Dive Brief:
- Revenue at QVC owner Qurate Retail Group fell 13% year over year during the third quarter, according to a press release.
- Leading the way was the company’s troubled Zulily e-commerce unit, with a 39% decline in revenue in Q3. The company attributed the drop to lower availability of products from national brands and reduced marketing spend.
- At $403 million, operating losses at Zulily increased 10 times over from the same period last year, which included a $366 million impairment charge against its tradename and $3 million in restructuring costs.
Dive Insight:
Zulily presents a steep challenge for Qurate, but the e-commerce site is not the company’s only struggle as it weathers declines in consumer spending.
Sales were also down by 8% in Qurate’s QxH unit, which includes the QVC and HSN television retail channels, and down 21% at QVC International. Only the company’s Cornerstone business — which includes the catalog specialists Frontgate, Ballard Designs, Grandin Road and Garnet Hill — grew, with sales up 8%.
In the release, Qurate CEO David Rawlinson attributed the company’s revenue declines to the “intensely promotional environment” in retail as the industry tries to manage pullbacks in consumer spending and elevated inventory levels.
For Qurate as a whole, operating losses topped $2.6 billion, compared to a $274 million profit last year. Most of that operating loss was due to non-cash impairment charges to the goodwill and tradename of HSN and Zulily.
Qurate attributed those impairments to “a significant increase in discount rates used, combined with recent business performance that is partially attributed to the challenged economic conditions.”
QxH has also lost nearly 1.9 million customers from its total count, with losses in existing, new and reactivated customers in September compared to the same period last year, according to a Qurate company presentation.
S&P Global Ratings downgraded Qurate in September, with analysts citing “ongoing supply chain constraints and lower discretionary spending [that] will weigh on the company’s efforts to turn around operations.” The analysts also said that the company had “limited ability to effectively adjust its merchandising strategy amid the early stages of its turnaround.”
To help its struggling Zulily unit, Qurate earlier this year brought in Terry Boyle, former president of Nordstrom’s Trunk Club, to lead the turnaround. While still bad, Zulily’s performance has improved from Q2, when sales were down 45%. The unit has also shed employees to cut costs as it readjusts to lower sales.
