Revenue Performance - Consolidated Qurate Retail revenue decreased by 15.7% or $551 million for the three months ended June 30, 2022, and by 14.7% or $1,005 million for the six months ended June 30, 2022, compared to the prior year [139]. - Revenue from QxH decreased by $235 million, Zulily by $177 million, and QVC International by $153 million for the three months ended June 30, 2022 [139]. - Qurate Retail reported a net revenue decrease of 14.0% and 13.6% for the three and six months ended June 30, 2022, respectively, compared to the same periods in 2021 [174]. - Zulily's consolidated net revenue decreased 44.6% and 41.6% for the three and six months ended June 30, 2022, respectively, attributed to a 50.6% and 48.2% decline in total units shipped [192]. - QVC's international operations saw a decline in net revenue due to a 6.5% decrease in units shipped across all markets except Japan for the three months ended June 30, 2022 [179]. Operating Income - Operating income for QxH was $361 million for the three months ended June 30, 2022, compared to $295 million in the same period of the prior year [139]. - Consolidated operating income decreased by $15 million (3.5%) for the three months ended June 30, 2022, and by $282 million (35.0%) for the six months ended June 30, 2022, compared to the prior year [144]. - Operating income at QVC International decreased by $46 million (approximately 10.6%) for the three months ended June 30, 2022, compared to the prior year [144]. - Operating income at Zulily decreased by $36 million (approximately 20.5%) for the three months ended June 30, 2022, compared to the prior year [144]. - The Corporate and other segment saw an increase in operating income of $1 million (approximately 1.0%) for the three months ended June 30, 2022, compared to the prior year [144]. Adjusted OIBDA - Adjusted OIBDA for Consolidated Qurate Retail was $347 million for the three months ended June 30, 2022, down from $581 million in the same period of the prior year [139]. - Adjusted OIBDA decreased by $234 million (40.3%) for the three months ended June 30, 2022, and by $416 million (37.9%) for the six months ended June 30, 2022, compared to the corresponding periods in the prior year [149]. - QVC's reported Adjusted OIBDA for the six months ended June 30, 2022 would have been impacted by approximately $2 million for every 1% change in foreign currency exchange rates relative to the U.S. Dollar [200]. Costs and Expenses - The cost of goods sold as a percentage of net revenue increased to 66.6% for the three months ended June 30, 2022, compared to 63.1% for the same period in 2021 [181]. - QVC's SG&A expenses (excluding stock-based compensation) increased to 12.2% of net revenue for the three and six months ended June 30, 2022, compared to 10.6% and 10.3% in the same periods of 2021 [185]. - Zulily's cost of goods sold as a percentage of net revenue was 77.3% for the three months ended June 30, 2022, an increase from 75.8% in the prior year [193]. - Zulily's SG&A expenses (excluding stock-based compensation) increased from 19.4% to 27.7% of net revenue for the three months ended June 30, 2022, primarily due to sales deleverage [195]. Fire-Related Costs - QVC experienced a fire at its Rocky Mount fulfillment center, which processed approximately 25% to 30% of QVC U.S. volume, resulting in $250 million of fire-related costs for the year ended December 31, 2021 [133]. - QVC recorded $16 million and $98 million of fire-related costs for the three and six months ended June 30, 2022, primarily due to inventory losses from the Rocky Mount fulfillment center fire [186]. - QVC's inventory write-downs related to the Rocky Mount incident amounted to $95 million during the six months ended June 30, 2022 [134]. Liquidity and Capital Expenditures - As of June 30, 2022, Qurate Retail's total liquidity position included $561 million in cash and cash equivalents [162]. - QVC's Senior Secured Credit Facility had a borrowing capacity of $2,314 million as of June 30, 2022 [162]. - The company expects to spend between $170 million and $197 million on capital improvements for the remainder of 2022 [165]. - Cash provided by investing activities was $237 million for the six months ended June 30, 2022, primarily from the sale of fixed assets [164]. - The company anticipates that cash on hand and future operating cash flows will be sufficient to fund projected uses of cash [167]. Other Financial Metrics - Net earnings were $221 million for the three months ended June 30, 2022, down from $250 million in 2021, and $234 million for the six months ended June 30, 2022, down from $474 million in 2021 [158]. - Stock-based compensation decreased by $3 million (15.8%) for the three months ended June 30, 2022, and by $4 million (11.4%) for the six months ended June 30, 2022, compared to the same periods in 2021 [141]. - The total unrecognized compensation related to unvested Qurate Retail equity awards was approximately $129 million as of June 30, 2022 [143]. - Stock-based compensation expense for QVC was $10 million and $18 million for the three and six months ended June 30, 2022, compared to $11 million and $20 million in the prior year [188]. - As of June 30, 2022, QVC's variable rate debt was $562 million at a weighted average interest rate of 3.0% [200]. Internal Controls and Legal Proceedings - The Company conducted an evaluation of its disclosure controls and procedures, concluding they were effective as of June 30, 2022 [202]. - There were no changes in the Company's internal control over financial reporting during the three months ended June 30, 2022, that materially affected its internal control [203]. - The Company reported no legal proceedings pending as of the date of the report [205].
Qurate Retail(QRTEB) - 2022 Q2 - Quarterly Report