASO |
|
382 |
|
|
|
390 |
|
|
|
|
|
383 |
|
|
|
388 |
|
|
|
|
|
|
|
|
|
|
|
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|
||||
GAAP EPS(b) |
$ |
(0.13 |
) |
|
$ |
(0.70 |
) |
|
|
|
$ |
(6.83 |
) |
|
$ |
(0.37 |
) |
|
Adjusted EPS(a) |
$ |
(0.05 |
) |
|
$ |
0.22 |
|
|
|
|
$ |
0.15 |
|
|
$ |
0.24 |
|
|
________________________________________ |
||
a) |
See reconciling schedule 3. |
|
b) |
Represents diluted net income per share attributable to Series A and Series B common stockholders as presented in Qurate Retail’s financial statements. |
QxH
QxH revenue declined in the fourth quarter and full year. Revenue declined in both periods primarily due to lower units shipped, which decreased 5% in the fourth quarter and 6% in the full year, as well as lower shipping and handling revenue and higher returns. Units shipped in the fourth quarter were impacted by less inventory liquidation sales compared to the prior year. These factors were partially offset by a 3% increase in average selling price in both the fourth quarter and full year. QxH grew apparel and jewelry with declines in electronics and home in the fourth quarter. QxH reported declines in all categories for the full year.
Operating loss in the fourth quarter was primarily driven by a
In the fourth quarter, US Dollar denominated results were positively affected by exchange rate fluctuations. The US Dollar weakened 6% against the British Pound and the Euro, partially offset by the US Dollar strengthening 5% against the Japanese Yen. Exchange rate fluctuations negatively impacted full year 2023 results. The US Dollar strengthened 7% against the Japanese Yen, partially offset by weakening 2% against the Euro and 1% against the British Pound. The financial metrics presented in this press release also provide a comparison of the percentage change in QVC International’s results in constant currency (where applicable) to the comparable figures calculated in accordance with US GAAP for the fourth quarter and full year 2023.
In the fourth quarter, QVC International’s constant currency revenue was flat, with a 1% increase in average selling price offset by a 1% decrease in units shipped. For the full year, constant currency revenue decreased 1%, reflecting a 3% decline in units shipped and lower shipping and handling revenue, partially offset by a 2% increase in average selling price.
Operating margin declined in the fourth quarter and increased for the full year and Adjusted OIBDA margin was flat in the fourth quarter and declined for the full year. Operating income for the full year benefited from lower depreciation expense following the sale leaseback transactions in
Cornerstone
Cornerstone revenue decreased in the fourth quarter and full year, reflecting softness and competitive promotional pressure in the home sector as well as lower demand for apparel at Garnet Hill.
Operating income and Adjusted OIBDA margin decreased in the full year due to higher promotions and deleverage of marketing and administrative costs, partially offset by lower supply chain costs. Operating income and Adjusted OIBDA margin increased in the fourth quarter as a result of continued efforts to manage supply chain costs.
FOURTH QUARTER 2023 SUPPLEMENTAL METRICS |
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(amounts in millions unless otherwise noted) |
|
4Q22 |
|
4Q23 |
|
% Change |
|
|
% Change
Constant
|
|
|||||
QxH |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cost of Goods Sold % of Revenue |
|
|
72.9 |
|
% |
|
68.4 |
|
% |
(450 |
) |
bps |
|
|
|
Operating Income Margin (%)(b) |
|
|
1.2 |
|
% |
|
(8.9 |
) |
% |
NM |
|
|
|
|
|
Adjusted OIBDA Margin (%)(b) |
|
|
6.6 |
|
% |
|
10.2 |
|
% |
360 |
|
bps |
|
|
|
Average Selling Price |
|
$ |
53.95 |
|
|
$ |
55.76 |
|
|
3 |
|
% |
|
|
|
Units Sold |
|
|
|
|
|
|
|
(5 |
) |
% |
|
|
|
||
Return Rate(c) |
|
|
12.0 |
|
% |
|
13.9 |
|
% |
190 |
|
bps |
|
|
|
eCommerce Revenue(d) |
|
$ |
1,413 |
|
|
$ |
1,392 |
|
|
(1 |
) |
% |
|
|
|
eCommerce % of Total Revenue |
|
|
62.6 |
|
% |
|
64.5 |
|
% |
190 |
|
bps |
|
|
|
Mobile % of eCommerce Revenue(e) |
|
|
67.9 |
|
% |
|
70.1 |
|
% |
220 |
|
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cost of Goods Sold % of Revenue |
|
|
64.0 |
|
% |
|
63.0 |
|
% |
(100 |
) |
bps |
|
|
|
Operating Income Margin (%) |
|
|
12.8 |
|
% |
|
11.8 |
|
% |
(100 |
) |
bps |
|
|
|
Adjusted OIBDA Margin (%) |
|
|
14.6 |
|
% |
|
14.6 |
|
% |
— |
|
bps |
|
|
|
Average Selling Price |
|
|
|
|
|
|
|
3 |
|
% |
|
1 |
% |
||
Units Sold |
|
|
|
|
|
|
|
(1 |
) |
% |
|
|
|
||
Return Rate(c) |
|
|
18.6 |
|
% |
|
18.1 |
|
% |
(50 |
) |
bps |
|
|
|
eCommerce Revenue(d) |
|
$ |
326 |
|
|
$ |
359 |
|
|
10 |
|
% |
|
7 |
% |
eCommerce % of Total Revenue |
|
|
48.9 |
|
% |
|
52.9 |
|
% |
400 |
|
bps |
|
|
|
Mobile % of eCommerce Revenue(e) |
|
|
70.7 |
|
% |
|
70.5 |
|
% |
(20 |
) |
bps |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cornerstone |
|
|
|
|
|
|
|
|
|
|
|
|
|||
Cost of Goods Sold % of Revenue |
|
|
71.2 |
|
% |
|
59.0 |
|
% |
(1,220 |
) |
bps |
|
|
|
Operating Income Margin (%) |
|
|
(4.0 |
) |
% |
|
5.9 |
|
% |
NM |
|
|
|
|
|
Adjusted OIBDA Margin (%) |
|
|
(2.0 |
) |
% |
|
8.9 |
|
% |
NM |
|
|
|
|
|
eCommerce Revenue(d) |
|
$ |
273 |
|
|
$ |
245 |
|
|
(10 |
) |
% |
|
|
|
eCommerce % of Total Revenue |
|
|
78.4 |
|
% |
|
80.3 |
|
% |
190 |
|
bps |
|
|
|
________________________________________ |
||
a) |
For a definition of constant currency financial metrics, see the accompanying schedules. |
|
b) |
In the fourth quarter of 2022, QxH incurred |
|
c) |
Measured as returned sales over gross shipped sales in US Dollars. |
|
d) |
Based on net revenue. |
|
e) |
Based on gross US Dollar orders. |
FULL YEAR 2023 SUPPLEMENTAL METRICS |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
(amounts in millions unless otherwise noted) |
|
2022 |
|
2023 |
|
% Change |
|
|
% Change
|
|
||||
QxH |
|
|
|
|
|
|
|
|
|
|
|
|
||
Cost of Goods Sold % of Revenue(b) |
|
|
69.7 |
|
% |
|
67.3 |
% |
(240 |
) |
bps |
|
|
|
Operating Income Margin (%)(c) |
|
|
(24.7 |
) |
% |
|
3.9 |
% |
NM |
|
|
|
|
|
Adjusted OIBDA Margin (%)(c) |
|
|
10.2 |
|
% |
|
10.7 |
% |
50 |
|
bps |
|
|
|
Average Selling Price |
|
$ |
51.74 |
|
|
$ |
53.33 |
|
3 |
|
% |
|
|
|
Units Sold |
|
|
|
|
|
|
|
(6 |
) |
% |
|
|
|
|
Return Rate(d) |
|
|
14.0 |
|
% |
|
15.2 |
% |
120 |
|
bps |
|
|
|
eCommerce Revenue(e) |
|
$ |
4,450 |
|
|
$ |
4,321 |
|
(3 |
) |
% |
|
|
|
eCommerce % of Total Revenue |
|
|
60.5 |
|
% |
|
61.8 |
% |
130 |
|
bps |
|
|
|
Mobile % of eCommerce Revenue(f) |
|
|
67.1 |
|
% |
|
69.1 |
% |
200 |
|
bps |
|
|
|
LTM Total Customers(g) |
|
|
8.9 |
|
|
|
8.1 |
|
(9 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Cost of Goods Sold % of Revenue |
|
|
64.1 |
|
% |
|
63.7 |
% |
(40 |
) |
bps |
|
|
|
Operating Income Margin (%)(h) |
|
|
12.1 |
|
% |
|
15.1 |
% |
300 |
|
bps |
|
|
|
Adjusted OIBDA Margin (%)(h) |
|
|
14.2 |
|
% |
|
13.2 |
% |
(100 |
) |
bps |
|
|
|
Average Selling Price |
|
|
|
|
|
|
|
1 |
|
% |
|
2 |
% |
|
Units Sold |
|
|
|
|
|
|
|
(3 |
) |
% |
|
|
|
|
Return Rate(d) |
|
|
18.8 |
|
% |
|
19.1 |
% |
30 |
|
bps |
|
|
|
eCommerce Revenue(e) |
|
$ |
1,202 |
|
|
$ |
1,217 |
|
1 |
|
% |
|
2 |
% |
eCommerce % of Total Revenue |
|
|
47.5 |
|
% |
|
49.6 |
% |
210 |
|
bps |
|
|
|
Mobile % of eCommerce Revenue(f) |
|
|
70.8 |
|
% |
|
69.9 |
% |
(90 |
) |
bps |
|
|
|
LTM Total Customers(g) |
|
|
4.3 |
|
|
|
4.1 |
|
(5 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Cornerstone |
|
|
|
|
|
|
|
|
|
|
|
|
||
Cost of Goods Sold % of Revenue |
|
|
64.7 |
|
% |
|
61.5 |
% |
(320 |
) |
bps |
|
|
|
Operating Income Margin (%)(i) |
|
|
3.7 |
|
% |
|
3.0 |
% |
(70 |
) |
bps |
|
|
|
Adjusted OIBDA Margin (%)(i) |
|
|
5.9 |
|
% |
|
5.8 |
% |
(10 |
) |
bps |
|
|
|
eCommerce Revenue(e) |
|
$ |
994 |
|
|
$ |
902 |
|
(9 |
) |
% |
|
|
|
eCommerce % of Total Revenue |
|
|
75.7 |
|
% |
|
77.4 |
% |
170 |
|
bps |
|
|
|
________________________________________ |
||
a) |
|
For a definition of constant currency financial metrics, see the accompanying schedules. |
b) |
|
Excludes |
c) |
|
For the year ended |
d) |
|
Measured as returned sales over gross shipped sales in US Dollars. |
e) |
|
Based on net revenue. |
f) |
|
Based on gross US Dollar orders. |
g) |
|
LTM: Last twelve months. |
h) |
|
For the year ended |
i) |
|
For the year ended |
FOOTNOTES
1) |
|
|
2) |
Adjusted for the divestiture of Zulily on |
|
3) |
For a definition of constant currency financial metrics, see the accompanying schedules. Applicable reconciliations can be found in the financial tables at the beginning of this press release. |
|
4) |
For definitions and applicable reconciliations of Adjusted OIBDA, Adjusted OIBDA margin, adjusted net income and adjusted diluted EPS, see the accompanying schedules. |
NOTES
Cash and Debt
The following presentation is provided to separately identify cash and debt information.
(amounts in millions) |
|
|
|
|
||||
Cash and cash equivalents (GAAP) |
|
$ |
1,099 |
|
|
$ |
1,121 |
|
|
|
|
|
|
|
|
||
Indemnification agreement receivable (a) |
|
$ |
21 |
|
|
$ |
— |
|
|
|
|
|
|
|
|
||
Debt: |
|
|
|
|
|
|
||
QVC senior secured notes(b) |
|
$ |
3,509 |
|
|
$ |
3,509 |
|
QVC senior secured bank credit facility |
|
|
995 |
|
|
|
857 |
|
Total Qurate Retail Group Debt |
|
$ |
4,504 |
|
|
$ |
4,366 |
|
|
|
|
|
|
|
|
||
Senior notes(b) |
|
|
792 |
|
|
|
792 |
|
Senior exchangeable debentures(c) |
|
|
858 |
|
|
|
781 |
|
Corporate Level Debentures |
|
|
1,650 |
|
|
|
1,573 |
|
|
|
$ |
6,154 |
|
|
$ |
5,939 |
|
Unamortized discount, fair market value adjustment and deferred loan costs |
|
|
(589 |
) |
|
|
(599 |
) |
|
|
$ |
5,565 |
|
|
$ |
5,340 |
|
|
|
|
|
|
|
|
||
Other Financial Obligations: |
|
|
|
|
|
|
||
Preferred stock(d) |
|
$ |
1,270 |
|
|
$ |
1,270 |
|
|
|
|
|
|
|
|
||
|
|
|
2.6x |
|
|
2.4x |
________________________________________ |
||
a) |
Indemnity from Liberty Broadband Corporation (“Liberty Broadband”), pursuant to an indemnification agreement with respect to the |
|
b) |
Face amount of senior notes and debentures with no reduction for the unamortized discount. |
|
c) |
Face amount of senior exchangeable debentures with no adjustment for the fair market value adjustment. |
|
d) |
Preferred stock has an 8% coupon, |
|
e) |
As defined in QVC, Inc.’s credit agreement. The gains from sale leaseback transactions completed within the last twelve months and a portion of expected cost savings are included in adjusted EBITDA for purposes of the covenant calculations under QVC’s bank credit facility. |
Cash at
QVC’s bank credit facility has
As of
Important Notice:
This press release includes certain forward-looking statements, including statements about business strategies and initiatives (including Project Athens) and their expected benefits, market potential, future financial performance and prospects, future repayment of debt and other matters that are not historical facts. These forward-looking statements involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements, including, without limitation, possible changes in market acceptance of new products or services, competitive issues, regulatory matters affecting our businesses, continued access to capital on terms acceptable to
NON-GAAP FINANCIAL MEASURES
To provide investors with additional information regarding our financial results, this press release includes a presentation of Adjusted OIBDA, which is a non-GAAP financial measure, for
In addition, this press release includes references to adjusted net income and adjusted earnings per share, which are non-GAAP financial measures, for
This press release also references certain financial metrics on a constant currency basis, which is a non-GAAP measure, for
SCHEDULE 1
The following table provides a reconciliation of Qurate Retail’s Adjusted OIBDA to its operating income (loss) calculated in accordance with GAAP for the three months ended
CONSOLIDATED OPERATING INCOME AND ADJUSTED OIBDA RECONCILIATION |
||||||||||||||||||||||||||||
|
||||||||||||||||||||||||||||
(amounts in millions) |
|
4Q22 |
|
1Q23 |
|
|
2Q23 |
|
|
3Q23 |
|
4Q23 |
|
|
|
|
2022 |
|
|
2023 |
|
|||||||
Qurate Retail Operating Income (Loss) |
|
$ |
42 |
|
$ |
176 |
|
|
$ |
366 |
|
|
$ |
151 |
|
$ |
(103 |
) |
|
|
|
$ |
(2,041 |
) |
|
$ |
590 |
|
Depreciation and amortization |
|
|
110 |
|
|
100 |
|
|
|
104 |
|
|
|
105 |
|
|
98 |
|
|
|
|
|
481 |
|
|
|
407 |
|
Stock compensation expense |
|
|
14 |
|
|
16 |
|
|
|
14 |
|
|
|
10 |
|
|
13 |
|
|
|
|
|
60 |
|
|
|
53 |
|
Restructuring, penalties and fire related costs, net of (recoveries)(a) |
|
|
31 |
|
|
— |
|
|
|
(208 |
) |
|
|
19 |
|
|
— |
|
|
|
|
|
3 |
|
|
|
(189 |
) |
Impairment of intangible assets(b) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
326 |
|
|
|
|
|
3,081 |
|
|
|
326 |
|
(Gains) on sale of assets and sale leaseback transactions(c) |
|
|
— |
|
|
(113 |
) |
|
|
(6 |
) |
|
|
— |
|
|
6 |
|
|
|
|
|
(520 |
) |
|
|
(113 |
) |
Qurate Retail Adjusted OIBDA |
|
$ |
197 |
|
$ |
179 |
|
|
$ |
270 |
|
|
$ |
285 |
|
$ |
340 |
|
|
|
|
$ |
1,064 |
|
|
$ |
1,074 |
|
________________________________________ |
||
a) |
The year ended |
|
b) |
Includes |
|
c) |
Includes gains on the sale related to the modification of a lease that resulted in a sale leaseback for GAAP purposes of six US properties completed the year ended |
SCHEDULE 2
The following table provides a reconciliation of Adjusted OIBDA for QVC and Cornerstone to that entity or such businesses’ operating income (loss) calculated in accordance with GAAP for the three months ended
SUBSIDIARY ADJUSTED OIBDA RECONCILIATION |
|||||||||||||||||||||||||||||
(amounts in millions) |
|
4Q22 |
|
1Q23 |
|
2Q23 |
|
3Q23 |
|
4Q23 |
|
|
|
2022 |
|
2023 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
QVC |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating income (loss) |
|
$ |
113 |
|
|
$ |
230 |
|
|
$ |
374 |
|
|
$ |
154 |
|
$ |
(113 |
) |
|
|
|
$ |
(1,514 |
) |
|
$ |
645 |
|
Depreciation and amortization |
|
|
96 |
|
|
|
89 |
|
|
|
94 |
|
|
|
98 |
|
|
91 |
|
|
|
|
|
401 |
|
|
|
372 |
|
Stock compensation |
|
|
9 |
|
|
|
9 |
|
|
|
11 |
|
|
|
7 |
|
|
10 |
|
|
|
|
|
36 |
|
|
|
37 |
|
Restructuring, penalties and fire related costs, net of (recoveries) (including |
|
|
29 |
|
|
|
(4 |
) |
|
|
(211 |
) |
|
|
19 |
|
|
— |
|
|
|
|
|
(10 |
) |
|
|
(196 |
) |
(Gains) on sale of assets and sale leaseback transactions |
|
|
— |
|
|
|
(113 |
) |
|
|
(6 |
) |
|
|
— |
|
|
6 |
|
|
|
|
|
(520 |
) |
|
|
(113 |
) |
Impairment of intangible assets |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
326 |
|
|
|
|
|
2,715 |
|
|
|
326 |
|
Adjusted OIBDA |
|
$ |
247 |
|
|
$ |
211 |
|
|
$ |
262 |
|
|
$ |
278 |
|
$ |
320 |
|
|
|
|
$ |
1,108 |
|
|
$ |
1,071 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
QxH Adjusted OIBDA |
|
$ |
150 |
|
|
$ |
139 |
|
|
$ |
185 |
|
|
$ |
201 |
|
$ |
221 |
|
|
|
|
$ |
750 |
|
|
$ |
746 |
|
QVC International Adjusted OIBDA |
|
$ |
97 |
|
|
$ |
72 |
|
|
$ |
77 |
|
|
$ |
77 |
|
$ |
99 |
|
|
|
|
$ |
358 |
|
|
$ |
325 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Cornerstone |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Operating income (loss) |
|
$ |
(14 |
) |
|
$ |
(2 |
) |
|
$ |
15 |
|
|
$ |
4 |
|
$ |
18 |
|
|
|
|
$ |
48 |
|
|
$ |
35 |
|
Depreciation and amortization |
|
|
7 |
|
|
|
5 |
|
|
|
7 |
|
|
|
7 |
|
|
7 |
|
|
|
|
|
27 |
|
|
|
26 |
|
Stock compensation |
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
|
|
— |
|
|
2 |
|
|
|
|
|
3 |
|
|
|
4 |
|
Restructuring costs |
|
|
— |
|
|
|
— |
|
|
|
2 |
|
|
|
— |
|
|
— |
|
|
|
|
|
— |
|
|
|
2 |
|
Adjusted OIBDA (Loss) |
|
$ |
(7 |
) |
|
$ |
4 |
|
|
$ |
25 |
|
|
$ |
11 |
|
$ |
27 |
|
|
|
|
$ |
78 |
|
|
$ |
67 |
|
________________________________________
SCHEDULE 3
The following table provides a reconciliation of Qurate Retail’s net income (loss) to its adjusted net income and diluted earnings (loss) per share to adjusted earnings per share, in each case, calculated in accordance with GAAP for the three months ended
ADJUSTED NET INCOME AND ADJUSTED EPS RECONCILIATION |
|||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
(amounts in millions) |
|
|
4Q22 |
|
|
1Q23 |
|
|
2Q23 |
|
|
3Q23 |
|
|
4Q23 |
|
|
|
|
2022 |
|
|
2023 |
||||||
Qurate Retail Net Income (Loss) (GAAP) |
|
$ |
(51 |
) |
|
$ |
20 |
|
|
$ |
107 |
|
|
$ |
1 |
|
$ |
(273 |
) |
|
|
|
$ |
(2,594 |
) |
|
$ |
(145 |
) |
Purchase accounting amort., net of deferred tax benefit(a) |
|
|
18 |
|
|
|
17 |
|
|
|
15 |
|
|
|
14 |
|
|
14 |
|
|
|
|
|
68 |
|
|
|
60 |
|
Impairment of intangible assets, net of tax impact |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
326 |
|
|
|
|
|
3,004 |
|
|
|
326 |
|
Restructuring, penalties and fire related costs, net of (recoveries) |
|
|
24 |
|
|
|
— |
|
|
|
(156 |
) |
|
|
14 |
|
|
— |
|
|
|
|
|
3 |
|
|
|
(142 |
) |
(Gains) on sale of assets and sale leaseback transactions, net of tax impact |
|
|
— |
|
|
|
(92 |
) |
|
|
(5 |
) |
|
|
— |
|
|
6 |
|
|
|
|
|
(392 |
) |
|
|
(91 |
) |
Mark-to-market adjustments, net(b) |
|
|
(9 |
) |
|
|
35 |
|
|
|
26 |
|
|
|
11 |
|
|
14 |
|
|
|
|
|
(31 |
) |
|
|
86 |
|
Adjusted Net Income (Loss) |
|
$ |
(18 |
) |
|
$ |
(20 |
) |
|
$ |
(13 |
) |
|
$ |
40 |
|
$ |
87 |
|
|
|
|
$ |
58 |
|
|
$ |
94 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Diluted earnings per share (GAAP) |
|
$ |
(0.13 |
) |
|
$ |
0.05 |
|
|
$ |
0.28 |
|
|
$ |
— |
|
$ |
(0.70 |
) |
|
|
|
$ |
(6.83 |
) |
|
$ |
(0.37 |
) |
Adjustments, net of tax |
|
|
0.08 |
|
|
|
(0.10 |
) |
|
|
(0.31 |
) |
|
|
0.10 |
|
|
0.92 |
|
|
|
|
|
6.98 |
|
|
|
0.61 |
|
Adjusted earnings per share |
|
$ |
(0.05 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.03 |
) |
|
$ |
0.10 |
|
$ |
0.22 |
|
|
|
|
$ |
0.15 |
|
|
$ |
0.24 |
|
________________________________________
a) |
Add-back relates to non-cash, non-tax deductible purchase accounting amortization from Qurate Retail’s acquisitions of QVC, HSN, Zulily and Cornerstone, net of book deferred tax benefit. |
|
b) |
Add-back includes realized and unrealized gains/losses on financial instruments, net of tax. |
BALANCE SHEET INFORMATION (unaudited) |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
amounts in millions |
||||
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
1,121 |
|
1,275 |
|
Trade and other receivables, net |
|
|
1,308 |
|
1,394 |
|
Inventory, net |
|
|
1,044 |
|
1,346 |
|
Indemnification agreement receivable |
|
|
— |
|
50 |
|
Other current assets |
|
|
209 |
|
210 |
|
Total current assets |
|
|
3,682 |
|
4,275 |
|
Property and equipment, net |
|
|
512 |
|
570 |
|
Intangible assets not subject to amortization |
|
|
5,862 |
|
6,219 |
|
Intangible assets subject to amortization, net |
|
|
526 |
|
612 |
|
Operating lease right-of-use assets |
|
|
635 |
|
585 |
|
Other assets, at cost, net of accumulated amortization |
|
|
151 |
|
310 |
|
Total assets |
|
$ |
11,368 |
|
12,571 |
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
895 |
|
976 |
|
Accrued liabilities |
|
|
983 |
|
1,133 |
|
Current portion of debt |
|
|
642 |
|
828 |
|
Other current liabilities |
|
|
97 |
|
162 |
|
Total current liabilities |
|
|
2,617 |
|
3,099 |
|
Long-term debt |
|
|
4,698 |
|
5,525 |
|
Deferred income tax liabilities |
|
|
1,531 |
|
1,440 |
|
Preferred stock |
|
|
1,270 |
|
1,266 |
|
Operating lease liabilities |
|
|
615 |
|
518 |
|
Other liabilities |
|
|
148 |
|
198 |
|
Total liabilities |
|
|
10,879 |
|
12,046 |
|
Equity/Attributed net assets (liabilities) |
|
|
385 |
|
412 |
|
Non-controlling interests in equity of subsidiaries |
|
|
104 |
|
113 |
|
Total liabilities and equity |
|
$ |
11,368 |
|
12,571 |
|
STATEMENT OF OPERATIONS INFORMATION (unaudited) |
|||||||
|
|
|
|
|
|
||
|
|
Years ended |
|||||
|
|
2023 |
|
2022 |
|||
|
|
amounts in millions |
|||||
Revenue: |
|
|
|
|
|
||
Total revenue, net |
|
$ |
10,915 |
|
|
12,106 |
|
|
|
|
|
|
|
||
Operating costs and expenses: |
|
|
|
|
|
||
Cost of goods sold (exclusive of depreciation shown separately below) |
|
|
7,230 |
|
|
8,417 |
|
Operating expense |
|
|
795 |
|
|
835 |
|
Selling, general and administrative, including stock-based compensation |
|
|
1,869 |
|
|
1,945 |
|
Impairment of intangible assets |
|
|
326 |
|
|
3,081 |
|
Gains on sale of assets and sale leaseback transactions |
|
|
(113 |
) |
|
(520 |
) |
Restructuring, penalties and fire related costs, net of (recoveries) |
|
|
(189 |
) |
|
(92 |
) |
Depreciation and amortization |
|
|
407 |
|
|
481 |
|
|
|
|
10,325 |
|
|
14,147 |
|
Operating income (loss) |
|
|
590 |
|
|
(2,041 |
) |
|
|
|
|
|
|
||
Other income (expense): |
|
|
|
|
|
||
Interest expense |
|
|
(451 |
) |
|
(456 |
) |
Dividend and interest income |
|
|
52 |
|
|
10 |
|
Realized and unrealized gains (losses) on financial instruments, net |
|
|
(61 |
) |
|
55 |
|
Loss on disposition of Zulily, net |
|
|
(64 |
) |
|
- |
|
Tax sharing income (expense) with Liberty Broadband |
|
|
(11 |
) |
|
79 |
|
Other, net |
|
|
11 |
|
|
45 |
|
|
|
|
(524 |
) |
|
(267 |
) |
Earnings (loss) from continuing operations before income taxes |
|
|
66 |
|
|
(2,308 |
) |
Income tax (expense) benefit |
|
|
(160 |
) |
|
(224 |
) |
Net earnings (loss) |
|
|
(94 |
) |
|
(2,532 |
) |
Less net earnings (loss) attributable to the noncontrolling interests |
|
|
51 |
|
|
62 |
|
Net earnings (loss) attributable to |
|
$ |
(145 |
) |
|
(2,594 |
) |
STATEMENT OF CASH FLOWS INFORMATION (unaudited) |
||||||||
|
|
|
|
|
|
|
||
|
|
Years ended |
|
|||||
|
|
2023 |
|
2022 |
|
|||
|
|
amounts in millions |
|
|||||
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
||
Net earnings (loss) |
|
$ |
(94 |
) |
|
(2,532 |
) |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
407 |
|
|
481 |
|
|
Impairment of intangible assets |
|
|
326 |
|
|
3,081 |
|
|
Stock-based compensation |
|
|
53 |
|
|
60 |
|
|
Noncash interest expense |
|
|
9 |
|
|
10 |
|
|
Realized and unrealized (gains) losses on financial instruments, net |
|
|
61 |
|
|
(55 |
) |
|
Gains on sale of assets and sale leaseback transactions |
|
|
(113 |
) |
|
(520 |
) |
|
Gain on insurance proceeds, net of fire related costs |
|
|
(225 |
) |
|
(132 |
) |
|
Deferred income tax expense (benefit) |
|
|
80 |
|
|
12 |
|
|
Insurance proceeds received for inventory, operating expenses and business interruption losses |
|
|
226 |
|
|
96 |
|
|
Loss on disposition of Zulily, net |
|
|
64 |
|
|
— |
|
|
Other noncash charges (credits), net |
|
|
15 |
|
|
(38 |
) |
|
Changes in operating assets and liabilities |
|
|
|
|
|
|
||
Decrease (increase) in accounts receivable |
|
|
36 |
|
|
124 |
|
|
Decrease (increase) in inventory |
|
|
257 |
|
|
254 |
|
|
Decrease (increase) in prepaid expenses and other assets |
|
|
68 |
|
|
102 |
|
|
(Decrease) increase in trade accounts payable |
|
|
(34 |
) |
|
(446 |
) |
|
(Decrease) increase in accrued and other liabilities |
|
|
(217 |
) |
|
(303 |
) |
|
Net cash provided (used) by operating activities |
|
|
919 |
|
|
194 |
|
|
|
|
|
|
|
|
|
||
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
||
Cash proceeds from dispositions of investments |
|
|
71 |
|
|
13 |
|
|
Investment in and loans to cost and equity investees |
|
|
— |
|
|
(7 |
) |
|
Capital expenditures |
|
|
(230 |
) |
|
(268 |
) |
|
Cash paid for disposal of Zulily |
|
|
(41 |
) |
|
— |
|
|
Expenditures for television distribution rights |
|
|
(113 |
) |
|
(45 |
) |
|
Insurance proceeds received for fixed asset loss |
|
|
54 |
|
|
184 |
|
|
Proceeds from sale of fixed assets |
|
|
208 |
|
|
704 |
|
|
Payments for settlements of financial instruments |
|
|
(179 |
) |
|
— |
|
|
Payments from settlements of financial instruments |
|
|
167 |
|
|
— |
|
|
Other investing activities, net |
|
|
9 |
|
|
20 |
|
|
Net cash provided (used) by investing activities |
|
|
(54 |
) |
|
601 |
|
|
|
|
|
|
|
|
|
||
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
||
Borrowings of debt |
|
|
1,267 |
|
|
3,029 |
|
|
Repayments of debt |
|
|
(2,258 |
) |
|
(3,008 |
) |
|
Withholding taxes on net share settlements of stock-based compensation |
|
|
(1 |
) |
|
(7 |
) |
|
Dividends paid to noncontrolling interest |
|
|
(53 |
) |
|
(68 |
) |
|
Dividends paid to common shareholders |
|
|
(8 |
) |
|
(12 |
) |
|
Indemnification agreement settlement |
|
|
45 |
|
|
- |
|
|
Other financing activities, net |
|
|
(2 |
) |
|
(6 |
) |
|
Net cash provided (used) by financing activities |
|
|
(1,010 |
) |
|
(72 |
) |
|
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash |
|
|
(4 |
) |
|
(34 |
) |
|
Net increase (decrease) in cash, cash equivalents and restricted cash |
|
|
(149 |
) |
|
689 |
|
|
Cash, cash equivalents and restricted cash at beginning of period |
|
|
1,285 |
|
|
596 |
|
|
Cash, cash equivalents and restricted cash at end of period |
|
$ |
1,136 |
|
|
1,285 |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240227714996/en/
720-875-5432
Source: