Qurate Retail(US:QRTEA)2021-05-06 16:00Revenue Growth - Consolidated Qurate Retail revenue increased by 14.3% or $417 million for the three months ended March 31, 2021, compared to the same period in the prior year [113]. - QxH revenue rose by $144 million, QVC International revenue increased by $139 million, and Zulily revenue grew by $61 million during the same period [113]. - QVC's consolidated net revenue increased by 11.7% to $2.71 billion for the three months ended March 31, 2021, compared to $2.43 billion in the same period of 2020 [139]. - QxH net revenue increased by 8.0% to $1.94 billion for the three months ended March 31, 2021, driven by a 7.9% increase in units shipped [142]. - QVC International net revenue growth in constant currency was 14.5% for the three months ended March 31, 2021, primarily due to an 8.4% increase in units shipped [143]. - Zulily's consolidated net revenue increased by 19.3% for the three months ended March 31, 2021, driven by a 15.4% increase in total units shipped and a 14.8% rise in active customers [156]. Operating Income and Expenses - Consolidated operating income increased by $142 million for the three months ended March 31, 2021, with QxH contributing an increase of $67 million and QVC International contributing an increase of $44 million [116]. - Adjusted OIBDA increased by 34.6% or $133 million for the three months ended March 31, 2021, with QxH contributing an increase of $56 million and QVC International contributing an increase of $46 million [117]. - The increase in operating income at the Corporate and other segment was primarily due to strong revenue performance and expanding gross margins from lower promotional activity [116]. - Operating expenses increased by $9 million for the three months ended March 31, 2021, primarily due to a $4 million rise in customer service expenses [150]. - SG&A expenses (excluding stock-based compensation) decreased by $2 million, and as a percentage of net revenue, fell from 11.4% to 10.1% for the same period [151]. Financial Performance and Earnings - Net earnings were $224 million for the three months ended March 31, 2021, compared to net losses of $9 million in the same period of 2020 [126]. - Adjusted OIBDA increased to $492 million for the three months ended March 31, 2021, compared to $390 million in the same period of 2020 [138]. - Interest expense increased by $20 million to $117 million for the three months ended March 31, 2021, compared to $97 million in the same period of 2020 [121]. - Share of losses of affiliates decreased by $4 million to $32 million for the three months ended March 31, 2021, compared to $36 million in the same period of 2020, due to improved results at alternative energy entities [122]. Cash and Capital Management - Cash and cash equivalents totaled $739 million as of March 31, 2021, with QVC holding $638 million [130]. - The projected uses of cash for the remainder of 2021 include approximately $240 million for capital improvements and $210 million for debt service payments [133]. - Qurate Retail's operating businesses generated over $1 billion in annual cash from operating activities on average over the prior three years [131]. Impact of COVID-19 - Zulily experienced increased freight surcharges and additional labor expenses due to COVID-19, impacting its financial performance [106]. - The company anticipates potential adverse impacts from COVID-19, including reduced demand and supply chain disruptions, which could materially affect financial results [110]. Cost of Sales and Pricing - The cost of sales as a percentage of net revenue decreased from 65.3% to 64.9% for the three months ended March 31, 2021, attributed to favorable product returns and strategic pricing initiatives [149]. - Zulily's cost of sales as a percentage of net revenue increased from 75.9% to 76.4% for the three months ended March 31, 2021, primarily due to higher shipping costs [157]. Stock-Based Compensation - Stock-based compensation increased to $16 million for the three months ended March 31, 2021, up from $11 million in the prior year [115]. - The total unrecognized compensation cost related to unvested equity awards was approximately $159 million as of March 31, 2021 [115]. Foreign Currency Impact - QVC's reported Adjusted OIBDA for the three months ended March 31, 2021 would be impacted by approximately $1 million for every 1% change in foreign currency exchange rates relative to the U.S. Dollar [162].