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Liberty Interactive sees growth in local currency for most QVC markets


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Liberty Interactive sees growth in local currency for most QVC markets

Liberty InteractiveCorp. saw revenue growth across its footprint in the first quarter withrevenue driven by gains in U.S. and international markets as well as from the recentlyacquired zulily.

The QVC Group's revenue jumped by 22% year-over-year to $2.37billion, up from the $1.94 billion in the year-ago quarter. While adjusted OIBDAclocked in at $433 million, up 8% from the $401 million in the 2015 first quarter,the company saw operating income and adjusted net income both decrease by 13% to$206 million and $176 million, respectively. Net income contracted 40% to $90 millionfrom the $151 million in the year-ago quarter.

For QVC U.S., revenue showed a 5% increase to $1.41 billion forthe first quarter, driven by growth in apparel, accessories and home segments, whichwas offset by declines in jewelry and electronics. Revenue from eCommerce jumped10% to $698 million and adjusted OIBDA increased 7% to $326 million.

QVC's international saw constant currency revenue growth in everysector except Japan. Overall international revenue increased to $606 million forthe quarter, marking a 2% year-over-year increase, and included a small unfavorableexchange rate fluctuation. Growth was driven by fashion and home items; jewelrycontinued to see slowing growth. Germany, the United Kingdom and Italy were thestrongest growth markets while France saw slow growth, though executives said theywere still confident in the market's potential.

Japan has seen substantial slowdown in recent years, which QVCPresident Mike George attributed in part to an outdated website. The company isrefocusing efforts in the country with a revamped website, the first in more thana decade, and new management team.

"We are focused on getting our Japan business back to sustainabletop and bottom line growth in the face of poor economic conditions and the continuedpressures from the rising cost of TV carriage," George told analysts duringthe earnings call.

Revenue from the company's joint venture in the China clockedin at $41 million, up 14% year over year.

As for zulily, the flash-sale company saw revenue grow to $355million for the quarter, up 16% year over year. Adjusted OIBDA grew to $23 million,an increase of 475%. Zulily President and CEO Darrell Cavens attributed the growthto operational execution and earlier investments in the fulfillment and logisticsnetwork. He added that the synergies from the acquisition also contributed to thesavings. Mobile was a driving force for the company as 62% of orders came from mobiledevices.

Despite the gains, zulily recorded a net loss of $43 millioncompared to the $4 million net loss in the 2015 first quarter. The expanded losswas attributed primarily to $56 million in nontax deductible purchase accountingamortization.

In a conference call, analysts pressed executives on the QVC'sstrategy as far as leveraging social media and new technology to drive growth. Thequarter saw QVC use Facebook's Live video feature to deliver real-time conversationsacross the company's 18 Facebook pages, resulting in more than 2 million minutesof video content that reached more than 6 million viewers. The company also hasa presence in over-the-top platforms. While the company is partnered with Roku andApple TV, the OTT front is not as meaningful to the company right now, George said.

"They're just not where the eyeballs are at least for ourdemo," he said. "But as the eyeballs shift to those kinds of formats,we think we will be there."

In the LibertyVentures segment, the company filed two S-1 forms for the anticipatedspinoffs of CommerceHub and Liberty Expedia, though executives did not elaborateon the timeline.

From Feb. 1 to April 30, Liberty Interactive repurchased 7.7million QVCA shares at an average price of $24.98 per share for a total of $193million.