Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- QVC Group Inc (QVCGA, Financial) has signed a strategic agreement with TikTok for a 24/7 live shopping experience, enhancing their social shopping capabilities.
- The company has seen strong engagement on social and streaming platforms, with combined minutes watched up 26% year-over-year.
- QVC Group Inc (QVCGA) has successfully reduced its reliance on Chinese imports, decreasing the proportion of goods sourced from China to less than 50%.
- The company has launched new successful brands and products, such as the relaunch of Logo by Lori Goldstein and the launch of Jefferies, which sold out.
- QVC Group Inc (QVCGA) has strengthened its leadership team with the hiring of a new Chief Growth Officer and Chief People Officer, bringing in expertise to drive growth and transformation.
Negative Points
- Total revenue declined by 10% due to declining linear TV viewership and reduced consumer confidence.
- Consolidated adjusted OIBDA declined 31% in constant currency, reflecting sales deleverage and macroeconomic pressures.
- The company experienced a 10% decline in total customer count, with significant decreases in new and reactivated customers.
- QVC International revenue declined 4% in constant currency, impacted by geopolitical events and inflationary pressures.
- The Cornerstone segment saw a 13% revenue decline due to a depressed housing market and lower consumer demand.
Q & A Highlights
Q: Regarding the TikTok shop and social spending, what does the growth trajectory look like over the next three years, and what will drive this growth?
A: David Rawlinson, President and CEO, explained that social and streaming are expected to grow to $1.5 billion over three years. The growth will be driven by new customer acquisition and transitioning existing customers from cord-cutting. Social platforms provide access to large, pre-aggregated audiences, which are increasingly engaging with shopping content.
Q: What is the plan for capital allocation, particularly regarding the use of free cash flow and the potential sale of the St. Petersburg facility?
A: Bill Wafford, CFO, stated that the sale of the St. Petersburg facility is not expected to be material in the near term. The company is evaluating opportunities for capital structure management, but there is no immediate change in the use of free cash flow.
Q: Does the proactive financial option review mean the RCF renewal is off the table, and what are the company's liquidity needs?
A: Bill Wafford clarified that nothing is off the table, and the company is evaluating all options given current headwinds. The revolver does not mature until October 2026, providing time to assess the best course of action.
Q: With the decline in customer count and linear TV viewership, is this the new run rate until social ramps up?
A: David Rawlinson acknowledged the structural impact of cord-cutting on customer count. However, he noted that specific factors, such as consumer sentiment changes and strategic decisions not to heavily invest in new customer acquisition during the quarter, also contributed to the decline.
Q: How does the end of the de minimis exemption affect the competitive landscape for QVC?
A: David Rawlinson mentioned that the end of the de minimis exemption is slightly beneficial for QVC's digital businesses. It may provide a slight tailwind to their social push, as it affects competitors targeting younger consumers with lower average selling prices.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
