Qurate Retail(QRTEA) - 2025 Q3 - Quarterly Report

Financial Performance - Consolidated QVC Group revenue decreased by 5.6% or $131 million for the three months ended September 30, 2025, and by 7.6% or $540 million for the nine months ended September 30, 2025, compared to the prior year [156]. - Operating income decreased by $92 million for the three months and by $2,662 million for the nine months ended September 30, 2025, compared to the corresponding periods in the prior year [159]. - Adjusted OIBDA decreased by 32.4% or $81 million for the three months and by 27.2% or $215 million for the nine months ended September 30, 2025, compared to the prior year [163]. - The Company recorded net losses of $73 million for the three months and $2,373 million for the nine months ended September 30, 2025, compared to net losses of $15 million and net earnings of $25 million in the prior year [173]. - QVC's consolidated net revenue decreased by $110 million or 5.3% for the three months ended September 30, 2025, and by $466 million or 7.4% for the nine months ended September 30, 2025, compared to the same periods in 2024 [195]. - QxH's total revenue net decline for the three months ended September 30, 2025, was $105 million or 6.9%, primarily due to a 7.4% decrease in units shipped [198]. - CBI's consolidated net revenue decreased by 8.4% and 9.8% for the three and nine months ended September 30, 2025, respectively, due to a 14.5% decrease in units shipped for the three months [209]. Cost and Expenses - QVC's cost of goods sold as a percentage of net revenue increased to 66.4% and 65.9% for the three and nine months ended September 30, 2025, respectively, compared to 65.3% and 64.9% for the same periods in 2024 [200]. - Operating expenses were 7.7% and 7.8% of net revenue for the three and nine months ended September 30, 2025, a decrease from 7.9% for both periods in 2024 [201]. - Advertising expenses increased by $17 million or 24.3% for the three months ended September 30, 2025, and by $26 million or 12.9% for the nine months ended September 30, 2025, primarily due to marketing investments [202]. - CBI's cost of goods sold as a percentage of net revenue was 62.5% for the three months ended September 30, 2025, up from 59.9% in 2024, driven by higher inbound logistics costs [211]. - CBI's SG&A expenses (excluding stock-based compensation) increased from 33.7% to 34.2% of net revenue for the three months ended September 30, 2025 [213]. Restructuring and Strategic Initiatives - QVC recorded $36 million and $20 million of restructuring costs during the nine months ended September 30, 2025, as part of its reorganization efforts [143]. - The transition of general and administrative services from Liberty Media Corporation to QVC Group was substantially completed by the third quarter of 2025 [135]. - QVC Group's WIN strategy aims for top-line growth through three priorities: enhancing customer interactions, fostering engaging content, and leveraging technology for operational efficiency [142]. Liquidity and Financial Position - QVC Group's liquidity position included cash and cash equivalents totaling $1,817 million, with $1,328 million held by QVC [182]. - As of September 30, 2025, QVC's consolidated leverage ratio was greater than 3.5 to 1.0, restricting its ability to make dividends or other restricted payments under senior secured notes [176]. - The Company has potential sources of liquidity including available cash balances, equity issuances, and cash generated by operating activities of wholly-owned subsidiaries [175]. - For the nine months ended September 30, 2025, QVC Group's net cash provided by operating activities was $30 million, a decrease from $313 million in the prior year [185]. - QVC Group's primary source of cash during the nine months ended September 30, 2025, was net debt borrowings of $1,986 million [185]. Debt and Interest - Interest expense increased by $17 million for the three months and by $10 million for the nine months ended September 30, 2025, primarily due to higher outstanding debt [167]. - QVC's debt credit ratings were downgraded by Fitch, S&P, and Moody's during the nine months ended September 30, 2025, indicating increased financial risk [177][178][179]. - The projected uses of QVC Group cash for the remainder of 2025 include continued capital improvement spending between $50 million and $70 million and approximately $84 million for interest payments on outstanding debt [186]. Stock and Shareholder Information - The company implemented a reverse stock split at a ratio of 1-for-50, effective May 22, 2025, with no change to the number of shares authorized [136]. - QVC's stock began trading on a split-adjusted basis on May 23, 2025, following the reverse stock split [140]. - The Company recorded $7 million of stock-based compensation for the three months ended September 30, 2025, compared to $3 million in the prior year [158]. - QVC's stock-based compensation expense was $6 million and $14 million for the three and nine months ended September 30, 2025, respectively, compared to $1 million and $15 million for the same periods in 2024 [207]. Impairments and Taxation - Goodwill and tradename impairments related to the QxH reporting unit may require additional carrying value adjustments if future outlook declines in revenue or cash flows occur [152]. - The effective tax rate for the three months ended September 30, 2025, was 30%, influenced by a valuation allowance and permanent adjustments on net pretax losses [170]. - QVC recorded impairment of goodwill and intangible assets totaling $2,395 million for the nine months ended September 30, 2025, including $930 million for tradenames and $1,465 million for goodwill [205]. Market and Economic Conditions - Future net revenue will depend on QVC's ability to grow through digital platforms and retain existing customers amid economic uncertainties and inflationary pressures [147][148]. - QVC's revenue is significantly impacted by discretionary spending, which may decline during economic instability, affecting overall sales [148]. - The company anticipates challenges in maintaining favorable channel positioning due to changes in television viewing habits and competition from digital services [147].