Qurate Retail(US:QRTEA)2021-08-05 16:00Revenue Performance - Consolidated Qurate Retail revenue increased by 2.4% or $82 million for the three months ended June 30, 2021, and by 7.9% or $499 million for the six months ended June 30, 2021 compared to the prior year [131]. - QVC International revenue increased by $78 million for the three months ended June 30, 2021, and by $217 million for the six months ended June 30, 2021 compared to the same periods in the prior year [131]. - QVC's consolidated net revenue increased by 2.1% to $2,780 million for the three months ended June 30, 2021, and by 6.6% to $5,490 million for the six months ended June 30, 2021 compared to the prior year [159]. - Zulily's net revenue for the three months ended June 30, 2021, was $397 million, a decrease of 5.9% compared to $422 million in the same period of 2020 [175]. - For the six months ended June 30, 2021, Zulily's net revenue increased by 4.9% to $774 million from $738 million in the prior year [175]. Operating Income and Expenses - Operating income for Consolidated Qurate Retail was $433 million for the three months ended June 30, 2021, compared to $405 million for the same period in 2020 [131]. - Operating income for QVC International increased by $26 million for the three months and $70 million for the six months ended June 30, 2021, compared to the prior year [136]. - Operating income for the three months ended June 30, 2021 was $422 million, an increase from $381 million in the same period of 2020 [159]. - Zulily's operating income for the three months ended June 30, 2021, was a loss of $15 million, compared to an operating income of $20 million in 2020 [175]. - QVC's operating expenses increased by $9 million for the three months ended June 30, 2021, primarily due to increased customer service expenses [168]. Adjusted OIBDA - Adjusted OIBDA for Consolidated Qurate Retail was $581 million for the three months ended June 30, 2021, an increase from $565 million in the same period in 2020 [131]. - Adjusted OIBDA rose by $16 million (2.8%) and $149 million (15.7%) for the three and six months ended June 30, 2021, respectively, compared to the same periods in the prior year [137]. - Adjusted OIBDA for the three months ended June 30, 2021, was $9 million, down from $45 million in the same period of 2020 [175]. Customer Trends and Market Conditions - QVC observed a decline in new customers and demand for home products starting in the second quarter of 2021, while demand for apparel increased [122]. - Increased inflationary pressures and product shortages were noted during the second quarter of 2021, impacting QVC's ability to offer certain goods [126]. - The increase in net revenue for the three months was primarily due to a 3.2% increase in units shipped and a $13 million decrease in estimated product returns [160]. - The decrease in estimated product returns for the three months ended June 30, 2021 was primarily due to a decrease in sales volume [163]. - QVC's future net revenue growth will depend on e-commerce and mobile platform sales, as well as customer spending increases [166]. Financial Position and Cash Flow - Cash and cash equivalents totaled $950 million as of June 30, 2021, with QVC holding $737 million and Zulily holding $13 million [149]. - Net cash provided by operating activities was $702 million for the six months ended June 30, 2021, compared to $1,198 million in the prior year [152]. - The company generated over $1 billion in annual cash from operating activities on average over the past three years [151]. - The company expects cash on hand and cash generated from operations to be sufficient to fund projected uses of cash in future periods [153]. Cost of Sales and SG&A Expenses - QVC's cost of sales as a percentage of net revenue decreased to 63.1% for the three months ended June 30, 2021, compared to 64.0% for the same period in 2020 [167]. - The cost of sales as a percentage of net revenue increased to 75.8% for the three months ended June 30, 2021, compared to 73.0% in 2020, primarily due to higher shipping costs [176]. - QVC's SG&A expenses (excluding stock-based compensation) decreased to 10.6% of net revenue for the three months ended June 30, 2021, down from 10.8% in the prior year [169]. - SG&A expenses (excluding stock-based compensation) increased from 13.7% to 19.4% of net revenue for the three months ended June 30, 2021, attributed to increased marketing spend [178]. - Stock-based compensation increased to $19 million for the three months ended June 30, 2021, up from $16 million in the same period in 2020 [133]. Interest Expense - Interest expense increased by $23 million (24.2%) and $43 million (22.4%) for the three and six months ended June 30, 2021, respectively, compared to the prior year [140]. Capital Expenditures - Projected capital improvement spending for the remainder of 2021 is estimated to be between $150 million and $180 million [153]. - Qurate Retail's reported Adjusted OIBDA for the six months ended June 30, 2021, would be impacted by approximately $3 million for every 1% change in foreign currency exchange rates relative to the U.S. Dollar [184].