| Chris Forrester, on 12-08-2008 |
 TV shopping is still a big business for Liberty Media’s QVC subsidiary. But UK and Japanese sales efforts helped buck a slackening revenue trend in the US.
QVC trades within Liberty Media’s quoted Liberty Interactive Group and
reported a four per cent increase in total second-quarter revenue,
reaching $1.76bn compared to $1.69bn in the same period last year. The
shopping channel’s US domestic second-quarter revenue slipped a little,
at $1.181bn in 2008 compared to $1.184bn year earlier, but that was
offset by overseas sales growth.
QVC’s international sales revenue grew 14%, to $580m from $509m in
2007, Liberty Media reported. "The challenging economic environment
continues, however we are pleased with our disciplined approach to
margin, expense and capital management," stated Mike George, QVC
President and CEO. "We are excited about several product, programming
and distribution initiatives planned for the second half of the year to
offer our customers a compelling shopping experience which will further
differentiate us from other retailers. Internationally, Japan has been
a bright spot as sales momentum continues to increase."
QVC's domestic revenue decreased slightly in the second quarter to
$1.181 billion. Adjusted OIBDA decreased 2% to $286 million in the
quarter. For the quarter, the mix of product sold shifted to the
accessories area from the home and jewellery categories. The average
selling price increased six per cent from $44.83 to $47.39 while the
total number of units shipped declined four per cent to 27.6 million
from 28.8 million. Returns as a percent of gross product revenue
increased due to product mix shifts and higher average selling prices.
QVC.com sales as a percentage of domestic sales grew from 23% in the
second quarter of 2007 to 25% in the second quarter of 2008.
QVC's international revenue increased 14% in the second quarter to
$580m due to favourable foreign currency exchange rates and subscriber
growth in the UK and Japan. Excluding the effect of exchange rates,
international revenue increased in the UK by three per cent and Japan
by 10% and three per cent overall. International adjusted OIBDA
increased 11% in the second quarter from $91 million to $101 million.
QVC UK revenue grew three per cent in local currency in the second
quarter. The UK experienced a slowdown in promotional category sales
and softness in the home category. Units shipped increased four per
cent in the second quarter while average selling price declined one per
cent. QVC Japan's net revenue in local currency increased 10% for the
second quarter, the first double digit quarter sales increase since the
fourth quarter of 2006. Beginning in March 2007, QVC Japan faced a
heightened regulatory focus on health and beauty product presentations.
QVC Japan's results were favourably impacted as it anniversaries the
impact of this to the business and it has shown productivity gains in
the home, jewellery and fashion areas as it continues to shift product
away from health and beauty and into these categories.
The German business experienced softness in the jewellery and apparel
product categories resulting in a three per cent decrease in net
revenue in local currency for the second quarter. QVC Germany's average
selling price increased slightly in local currency but units shipped
decreased in the period by two per cent. QVC Germany experienced a
lower gross margin percentage primarily due to a higher inventory
obsolescence provision.
QVC's outstanding bank debt was $4.49 billion at June 30, 2008.
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