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Over 2,000 jobs at risk as Qurate plans to merge QVC US, HSN units

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Over 2,000 jobs at risk as Qurate plans to merge QVC US, HSN units

Qurate Retail Inc. said Oct. 17 that it will combine the U.S. operations of QVC and Home Shopping Network, or HSN, to form a new business entity called QXH, putting approximately 2,075 jobs at risk.

The U.S. retail group, which also owns the zulily, Ballard Designs, Frontgate and Garnet Hill brands, said the purpose of HSN and QVC's merger is to ensure an aligned approach to the U.S. market and to leverage the combined scale and resources of the two units, among other reasons.

Of the 350 affected positions in the fulfillment networks of HSN and QVC U.S., the majority will be from HSN's St. Petersburg, Fla., and Long Island, N.Y., operations. A smaller number of jobs also will be removed at Qurate's and QVC's operations in West Chester, Pa.

Approximately 1,725 positions will be eliminated at the first phase of HSN's and QVC U.S.'s integration from anticipated closures of fulfillment centers in Lancaster, Pa.; Roanoke, Va.; and Greeneville, Tenn., in 2020. The company said the number will be partially offset by the expected hiring of 1,200 to 1,500 positions at a new facility in Bethlehem, Pa., in 2019.

In addition, HSN will shut down its Ingenious Designs LLC facility in Long Island, N.Y., and move product designing and sourcing to Qurate's in-house team.

Affected employees will receive transition support, including severance payments, continuation of some benefits and outplacement assistance, the retailer added.

As a result, Qurate said it expects to incur an incremental one-time cost of $40 million to $45 million from severance and restructuring expenses during the third quarter of 2018, as well as $30 million on costs of establishing and running duplicate facilities from 2019 to 2021.

The company also said it will lease many of its fulfillment facilities to reduce longer-term capital requirements. The group also plans to combine both units' fulfillment centers into integrated fulfillment centers, relocate some fulfillment centers to reduce delivery time to customers, and upgrade fulfillment technologies, including deploying a warehouse management system.

Qurate said it will invest $200 million in net capital until 2022 on new fulfillment centers and technology spending. It also forecasts annual incremental leasing costs to reach $20 million in 2022.

The omnichannel retailer added that it expects to benefit from run-rate synergies of between $120 million and $125 million by 2022.

Meanwhile, the Colorado-based company said QVC U.S. President Steve Hofmann will leave the group, effective Oct. 19, as his role will be eliminated upon completion of the units' combination.

The media conglomerate appointed Qurate Chief Merchandising Officer and QVC U.S. Chief Commerce Officer Mary Campbell as QXH's head of merchandising, marketing, brand and digital strategy. Campbell also will be responsible for digital content and broadcast operations of QVC U.S.

HSN President Mike Fitzharris will be responsible for the expansion and distribution of QXH's video platform, in addition to HSN's digital content and broadcast operations.

Both appointments are effective immediately.

HSN and QVC U.S. recorded a combined revenue of $8.5 billion in 2017, according to the release. The company acquired HSN, formerly named HSNi, in December 2017.