QVC chief says ‘we’re living in a changing world’ as shares plunge on disappointing results

Qurate Retail, Inc. (QRTEA) stock fell nearly 27 percent after the company announced a decrease in revenue across its brands, including the combined QVC and HSN home shopping networks.

West Chester-based QVC and St. Petersburg, Fla.-based Home Shopping Network merged in 2017 to expand their reach in competing against Amazon, Walmart, and other large-scale retailers. Today, the stock tumbled about 27 percent to $12.10, the company’s lowest price since it was formally renamed “Qurate Retail Group.”

“Our first-quarter performance was disappointing amidst a changing retail and media landscape,” Mike George, the company’s president and chief executive officer, said on the call. He said he expects results to remain “variable,” as the company navigates the HSN acquisition along with changing shopping habits by consumers.

Victor Anthony, an analyst and managing director at Aegis Capital, pointed out that changes in habits, like shopping online and forgoing cable channels, have been ongoing for several years.

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“The market trends that you cited, the growth of cord cutting, cord-nevers, the shift away from traditional media consumption, and the shift to digital media consumption, those are trends that have existed at least for the better part of the past decade,” Anthony said. “So why’s it having a more pronounced impact on the first quarter?”

George acknowledged that these behaviors have been long-term trends and said he mentioned them as an acknowledgment that “Yup, we’re living in a changing world.”

“The combination of those things coupled with a very large and complicated acquisition and integration have made for bumpier performance than we want to be delivering and have typically delivered,” he said. “And that’s now a multi-quarter trend.”

Qurate’s overall revenue decreased 4 percent to about $3.1 billion for the first quarter. Its largest brands, QVC and HSN, which the company is referring to as “QxH,” account for 60 percent of the company’s revenue.

For the first quarter of 2019, QxH reported its revenues decreased 4 percent to $1.9 billion. This loss can be attributed to declines in sales of home, jewelry, and beauty products, even with gains in electronics, apparel, and accessories, the company reported.

QVC International revenue decreased 5 percent to $644 million. Seattle-based mobile-shopping retailer Zulily, which the company acquired in 2015 to attract a younger generation of shoppers, saw revenue decrease 5 percent to $397 million.

The company’s Cornerstone Brands division, which includes Ballard Designs, Frontgate, Garnet Hill, Grandin Road, and Improvements, saw revenue fall 10 percent to $187 million.