Q4 2024 QVC Group Inc Earnings Call

February 27, 2025

Welcome to the QVC group 'twenty 'twenty four Q4 earnings call.

Operator: Welcome to the QVC Group 2024 Q4 Earnings Call. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press star one on your telephone. As a reminder, this conference will be recorded 27 February. I would now like to turn the call over to Shane Kleinstein, Senior Vice President, Investor Relations. Please go ahead.

During the presentation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session.

At that time, if you have a question. Please press star one on your telephone.

As a reminder, this conference will be recorded February 27th.

I would now like to turn the call over to Shane <unk> Senior Vice President Investor Relations. Please go ahead.

Speaker Change: Thank you and good afternoon before we begin we'd like to remind everyone that this call includes certain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Form 10-K filed by our company and QVC with the SEC.

Shane Kleinstein: Thank you and good afternoon. Before we begin, we'd like to remind everyone that this call includes certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent Form 10-K filed by our company and QVC with the SEC. These forward-looking statements speak only as of the date of this call, and QVC Group expressly disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein to reflect any change in QVC Group's expectations with regard thereto or any change in events, conditions, or circumstances upon which any such statement is based. Please note that we have published slides to accompany the earnings release.

These forward looking statements speak only as of the date of this call and QVC group expressly disclaims any obligation or undertaking so does that mean any updates or revisions to any forward looking statements contained herein to reflect any change in TBC group's expectations with regard there to or any change in events conditions or circumstances upon which any such statement is based.

Speaker Change: Please note that we have published slides to accompany the earnings release on today's call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA adjusted OIBDA margin free cash flow and constant currency information regarding the comparable GAAP metrics, along with required definitions and reconciliations, including preliminary note and schedules one and two can be found in the earnings press release.

Shane Kleinstein: On today's call, we will discuss certain non-GAAP financial measures, including Adjusted EBITDA, Adjusted EBITDA margin, free cash flow, and constant currency. Information regarding the comparable GAAP metrics, along with required definitions and reconciliations, including preliminary notes and Schedules 1 and 2, can be found in the earnings press release issued today or our earnings presentation, which are available on our website. Today, speaking on the call, we have QVC Group President and CEO David Rawlinson, QVC Group CFO Bill Wafford, and QVC Group Executive Chairman Greg Maffei. Now I'll hand the call over to David.

Speaker Change: If you today or our earnings presentation, which are available on our website.

Speaker Change: Today speaking on the call we have QVC group's president and CEO, David Rawlinson QVC group CFO Bill Wafford, MTV Ctrip Executive Chairman, Greg Maffei, now I'll hand, the call over to David.

Speaker Change: Okay.

Thank you Shane and good afternoon to all thank you for joining us and for your interest and the QVC group I'll begin today with a recap our fourth quarter results then speak to the conclusion of 'twenty 'twenty, four and project atoms before going deeper into our growth strategy.

David Rawlinson: Thank you, Shane, and good afternoon to all. Thank you for joining us and for your interest in the QVC Group. I'll begin today with the recap of Q4 results, then speak to the conclusion of 2024 and Project Athens before going deeper into our growth strategy announced at Investor Day. Total revenue declined 6% in the Q4. Our top-line performance saw continued volume pressure similar to the Q3, driven by linear television declines, a cautious consumer environment, and meaningful distractions in our TV viewership due to headline-grabbing events like hurricanes and the election. These events affect our sales far more than other retailers as a video-driven commerce platform, with the need for people to tune into our programming in order to drive sales.

Speaker Change: Now instead of Investor day.

Speaker Change: Total revenue declined 6% in the fourth quarter. Our top line performance saw continued volume pressure similar to the third quarter driven by linear TV declines a cautious consumer environment and meaningful distractions in our TV viewership due to headline grabbing.

Speaker Change: Events like Hurricanes and the election.

Speaker Change: These events affect our sales far more than other retailers as the video driven commerce platform with the need for people to tune into our programming in order to drive sales to X H T V minutes viewed declined 4% while across the TV industry the number of hours.

David Rawlinson: QXH TV minutes viewed declined 4%, while across the TV industry, the number of hours watched for news and information programming increased 11%. QVC International had flat revenue, and Cornerstone Brands continued to experience sales pressure due to a soft housing sector in the fourth quarter. Volume pressures led to sales deleverage in Q4. We continue to actively manage costs, which partially offset some of the sales deleverage in the quarter, with total company operating expenses and SG&A declining 9% and 6%, respectively. At our core businesses, QXH and QVC International, we expanded adjusted OIBDA margin 10 and 170 basis points, respectively. QVC International was our best-performing business in Q4, with OIBDA increasing 12% year-over-year. Cornerstone had a disproportionate impact to the QVC Group's consolidated OIBDA in the fourth quarter.

Speaker Change: Watch for news and information programming increased 11%.

Speaker Change: QVC International had flat revenue and cornerstone brands continued to experience sales pressure due to a soft housing sector in the fourth quarter.

Speaker Change: Volume pressures led to sales deleverage in Q4, we continue to actively manage costs, which partially offset some of the sales deleverage in the quarter with total company operating expenses and SG&A declining, 9% and 6% respectively.

Speaker Change: At our core businesses, <unk> and QVC International we expanded adjusted OIBDA margin 10, and 170 basis points respectively.

Speaker Change: QVC International was our best performing business in Q4, with the OIBDA, increasing 12% year on year on year.

Speaker Change: Cornerstone had a disproportionate impact to the QVC group's consolidated OIBDA in the fourth quarter. While it was the only 10% of total company revenue corner store I'm, sorry, cornerstones OIBDA declined 22 million were a consolidated company total OIBDA decreased.

David Rawlinson: While it was only 10% of total company revenue, Cornerstone—I'm sorry, Cornerstone's OIBDA declined $22 million, where consolidated company total OIBDA decreased $28 million, or 8% year-over-year. Cornerstone made up 3/4 of the decline. Total company OIBDA margin contracted slightly, which included approximately 85 basis points of sales deleverage. Looking at the full year, we achieved several milestones. Importantly, we successfully completed Project Athens. Through 2024, we generated more than $500 million of run rate OIBDA improvement compared to the objective of $300 to 600 million. We expanded OIBDA margins 220 basis points and improved free cash flow, excluding insurance proceeds, over $500 million from 2022 to 2024.

28 million or 8% year over year.

Speaker Change: Cornerstone made up three fourths of the decline.

Total company OIBDA margin contracted slightly which included approximately 85 basis points of sales deleverage.

Speaker Change: Looking at the full year, we achieved several milestones and importantly, we successfully completed project athans through 'twenty 'twenty four we generated more than $500 million of run rate OIBDA improvement compared to the objective of three to 600 million we expanded.

Speaker Change: OIBDA margins 220 basis points and improved free cash flow, excluding insurance proceeds over $500 million from 2022 to 2024.

David Rawlinson: We took action to manage our costs while facing challenges from revenue headwinds in 2024, resulting in the second consecutive year of Adjusted OIBDA growth. On a reported basis, including Zulily, we expanded gross margins 120 basis points year-over-year in 2024 due to product margin gains. We also reduced operating expenses by 8% and SG&A costs by 9% from lower commissions. We also reduced outside services and personnel costs. QVC International had a solid year, delivering stable revenue and Adjusted OIBDA margin up 70 basis points. We drove strong growth in our streaming businesses, with monthly average users up 80%, minutes watched increasing 27%, and attribute-- I'm sorry, attributed revenue up 19%. We shifted our IT model to a managed services approach to improve productivity, increase innovation, and generate savings.

Speaker Change: We took action to manage our costs, while facing challenges from revenue headwinds in 2024, resulting in the second consecutive year of adjusted OIBDA growth.

Speaker Change: On a reported basis, including Xu Lilly, we expanded gross margins 120 basis points year over year and 2024 due to product margin gains. We also reduced operating expenses by 8% and SG&A costs by 9% from lower commissions.

Speaker Change: We also reduced outside services and personnel costs.

Speaker Change: We see international had a solid year delivering stable revenue and adjusted OIBDA margin up 70 basis points.

Speaker Change: We drove strong growth in our streaming businesses with monthly average users up 80% minutes watched increasing 27% and a trip I'm sorry attributed revenue now.

Speaker Change: 19%.

Speaker Change: We shifted our model to a managed services approach to improve productivity increase innovation and generate savings, we improved the balance sheet and reduced gross debt $442 million, while also extending our maturity profile.

David Rawlinson: We improved the balance sheet and reduced gross debt $442 million, while also extending our maturity profile. Importantly, in mid-November, we introduced our social shopping strategy, which I'll discuss in more detail momentarily. Looking at industry data, we were in line with the discretionary market in the first half of 2024. Our revenue performance decelerated, particularly at QXH, in the second half of 2024 compared with the first half, in part because of both anticipated and unanticipated headline-grabbing events, leading to meaningful distractions in our TV viewership. Also, Cornerstone had continued challenges in the business, which led to an outsized margin impact on our consolidated results in 2024. Ultimately, these top-line pressures were more as than anticipated and led to approximately 80 basis points of sales deleverage through the P&L, through the P&L for the full year and on a two-year basis.

Speaker Change: And importantly in mid November we introduced our social shopping strategy, which I'll discuss in more detail momentarily.

Speaker Change: Looking at industry data, we were in line with the discretionary market in the first half of 'twenty 'twenty four our revenue performance decelerated, particularly at <unk> in the second half of 2024 compared with the first half in part because of both anticipated and unanticipated headline grab.

Speaker Change: <unk> event, leading to meaningful distractions and our television viewership.

Speaker Change: Also cornerstone had continued challenges in the business, which led to an outsize the margin impact on our consolidated results in 2024.

Speaker Change: Ultimately these top line pressures were more than anticipated and led to approximately 80 basis points of sales de leverage through the P&L through the P&L for the full year and on a two year basis.

Speaker Change: Looking at <unk> customers on a quarterly basis total customer count declined 9% in Q4, reflecting a 7% decrease in existing and reactivated customers as well as a 17% decline in new customers, we reduced performance marketing spend and promotions.

David Rawlinson: Looking at QXH customers on a quarterly basis, total customer count declined 9% in Q4, reflecting a 7% decrease in existing and reactivated customers, as well as a 17% decline in new customers. We reduced performance marketing spend and promotions, particularly for gaming products. As you can see on Slide 8 in our presentation, on a 12-month basis, count was down 3% for the 12 months ending December 31, compared to the 12 months ended September 30. This reflects the challenges I mentioned earlier: declining linear TV, changes in consumer media consumption, and the disruption of our TV viewership from events in the second half of the year. While count declined, QXH existing customers continued to purchase at healthy levels, spending on average $1,650 and purchasing 32 items in 2024.

Speaker Change: Particularly for gaming products as you can see on slide eight in our presentation on a 12 month basis count was down 3% for the 12 months ending December 31, compared to the 12 months ended September 30th this reflects the challenges I mentioned earlier declining linear TV.

Speaker Change: Changes in consumer media consumption and the disruption of our TV viewership from events in the second half of the year, while count decline to xa to existing customers continue to purchase at healthy levels spending on average $1650 and purchasing 32 items.

Speaker Change: In 2024 at QVC, our best customers, who buy 20 or more items annually also continued to purchase at very attractive levels. In 2024, they spent $3980 on average and bought 76 items.

David Rawlinson: At QVC, our best customers, who buy 20 or more items annually, also continued to purchase at very attractive levels. In 2024, they spent $3,980 on average and bought 76 items. From a QXH merchandise perspective, we were pleased to expand product margins more than 100 basis points in 2024, despite the volume pressures. These gains were driven by Project Athens initiatives, including strategic pricing, and product mix actions, as well as steps to improve product COGS. Before I review our go-forward strategy, let me reflect on the company during my tenure as CEO thus far. The business has been affected by a number of factors. The tragic fire at our Rocky Mount, North Carolina, fulfillment center cost QXH an estimated 1 million customers and $500 million in revenue.

From a QA excites merchandise perspective, we were pleased to expand product margins more than 100 basis points in 2024. Despite the volume pressures. These gains were driven by project athans initiatives, including strategic pricing and product mix actions as well as steps to improve product Cogs.

Speaker Change: Before I review our go forward strategy, let me reflect on the company during my tenure as CEO, thus far.

The business has been affected by a number of factors the tragic fire at our Rocky Mount North Carolina fulfillment Center cost two X eight an estimated 1 million customers and $500 million in revenue.

David Rawlinson: Cord cutting has reduced the number of linear homes we reach. Comparing 2024 to 2018, QVC and HSN's main channel reached 44% and 47% fewer homes, respectively. Through Project Athens, we took action to improve the cost structure, operating discipline, and cash flow capabilities of the company. We enhanced the portfolio with the divestiture of Zulily, while we also successfully improved the profitability under Athens. We did not, however, achieve stable revenue, and that is where we are increasing the focus going forward. In mid-November, we introduced a new strategy aimed at returning the company to growth over the next 3 years. We are moving faster to become a live social shopping company, with a focus on balancing top-line growth with margin and cash flow discipline.

Speaker Change: Cord cutting has reduced the number of linear homes, we reach.

Speaker Change: Comparing 'twenty 'twenty four to 'twenty 18, QVC and HSN main channel reached 44% and 47% fewer homes respectively.

Speaker Change: Through project atoms, we took action to improve the cost structure operating discipline and cash flow capabilities of the company, we enhanced the portfolio with the divestiture of the zoo Lilly while we also successfully improved the profitability under Athens.

Speaker Change: We did not however achieved stable revenue and that is where we are increasing the focus going forward.

Speaker Change: In mid November we introduced a new strategy aimed at returning the company to growth over the next three years, we are moving faster to become a large social shopping company with a focus on balancing topline growth with margin and cash flow discipline last Friday, we commenced our rebranding chain.

David Rawlinson: Last Friday, we commenced our rebranding, changing our corporate name to QVC Group, Inc., bringing the household name we are known for back into our everyday language. On Monday, our equity securities began trading under their new ticker symbols. To succeed in social commerce, you not only need a social network and personalities, you also need the ability to create content, source merchandise, distribute product, and provide an end-to-end customer experience at scale. QVC Group is well-positioned. Globally, we produce about 120 hours of live content daily, which is over 40,000 hours of content annually. We have expertise around brand and merchandising, with about 400,000 products in our ecosystem. QVC US and HSN present about 1,200 products per week on our live programming. We have an established supply chain to distribute these large quantities of products.

Speaker Change: Our corporate name to QVC Group, Inc.

Speaker Change: Bringing the household name we are known for back into our everyday language on Monday, our equity Securities began trading under their new ticker symbols.

Speaker Change: To succeed in social Commerce, you not only need a social network and personalities you also need the ability to create content source merchandise distribute product and provide an end to end customer experience at scale QVC group is well positioned globally.

Speaker Change: We produce about 120 hours of live content daily, which is over 40000 hours of content annually, we have expertise around brand and merchandising with about 400000 products in our equals ecosystem QVC U S and H S N presented.

Speaker Change: 1200 products per week on our live programming.

Speaker Change: And we have an established supply chain to distribute these large quantities of products across our businesses, we shipped more than 200 million units from 15 fulfillment centers to 13.5 million customers in 2024.

David Rawlinson: Across our businesses, we shipped more than 200 million units from 15 fulfillment centers to 13.5 million customers in 2024. Social commerce is an attractive market and a natural extension of our core capabilities. The social commerce market in the US is projected to nearly double in the next 5 years based on research estimates. Behaviorally, there are a lot of core similarities between the QVC model and the way consumers engage with social content. Our today's special value is a daily discovery-based purchase that has inspired customers for decades. Similarly, 68% of purchases on social selling platforms last year were made on impulse. In short, social scrolling is the new channel surfing, and we believe this behavior is very relevant for today's consumer. We are enhancing our core capabilities on social, where we already have a strong presence.

Social commerce is an attractive market and a natural extension of our core capabilities. The social commerce market in the U S is projected to nearly double in the next five years based on research estimates Bill.

Bill: Havey early there are a lot of core similarities between the QVC model and the way consumers engage with social content. Our today's special valley value as a daily discovery based purchase that has inspired customers for decades, Similarly, 68% of purchase.

Bill: <unk> on social selling platforms last year were made on impulse and short social scrolling is the new channel surfing and we believe this behavior is very relevant for today's consumer.

Bill: We are enhancing our core capabilities on social where we already have a strong presence <unk> has a combined 7 million followers across Instagram Facebook tick tock and Youtube.

David Rawlinson: QXH has a combined 7 million followers across Instagram, Facebook, TikTok, and YouTube. We are organizing our new strategy around three priorities to win in live social shopping. WIN is an acronym. W means we are going to drive live shopping content whenever she shops, wherever she shops, and spends her time. I stands for inspiring people and products by creating the world's leading live shopping content engine to inspire human connection with incredible merchandise. And N is about new ways of working to unlock efficiency and fund expansion on new platforms. We are implementing our strategy and have taken a series of actions. We have recruited a chief growth officer to extend our sales, content, and celebrity expertise to the largest social platforms and to bolster our streaming app with our partners.

Bill: We are organizing our new strategy around three priorities to win and loss social shopping when is an acronym W. Means we are going to drive a lot of shopping content win ever she shops wherever she shops and spend some time.

Bill: <unk> stands for inspiring people and products by creating the world's leading lives shopping content engine to inspire human connection with incredible merchandise and N is about new ways of working to unlock efficiency and fund expansion on new platform.

Bill: We are implementing our strategy and I've taken a series of actions, we have recruited a chief growth officer to extend our sales content and celebrity expertise to the largest social platforms and to bolster our streaming app with our partners. This new leader will head up social streaming.

David Rawlinson: This new leader will head up social, streaming, digital, new business development, and platform distribution for QVC US and HSN. We expect to announce more on this very soon. We must build a world-class content engine to be successful in social commerce. Therefore, we are consolidating our QVC US and HSN operations into Studio Park in West Chester, Pennsylvania, and closing the HSN campus in St. Petersburg, Florida. This will allow us to create efficiencies and better collaboration across common functions, content production, broadcasting, merchandising, operations, technology, and people. Importantly, we will maintain the distinct brand identities of QVC and HSN. We plan to activate this consolidated operation over the coming months, launching HSN live broadcast from Studio Park by Q3. We anticipate our operations in St. Petersburg will wind down by the end of the year.

Bill: <unk> digital new business development and platform distribution for QVC U S and HSN, we expect to announce more on this very soon.

Bill: We must build a world class content engine to be successful and social commerce. Therefore, we are consolidating our QVC U S and HSN operations into studio Park in West Chester, Pennsylvania, and closing the HSN campus in St. Petersburg, Florida.

Bill: This will allow us to create efficiencies and better collaboration across common functions content production broadcasting merchandising operations technology and people.

Bill: Importantly, we will maintain the distinct brand identities of QVC and HSN, we plan to activate this consolidated operation over the coming months launching HSA on live broadcast from studio Park by Q3.

Bill: We anticipate our operations in St. Petersburg will wind down by the end of the year. We acknowledge this is a decision that affects many but believe it is the right step to achieve success I'd like to thank the St. Petersburg community for his support over many many years.

David Rawlinson: We acknowledge this is a decision that affects many, but believe it is the right step to achieve success. I'd like to thank the St. Petersburg community for its support over many, many years. At the end of January, we realigned our executive leadership team to work more efficiency, build new capabilities, create better customer experiences, and pursue growth faster. Mike Fitzharris now also leads QVC US and HSN broadcast and content production teams, as well as global operations, technology, and people. Mike will also continue to serve as the president of the QVC US brand. We are also consolidating our US merchandising leadership. Stacy Bowe now leads buying, planning, programming, and brand marketing for QVC US and HSN. She also serves as president of the HSN brand. Having realigned our executive leadership team, we are looking at the rest of the enterprise to fund and build the needed capabilities.

Bill: At the end of January we realigned our executive leadership team to work more efficiency build new capabilities create better customer experiences and pursue growth faster.

Speaker Change: Like the tariffs now also leads QVC U S and HSN broadcast and content production teams as well as global operations technology and people. Mike will also continue to serve as the president of the QVC U S brand.

Speaker Change: We are also consolidating our U S. Merchandizing leadership, Stacy BOE now leads buying planning programming and brand marketing for QVC U S and HSN. She also serves as president of the HSN brand.

Speaker Change: Having realigned our executive leadership team, we are looking at the rest of the enterprise to fund and build the needed capabilities. We are pursuing $100 million of additional OIBDA opportunity by examining all areas of spending across the company.

David Rawlinson: We are pursuing $100 million of additional OIBDA opportunity by examining all areas of spending across the company. Headcount reductions, while challenging decisions, are necessary to fund new capabilities and drive growth. We are focusing this work on QVC US, HSN, and the global functions. Separately, QVC International is identifying additional cost efficiencies for 2025, and Cornerstone remains focused on this transformation journey. In terms of the financial impact of our win strategy, we expect to generate $1.5 billion of run rate revenue from social and streaming within the next 3 years. While we work toward these revenue goals, we plan to sustain a stable double-digit adjusted OIBDA margin, and we commit to at least a 2.5 times or better long-term leverage target.

Speaker Change: Head count reductions, while challenging decisions are necessary to fund new capabilities and drive growth. We are focusing this work on QVC U S. H S N and the global functions separately QBC International is identifying additional cost efficiencies for 2025 and cornerstone.

Speaker Change: The focus on this transformation journey.

Speaker Change: In terms of the financial impact of our win strategy, we expect to generate $1.5 billion of run rate revenue from social and streaming within the next three years, while we work toward these revenue goals, we plan to sustain a stable double digit adjusted OIBDA margin.

And we commit to at least a two and a half times are better long term leverage target.

Speaker Change: In conclusion.

David Rawlinson: In conclusion, we firmly believe that we have a once-in-a-generation opportunity to capture a fast-developing and rapidly growing market in live social shopping. Social and streaming are the next frontier for entertainment and retail, and we are well positioned to compete and win in this space. We have a long history of innovation. In the eighties, we invented home shopping on cable TV. In the nineties, we launched our first website, and today, are an e-commerce leader. We were early adopters on mobile and social. We have built a successful streaming business. We are intently focused on achieving our objectives and positioning the company for future growth, and we look forward to updating you on our progress. Now, I'll turn the call to Bill to review the Q4 financial results of each of our businesses.

Speaker Change: We firmly believe that.

Speaker Change: But we have a once in a generation opportunity to capture a fast developing and rapidly growing market and lost social shopping.

Speaker Change: Social and streaming or the next frontier for entertainment and retail and we are well positioned to compete and win in this space. We have a long history of innovation in the eighties, we invented home shopping on cable television and the nineties, we launched our first website in today.

Speaker Change: Or an E Commerce leader, we were early adopters on mobile and social we have built a successful streaming business. We are intently focused on achieving our objectives and positioning the company for future growth and we look forward to updating you on our progress.

Speaker Change: Now I'll turn the call to Bill to review the Q4 financial results of each of our businesses.

Bill: Thank you David and good afternoon, everyone.

Bill Wafford: Thank you, David, and good afternoon, everyone. Unless otherwise noted, my comments compare financial performance for the three months ended 31 December 2024, to the same period in 2023. Starting with QXH. Revenue fell by 8% due to lower unit volume, average selling price, and shipping and handling revenue. From a category perspective, home revenue decreased 8%, driven by reduced demand for culinary and floor care products, partially offset by growth in seasonal items. Apparel revenue grew 2% due to gains from Age of Possibility brands, including Kim Gravel, Jenny Garth, Stacy London, and Susan Graver, as well as celebrities Christie Brinkley, Christian Siriano, and Jhoan Sebastian Grey at HSN. These gains were partially offset by lower demand for outerwear. Beauty revenue fell 9% due to lower demand for skincare and bath and body products.

Bill: Unless otherwise noted my comments compare financial performance for the three months ended December 31, 2024 for the same period in 2023.

Bill: Starting with Q X H <unk>.

Bill: Revenue fell by 8% due to lower unit volume average selling price and shipping and handling revenue.

Bill: From a category perspective home revenue decreased 8% driven by reduced demand for culinary and floor care products, partially offset by growth in seasonal items.

Bill: Apparel revenue grew 2% due to gains from age of possibility brands, including Kim Gravelle, Jennie Garth Stacy, London, and Susan Graver, as well as celebrities Christie Brinkley Christian Siriano and Johann Sebastian Gray at HSN.

Bill: These gains were partially offset by lower demand for outerwear.

Bill: Beauty revenue fell 9% due to lower demand for skin care and Bath and body products.

Bill Wafford: Electronics declined 16% due to lower demand for gaming and computers. We reduced online promotions for gaming items and shifted focus to higher margin products such as audio and portable power, where we experienced gains. Adjusted OIBDA margin expanded 10 basis points. Gross margin declined 40 basis points, with higher product margins mitigated by fulfillment pressure. Product margins increased by approximately 90 basis points due to higher initial margins from private label penetration and improved product COGS. Fulfillment expenses were unfavorable 130 basis points due to higher wages and freight rates and sales deleverage. Operating expenses decreased 11% and were favorable by 25 basis points due to lower commissions. SG&A expenses declined 10% and were favorable by 20 basis points, reflecting lower marketing, personnel, and outside services expenses, partially offset by sales deleverage....

Bill: Electronics declined 16% due to lower demand for gaming and computers, we reduced online promotions for gaming items and shifted focus to higher margin products, such as audio and portable power, where we experience gains.

Bill: Adjusted OIBDA margin expanded 10 basis points.

Bill: Gross margin declined 40 basis points with higher product margins mitigated by fulfillment pressure.

Bill: Product margins increased by approximately 90 basis points due to higher initial margins from private label penetration and improve product Cogs.

Bill: The film and expenses were unfavorable 130 basis points due to higher wages and freight rates and sales deleverage.

Bill: Operating expenses decreased 11% and were favorable by 25 basis points due to lower commissions.

Bill: SG&A expenses declined 10% and were favorable by 20 basis points, reflecting lower marketing personnel and outside services expenses, partially offset by sales deleverage.

Bill: Before moving on to QVC International as noted in our earnings release, we conducted an annual impairment assessment and recognized a $1 5 billion noncash impairment charge at <unk> related to goodwill and trade names. This isn't included in operating loss, but excluded from adjusted OIBDA.

Bill Wafford: Before moving on to QVC International, as noted in our earnings release, we conducted an annual impairment assessment and recognized a $1.5 billion non-cash impairment charge at QXH, related to goodwill and trade names. This is included in operating loss, but excluded from Adjusted OIBDA. Moving to QVC International. My comments will focus on constant currency results. Revenue was flat, reflecting 1% growth in units shipped and favorable returns, offset by lower average selling price. From a category perspective, QVC International experienced constant currency growth in home, accessories, and apparel, with a decline in beauty. QVC Germany and UK grew 8% and 1%, respectively, while Japan declined mid-single digits. Germany experienced sales growth in home, apparel, accessories, and electronics categories. Adjusted OIBDA increased 12%, and Adjusted OIBDA margin expanded 170 basis points.

Bill: Moving to give you the international.

Bill: My comments will focus on constant currency results.

Bill: Revenue was flat, reflecting 1% growth in units shipped and favorable returns offset by lower average selling price.

Bill: From a category perspective, QVC international experienced constant currency growth in home accessories, and apparel with a decline in beauty.

Bill: QVC, Germany, and U K grew 8% and 1%, respectively, while Japan declined mid single digits.

Bill: Germany experienced sales growth in home apparel, and access accessories and electronics categories.

Bill: Adjusted OIBDA increased 12% and adjusted OIBDA margin expanded 170 basis points.

Bill: Gross margin decreased 20 basis points due to higher fulfillment costs, partially offset by product margin gains.

Bill Wafford: Gross margin decreased 20 basis points due to higher fulfillment costs, partially offset by product margin gains. Some costs increased due to higher freight rates and fulfillment center wages, as well as increased unit shipped. Product margin strength was due to favorable returns and improved sourcing costs. SG&A was favorable by approximately 190 basis points due to lower personnel expenses and costs for outside services. Moving to Cornerstone. Revenue declined 7% in the quarter as we experienced soft demand for, and competitive promotional pressure in our home brands and continued challenges in the home sector. Adjusted OIBDA margin decreased due to costs for outside services related to the transformation plan Cornerstone is implementing, higher personnel costs, and sales deleverage. Looking to 2025, let me briefly comment on the recent tariff actions.

Bill: Some cost increase due to higher freight rates and fulfillment center wages as well as increased units shipped.

Bill: Our margin strength was due to favorable returns and improve sourcing costs.

Bill: SG&A was favorable by approximately 190 basis points due to lower personnel expenses and costs for outside services.

Bill: Moving to cornerstone rare.

Bill: Revenue declined 7% in the quarter as we experienced soft demand for and competitive promotional pressure in our home brands and continued challenges in the home sector.

Bill: Adjusted OIBDA margin decreased due to cost for outside services related to the transformation plan cornerstone is implementing higher personnel costs and sales deleverage.

Bill: Looking to 2025.

Bill: Let me briefly comment on the recent tariff actions.

Bill Wafford: As most US-based discretionary retailers, we are also exposed to import tariffs, and while receipt levels from both Mexico and Canada are negligible, we do source a significant percentage of our QXH goods from China. Like other retailers, we are taking action to mitigate the impact to our business, including working with our product suppliers, evaluating our pricing and product mix, and assessing the opportunity to change the country of origin for our goods. Turning to full year cash flow and the balance sheet. In 2024, free cash flow was a source of $238 million, compared to a source of $297 million last year, excluding insurance proceeds related to the Rocky Mount fire.

Bill: As most U S based discretionary retailers. We are also exposed to import tariffs and while receipt levels from both Mexico and Canada are negligible, we do source a significant percentage of our Q X H goods from China.

Bill: Like other retailers, we are taking action to mitigate the impact to our business, including working with our product suppliers evaluating our pricing and product mix and assessing the opportunity to change the country of origin for our goods.

Bill: Turning to full year cash flow and the balance sheet.

Bill: In 2020 for free cash flow was a source of $238 million compared to a source of $297 million last year, excluding insurance proceeds related to the Rocky Mountain fire.

Bill Wafford: The decrease in cash flow, net of insurance proceeds, was primarily due to lower cash from operations, partially offset by lower payments for TV distribution rights and capital expenditures. In 2024, we spent $37 million on renewals of our TV distribution contracts and $199 million on capital expenditures. Reminder that our TV distribution payments can fluctuate year-over-year, depending on renewal cycles. We expect the two-year average to be approximately $70 to 80 million. Additionally, for 2025, we anticipate CapEx to be approximately $230 million. Looking at the QVC Group, Inc. debt profile. As of 31 December 2024, net debt was $4.6 billion. As of year-end, the QVC revolver had $1.2 billion drawn and $1.6 billion in available capacity.

Bill: Decrease the decrease in cash flow net of insurance proceeds was primarily due to lower cash from operations, partially offset by lower payments for TV distribution rights and capital expenditures.

Bill: In 2024, we spent $37 million on renewals of our television distribution contracts and 199 million on capital expenditures.

Bill: Reminder, that our television distribution payments can fluctuate year over year, depending on renewal cycles, we expect the two year average to be approximately $70 million to $80 million.

Bill: Additionally for 2025, we anticipate capex to be approximately $230 million.

Bill: Looking at the QVC Group, Inc debt profile.

Bill: As of December 31, 2024, net debt was $4 6 billion.

Bill: As of year end, the QVC revolver had $1 2 billion was drawn and $1 6 billion in available capacity.

Bill Wafford: In terms of cash balances, QVC Group had total cash of $905 million, of which $297 million was at QVC Inc., $204 million was at Liberty Interactive LLC, and $269 million was at QVC Group, Inc. Our leverage ratio as of December 31, 2024, as defined by the QVC revolving credit facility, was 3.1 times, compared to our maximum covenant threshold of 4.5 times. Please note that covenant OIBDA includes adjusted OIBDA of QVC Inc. and Cornerstone. This February, we paid off the remaining $585 million of QVC Inc.'s 4.45% 2025 senior notes at maturity, funded with our revolver and cash on hand.

Bill: In terms of cash balances QVC group had total cash of $905 million of which $297 million at QVC, Inc. $204 million was at Liberty Interactive LLC and $269 million was at QVC Group, Inc.

Bill: Our leverage ratio as of December 31, 2024, as defined by the <unk> revolving credit facility was three one times compared to our maximum covenant threshold of four five times.

Bill: Please note that covenant OIBDA includes adjusted OIBDA of QVC, Inc, and cornerstone.

Bill: This February we paid off the remaining $585 million.

Bill: QVC, Inc. For 45% 2025 senior notes at maturity funded with our revolver and cash on hand.

Bill Wafford: We affirm that our debt level is manageable and our current cushion is sufficient in relation to the 4.5 times maximum net leverage covenant threshold stipulated in our credit facility. Finally, as previously mentioned, we received a non-compliance notice from NASDAQ in June 2024 due to our closing bid price trading below NASDAQ's minimum requirement of $1. On 2 December 2024, we transferred our stock from the NASDAQ Global Select Market to the NASDAQ Capital Market, and an additional 180-day calendar period began to regain compliance. As part of this extension, we have committed to effect a reverse stock split, if necessary, to remain on NASDAQ after the 180-day period. Now I'll turn the call over to Greg.

Bill: We affirm that our debt levels are manageable and our current cushion is sufficient in relation to the four five times maximum net leverage covenant threshold stipulated in our credit facility.

Bill: Finally, as previously mentioned, we received a noncompliance notice from NASDAQ in June 2024, due to our closing bid price trading below nasdaq's minimum requirement of $1.

Bill: On December 2nd 2024, we transferred our stock from the NASDAQ Global select market to the NASDAQ capital market and an additional 180 day calendar period began to regain compliance.

Bill: As part of this extension, we have committed to effect a reverse stock split if necessary to remain on NASDAQ. After the 180 day period.

Greg: Now I'll turn the call over to Greg.

Greg: Thanks Bill.

Greg Maffei: Thanks, Bill. So in 2024, we had a successful execution of many elements of the balance sheet. Just to reiterate a couple that Bill noted already, or David as well, we reduced debt by $442 million during the year, including the repayment of the QVC 2024 notes. After year-end, we also repaid the 2025 notes, and we tendered for 89% of the 2027 and 2028 notes, which was partially funded with new 2029 notes. These actions extended our debt maturity profile and helped support our anticipated revolving credit facility extension. It's great work from the team in achieving higher margins and free cash flow under Athens. OIBDA was up 4%, including the elimination of Zulily and flat without Zulily. This is pretty solid, given the challenging backdrop of accelerated cord-cutting.

Greg: So in 2024, we had a successful execution of many elements of the balance sheet.

Greg: Just to reiterate a couple that bill noted already or for David as well, we reduced debt by $442 million during the year, including the repayment of the <unk> 2024 notes.

Greg: After year end, we also repaid the 2025 notes.

Greg: We tended for 89% of the 27 28 notes, which was partially funded with new 2029 notes.

Greg: These actions extended our debt maturity profile and help support our anticipated revolving credit facility extension.

Greg: It's great work from the team and achieving higher margins and free cash flow under Athens.

Greg: OIBDA was up 4%, including the elimination of the Lilly and flat without to Lilly.

It is pretty solid given the challenging backdrop of accelerated cord cutting.

Greg Maffei: And though it's short of our targeted OIBDA growth rate when we set out for Project Athens, it's still admirable given these conditions. We do recognize the macro pressures of cord cutting and discretionary retail, and we have seen the massive growth in live social shopping and the clear change in consumer behavior, which is continually shifting towards digital. Accordingly, we're moving our businesses towards this opportunity. As our audience increasingly go onto social, a growing market, and they become increasingly comfortable transacting on social, we believe QVC is set up well to win in this space with our content production, our brands, and the knowledge of the market. We believe we can balance the growth in this market with maintaining profitability going forward. And with that, operator, I'll open up the line for questions.

Greg: And though it is short of our targeted OIBDA growth rate when we set out for project Athens is still admirable given these conditions.

Greg: We do recognize the macro pressures of cord cutting and discretionary retail.

Greg: And we've seen the massive growth in life social shopping in the clear change in consumer behavior, which is continually shifting towards digital.

Greg: Accordingly.

Greg: We're moving our businesses towards this opportunity.

Greg: As our audiences increasingly go onto social a growing market and they become increasingly comfortable transacting on social we believe QVC is set up well to win in this space with our content production or <unk>.

Greg: <unk> and the knowledge of the market.

Greg: We believe we can balance the growth in this market with maintaining profitability going forward.

Greg: And with that operator, I will open up the line for questions.

Operator: Thank you. And if you would like to ask a question, press star one on your telephone keypad. A confirmation tone will indicate that your line is in a question queue. You may press star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question comes from Jenna Giannelli with Morgan Stanley. Please state your question.

Andy: Thank you Andy.

Speaker Change: And if you'd like to ask a question press star one on your telephone keypad, a confirmation tone will indicate that your line is in the question queue. You May press star two to remove yourself from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys. Our first question comes from Jenna Giannelli with Morgan Stanley.

Speaker Change: Family. Please state your question.

Speaker Change: Hi, good afternoon, Thanks for taking my question.

Jenna Giannelli: Hi, good afternoon. Thanks for taking my question. In terms of the three-year plan and as it pertains to 2025, how should we think about the cadence of that, you know, playing out over the next few years? Should we expect any revenue growth this year, do you think, or at least in the second half? And is the flat EBITDA margin, or EBITDA margin, excuse me, the goal for this year as well? Thank you.

Speaker Change: And in terms of the three year plan and as it pertains to 2025, how should we think about the cadence of that playing out over the next few years should we expect any revenue growth. This year or do you think or at least in the second half and as the flat EBITDA margin or EBITDA margin excuse me the goal for this year as well.

Speaker Change: Thank you.

Speaker Change: Yeah, I'll start on that and then I'll, let bill jump in if he wants to important yet. So I think what you I think 2025 will be a real transition year I think youll see.

David Rawlinson: Yeah, I'll start on that, and then I'll let Bill jump in if he wants to, for it. So I think what you-- I think 2025 will be a real transition year. I think you'll see even stronger acceleration of social and streaming revenue than what we've had in the last couple of years. And I think you'll continue to see us experience cord-cutting related declines in some of the core US video commerce businesses. I think you'll see the revenue build from the growing parts of the businesses start to overcome the rate of that decline as we go through 2025 and get into 2026. So I think it'll be very much a year of transition while we grow into that revenue growth over the full 3-year period.

Speaker Change: Even stronger acceleration of social and streaming revenue than what we've had in the last couple of years and I think youll continue to see.

Speaker Change: US experience cord cutting related declines in some of the core U S video commerce businesses.

Speaker Change: I think youll see the revenue build from the growing parts of the businesses start to overcome the rate of that decline as we go through 2025 and get into two.

Speaker Change: 2026, so I think it will be very much a year of transition while we grow into that.

Speaker Change: And to that revenue growth over the full three year period in terms of OIBDA margin I would expect that we will maintain our basic margin levels of profitability.

David Rawlinson: In terms of OIBDA margin, I would expect that we will maintain our basic margin levels of profitability comfortably, sort of double-digit type OIBDA margins throughout the three-year strategic period.

Speaker Change: Amphora believe sort of double digit type OIBDA margins.

Speaker Change: Throughout the three year strategic period.

Speaker Change: Okay.

Speaker Change: Excellent. Thank you and then I just had one follow up if I can international outperformed pretty notably I guess, maybe what were some of the key differences. There are the drivers of that and is there anything going on there specifically or structurally that you think you can pull back or leverage.

Jenna Giannelli: Excellent. Thank you. And then I just had one follow-up, if I can. International performed pretty notably. I guess, maybe what were some of the key differences there, the drivers of that? And is there anything going on there, specifically or structurally, that, you know, you think you can pull back or leverage, you know, here in the Americas? Thanks.

Speaker Change: Here and in the Americas.

Speaker Change: Yes, so great question.

David Rawlinson: Yeah, it's a great question. The biggest difference, by far, is they're seeing some of the same technology transitions that we're seeing in the US, but it's all much delayed, and so they're not seeing anything close to the type of cord cutting that we've seen in the US, which is just allowing us to make the technology and platform transition in a more balanced, deliberate way than I think we're going to have the luxury of being able to do in the United States. I think it also helps. We have a very experienced team on that business. We have very strong local brand presence in each of those markets.

Speaker Change: Biggest difference by far is they are just they are seeing some of the same technology transitions that we're seeing in the U S. But it's all much of delayed and so theyre not seeing anything close to the type of cord cutting that we've seen in the U S, which is just allowing us to make the technology platform.

Speaker Change: Transition and in a more balanced deliberate deliver.

Speaker Change: Deliberate way then I think we're going to have.

Speaker Change: The luxury of being able to do in the United States I think it also helps we have a very experienced team.

Speaker Change: That business, we have very strong local brand presence in each of those.

Speaker Change: <unk> I would say on average our international markets are slightly less competitively intense than what we tend to face on a daily basis and our U S.

David Rawlinson: I would say, on average, our international markets are slightly less, competitively intense, than what we tend to face on a daily basis in our US, in our US markets, and so that's, that's helpful as well. I will say, a lot of the core disciplines that, we are now, perfecting, especially in the social shopping space in the US, we think are going to give us, even greater competitive advantages in our international markets going forward. This year, the, real concentration on building things like the content factory engine and, some of the other capabilities is focused on the US.

Speaker Change: In our U S markets and so that's that's helpful. As well I will say a lot of the core disciplines that we're now protecting especially in the social shopping space in the U S. We think are going to give us even greater competitive advantages in our international markets going forward.

Speaker Change: This year would be a real concentration on building things like the content factory Amgen.

Speaker Change: Some of the other capabilities is focused on the U S. But we're really very excited about what it's going to mean as we go through this year and into 2026 and bring some of those capabilities to some of the international markets, which are even if more slowly facing a lot of the same growth opportunities.

David Rawlinson: But we're really very excited about what it's going to mean as we go in through this year and into 2026, and bring some of those capabilities to some of the international markets, which are, even if more slowly, facing a lot of the same growth opportunities that are emerging here.

Speaker Change: Other emerging here.

Speaker Change: Great. Thanks, so much.

Jenna Giannelli: Great. Thanks so much.

Speaker Change: Your next question comes from William Reuter with Bank of America. Please state your question.

Operator: Your next question comes from William Reuter with Bank of America. Please state your question.

Rob Break: Hi, Good evening. This is Rob break beyond for Bill. So first question from Us.

Greg Maffei: Hi, good evening. This is Rob Rigby on for Bill. So first question from us. I was just wondering if you could touch on your plans for the St. Petersburg facility, and if your plan is to sell the facility, what proceeds would be used for? Thank you.

Robert Rigby: Hi, good evening. This is Rob Rigby on for Bill. So first question from us. I was just wondering if you could touch on your plans for the St. Petersburg facility, and if your plan is to sell the facility, what proceeds would be used for? Thank you.

Speaker Change: Just wondering if you could touch on your plans for the St. Petersburg facility.

Speaker Change: And if your plan is to sell the facility what proceeds would be used for thank you.

Speaker Change: Yeah, we're still I mean, St. Petersburg, obviously, the team is still operating there and will be for a good portion of this year and David.

Bill Wafford: Yeah, we're still I mean, St. Petersburg, obviously, the team's still operating there and will be for a good portion of this year. And David, you know, mentioned that, you know, by Q3, we intend to, you know, having, you know, consolidating all content production here in Studio Park. You know, we'll work on decommissioning that facility this year. Eventually, high likelihood, obviously, that we'll, you know, dispose of the facility via a sale, still remains to be seen in terms of, you know, what the exact timing that's going to be and how we use the proceeds.

Speaker Change: Mentioned that by Q3, we intend to.

Speaker Change: Having consolidated all content production here in the studio Park will work on decommissioning that facility this year.

Eventually.

Speaker Change: Hi, likelihood, obviously that will disposal facility front via sale still remains to be seen in terms of what the exact timing and that's going to be and how we use the proceeds.

Speaker Change: Got it understood.

[Company Representative] (Conference Center): ... Got it. Understood. And then, regarding tariffs, I was just wondering, maybe if you could quantify, in any way your exposure to China and then, your ability to potentially shift sourcing of certain goods.

Robert Rigby: Got it. Understood. And then, regarding tariffs, I was just wondering, maybe if you could quantify, in any way your exposure to China and then, your ability to potentially shift sourcing of certain goods.

Speaker Change: And then regarding tariffs I was just wondering maybe if you could quantify that.

Speaker Change: Your exposure to China.

Speaker Change: Our ability to to potentially shift sourcing of certain codes.

Speaker Change: Yeah, I mean, we've taken a sourcing considerable amount of our source of supply out of China really since 2018. The last time you saw significant tariff action.

Bill Wafford: Yeah, I mean, we've taken, you know, sourcing considerable amount of our source of supply out of China, really, since 2018, you know, when the last time, you know, that you saw significant tariff action. We don't, the majority of our goods, we, you know, source through our vendors where we're not the importer of record. We don't quote typically, you know, what our tip, what our complete exposure is, and obviously, we don't control the total exposure, but, but it's, you know, significant on the business. We're continuing to work with our suppliers as we evaluate, you know, product pricing and, you know, sources of supply from country of origin going forward, and obviously, what our pricing situation is here in the US and, and if we have to pass that on to consumers.

Speaker Change: We don't the majority of our goods, we source through our vendors, where we're not the importer of record. We don't quote typically you know what our tip and what our complete exposure is and obviously, we don't control the total exposure, but but it's significant on the business, we're continuing to work with our suppliers as we evaluate.

Speaker Change: Product pricing and a source of supply from country of origin going forward and obviously, what our pricing situation is here in the U S and if we have to pass that onto consumers.

Speaker Change: Great. Thanks, and then just just one last one quickly.

[Company Representative] (Conference Center): Great, thanks. And then just, just one last one quickly. I'm not sure if I missed it, but, did you touch on the timing of that $100 million of adjusted savings?

Robert Rigby: Great, thanks. And then just, just one last one quickly. I'm not sure if I missed it, but, did you touch on the timing of that $100 million of adjusted savings?

Speaker Change: I'm not sure if I missed it but did you touch on the timing of that hundred million dollars of adjusted EBITDA savings.

Speaker Change: We're targeting that to have a run rate by the end of this year in terms of OIBDA opportunity improvement.

Bill Wafford: We're targeting that to have a run rate by the end of this year in terms of OIBDA opportunity improvement.

Speaker Change: Okay.

[Company Representative] (Conference Center): Great. That's all for me. Thank you.

Robert Rigby: Great. That's all for me. Thank you.

Speaker Change: Great. That's all for me thank you.

Speaker Change: Yeah.

Operator: Our next question comes from Karru Martinson with Jefferies. Please state your question.

Speaker Change: Our next question comes from Guru Martinsen with Jefferies <unk> Company. Please state your question.

Karru Martinson: Good afternoon. The anticipated revolver extension, where are we on that? Is that something that's near term here, or is that closer to maturity?

Guru Martinsen: Good afternoon.

The anticipated revolver extension, where are we on that is that something that near term here or is that closer to maturity.

David Rawlinson: This is Ben Oren. I think the way we're thinking about that is October 2026 is the maturity, October 2025 is the current. And so, you know, we are in active dialogue with the banks and hope to have something back to you in the next, you know, 1 to 2 quarters.

Guru Martinsen: This has been our and I think the way we're thinking about that is October 2026 is the maturity October 2025.

Ben Oren: This is Ben Oren. I think the way we're thinking about that is October 2026 is the maturity, October 2025 is the current. And so, you know, we are in active dialogue with the banks and hope to have something back to you in the next, you know, 1 to 2 quarters.

Guru Martinsen: The current <unk>.

Guru Martinsen: And so we are in active dialogue with with.

Guru Martinsen: With banks and hope to have something back to you in the next one to two quarters.

Guru Martinsen: Okay.

Karru Martinson: Okay. And then when you look at the headwinds with fulfillment, 130 bps this quarter, you know, what's the ability to kind of see some offsets to that? Is that just the deleveraging on the top line? And I guess, how does that fit in with the maintaining a double-digit OIBDA margin?

Guru Martinsen: And then when you look at.

Guru Martinsen: The headwinds with fulfillment of 130 bps this quarter.

Guru Martinsen: What's the ability to kind of see.

Guru Martinsen: Some offsets to that is that just the deleveraging on the topline and I guess, how does that fit in with the maintaining a double digit OIBDA margin.

Guru Martinsen: Yeah, I mean, I think because you're a bit episodic in the quarter right I mean, you've got a bit of deleverage and theyre right on your warehouse costs flowing through I think you saw a little bit of things that were episodic in terms of smart small parcel and charges. We had in the in the quarter impacting US also when you looked at even the international business kind of some of the <unk>.

Bill Wafford: Yeah, I mean, I think you're a bit episodic in the quarter, right? I mean, you've got a bit of deleverage in there, right, on your warehouse costs flowing through. I think you saw a little bit of things that were episodic in terms of, you know, small parcel and charges we had in the quarter impacting us. Also, when you looked at even the international business, you know, kind of some of the tale of Red Sea disruption that we had that impacted freight and things like that. We don't anticipate that to be systemic going forward, you know, outside of any of the, you know, potential tariff discussions that are going on, right, that are impacting product COGS. We don't see that being consistent go forward.

Tale of Red Sea disruption that we had that impacted freight and things like that we don't anticipate that to be systemic going forward outside of any of the potential tariff discussions that are going on that are impacting product Cogs and we don't see that being consistent go forward. We've done a very good job of managing that over the last couple of years in <unk>.

Bill Wafford: We've done a very good job of managing that over the last couple of years and continue to be actively doing that now. One example is we just consolidated two of our distribution centers on the West Coast into one to be able to take some cost out of the equation.

Guru Martinsen: Continue to be actively be doing that now and one example is we just consolidated to our distribution centers on the west coast into one to be able to take some cost out of the equation.

Guru Martinsen: Yes.

Karru Martinson: Okay. And just lastly, I realize you don't give guidance, but, you know, we've talked with some other retailers saying, "Hey, there are some storms, some weather. There was a slow start to the year." Kind of balance that off with there haven't been as many, quote-unquote, "one-time events." You know, how is the consumer shaping up for 2025?

Guru Martinsen: Okay, and just lastly, I realize you don't give guidance, but you know we've talked with some other retailers, saying hey, there are some storm some whether there was a slow start to the year kind of balance that off with there haven't been as many couldnt quote one time events.

Guru Martinsen: How is the consumer shaping up for 2025.

Guru Martinsen: Yes, I think it's a little bit hard to read I think if you look across the consumer sentiment measures I think they're broadly stable, but broadly down.

David Rawlinson: Yeah, I think it's a little bit hard to read. I think if you look across the consumer sentiment measures, I think they're broadly stable, but broadly down. But I don't see anything that suggests demand is collapsing. I think a lot of retailers have remarked that you're seeing value seeking and deal seeking behavior among the consumer. I think we continue to see that gravitation towards deals, gravitation towards clearance, when there's an opportunity with a good, better, best to choose down towards good or better and to choose away from best. So I think you're continuing to see some of those trends as we go into this year.

Guru Martinsen: But I don't see anything that suggests demand is collapsing.

Guru Martinsen: I think.

A lot of retailers have remark that you are seeing value seeking and deal seeking behavior. Among the consumer I think we continue to see that gravitation towards deals gravitation towards clearance.

Guru Martinsen: When there's an opportunity with the good better best to choose down towards good or better than the choose away from best So I think youre continuing to see some of those trends as we go into this year I think you still continue to see a lot of the.

David Rawlinson: I think you still continue to see a lot of the income-related trends with buying behavior for upper middle class and greater being more stable than below, so but I think mostly I see a relatively stable continuation of trends from 2024 into 2025, with perhaps a touch of softness in consumer sentiment, but nothing that feels like it's sharp or alarming.

Income related trends with buying behavior.

Speaker Change: For upper Middle class.

Speaker Change: And greater being more stable than.

Speaker Change: Below.

Speaker Change: So, but I think mostly I see a relatively stable continuation of trends from 25 from 24, and the 25 with perhaps.

Speaker Change: Hutch.

Speaker Change: Softness in consumer sentiment, but nothing that feels like.

Speaker Change: It's sharp are alarming.

Thank you very much I appreciate it.

Karru Martinson: Thank you very much. Appreciate it.

Speaker Change: Yes.

Speaker Change: Our next question comes from Hale Holden with Barclays. Please state your question.

Operator: Our next question comes from Hale Holden with Barclays. Please state your question.

Hale Holden: Hi, Thank you.

Bill Wafford: Thank you. I had two questions. The first one is, when we think about sort of the effect of cord cutting, if that accelerates or as that accelerates, should we think about that as a, you know, straight line decline or linear decline in the subcount, or are they sort of unrelated? And then for the Q4, specifically, I think you mentioned the pullback in promotions on electronics, and I was wondering if that also had an impact on the subcount or not. And then I have a follow-up.

Hale Holden: Thank you. I had two questions. The first one is, when we think about sort of the effect of cord cutting, if that accelerates or as that accelerates, should we think about that as a, you know, straight line decline or linear decline in the subcount, or are they sort of unrelated? And then for the Q4, specifically, I think you mentioned the pullback in promotions on electronics, and I was wondering if that also had an impact on the subcount or not. And then I have a follow-up.

Speaker Change: Two questions. The first one is.

Hale Holden: What do we think about sort of the effect of cord cutting.

Speaker Change: Okay.

Speaker Change: If that accelerates or as that accelerates should we think about that is that straight.

Speaker Change: Straight line decline in linear decline and the sub count.

Speaker Change: Or are they sort of unrelated.

Speaker Change: And then for the fourth quarter specifically thank.

Speaker Change: I think you mentioned the pullback in promotions on on electronics and I was wondering if that also had an impact on the sub count or not and then I have a follow up.

Speaker Change: That's great.

David Rawlinson: ... That's great. We tend to look at subs on kind of a year-over-year basis. There's so much variation in quarters. We tend to look at it on sort of a year-over-year or a 12-month lagging, trailing 12 basis. What I would say, and I think we've seen relatively consistent losses over. I think in my remarks, I talked about from 2018 to 2024. I think we've seen a relatively consistent declines in terms of households during that time. I would say, while it started out in the general market a little bit faster, it was slower to start for us because a lot of our customers were the last to cut the cord because some of our customers are older and more wedded to that platform.

David Rawlinson: That's great. We tend to look at subs on kind of a year-over-year basis. There's so much variation in quarters. We tend to look at it on sort of a year-over-year or a 12-month lagging, trailing 12 basis. What I would say, and I think we've seen relatively consistent losses over. I think in my remarks, I talked about from 2018 to 2024. I think we've seen a relatively consistent declines in terms of households during that time. I would say, while it started out in the general market a little bit faster, it was slower to start for us because a lot of our customers were the last to cut the cord because some of our customers are older and more wedded to that platform.

Speaker Change: We tend to look at we tend to look at subs on kind of a year over year basis. There's so much variation in quarters, we tend to look at it on sort of a year over year or 12 month lagging trailing 12 basis, what I would say and I think it's we've seen relatively.

Speaker Change: <unk> consists the losses over I think in my remarks, I talked about from 2018 to 2024, I think we've seen a relatively consistent.

Speaker Change: Declines in terms of households, during that time, I would say, while it started out in the general market a little bit faster it was slower to start for us because a lot of our customers.

Speaker Change: Were the last to cut the cord because.

Speaker Change: Some of our customers are older and more weather too.

Speaker Change: That platform I would say what you're starting to see now is all customers are cutting.

David Rawlinson: I would say what you're starting to see now is all customers are cutting the cord at roughly the same sorts of roughly the same sorts of rates. We have generally overperformed cord cutting, so if you were to do a correlation between our revenue performance and our US video commerce businesses versus loss of households, because we've been moving some of those customers to streaming and some of those customers to digital channels, we haven't quite seen some of the reductions in revenue that you would be suggested by the level of cord cutting. But obviously, it has had a pretty direct a pretty direct impact. In terms of spending in Q4 on advertising, you caught that comment correctly.

Speaker Change: The court at roughly the same sorts of.

Speaker Change: Roughly the same sorts of rates, we have generally over performed.

Speaker Change: Cord cutting so if you were to do a correlation between our revenue performance in our U S video commerce businesses versus a loss of households, because we've been moving some of those customers to streaming and some of those customers through digital channels, we haven't.

Speaker Change: <unk> seen some of the reductions in revenue that you would be suggested by the level of cord cutting but obviously it has had a pretty direct.

Speaker Change: A pretty direct impact in terms of spending in the fourth quarter on advertising.

Speaker Change: Caught that comment correctly so we.

David Rawlinson: So we pulled some of our normal performance marketing in spending that we would normally have in the fourth quarter. Some of that we reprogrammed in the first three quarters, and some of that we just declined to spend in the fourth quarter. Advertising, given advertising is always a little less effective because more people are in the market advertising in the fourth quarter, so it usually has a lower payoff. With some of the election spending in this fourth quarter, it had an even lower than normal payoff. And we did not see some of the opportunities around innovation in places like electronics, where we thought it was productive to push. And then finally, we tend to see that our digital spending gets some significant tailwind when our viewership is up.

Speaker Change: We pulled some of our normal performance marketing.

Speaker Change: And spending that we would normally have in the fourth quarter. Some of that we re programmed in the first three quarters and some of that we just declining the spend in the fourth quarter advertising advertising is always a little less effective.

Speaker Change: Because more people are in the market advertising in the fourth quarter. So it usually has a lower pay off with some of the election spending in this fourth quarter. It had an even lower than normal.

Speaker Change: A lower than normal pay off and we did not see some of the opportunities around innovation and places like electronics, where we thought it was productive to push.

Speaker Change: And then finally.

Speaker Change: We tend to see that our digital spending get some significant tailwind when our viewership is up with viewership being down largely because of news and special events, we werent going to have that tailwind, which was going to be a headwind to digital marketing marketing.

David Rawlinson: With viewership being down, largely because of news and special events, we weren't gonna have that tailwind, which was going to be a headwind to digital marketing efficiency. And so we made a pretty deliberate decision to pull back, not to concentrate as much on new customers and new customer acquisition. Those tend to be, at least in the early days, slightly less profitable customers. So I think this was the first time new customer count went down in the last six quarters. I think we've been growing new customers, Bob, over the last six quarters. It went down this quarter, mostly because we made a deliberate decision to concentrate on our most profitable existing customers and not to concentrate as much on chasing the customer file.

Speaker Change: And so we made a pretty deliberate decision.

Speaker Change: The pullback.

Speaker Change: Not to concentrate as much on new customers and new customer acquisition those tend to be at least in the early days slightly less profitable customers. So I think this was the first time new customer count went down in the last six quarters I think we've been growing new customers Bob of the last six quarters. It went.

Speaker Change: Down.

Speaker Change: This quarter, mostly because we made a deliberate decision to concentrate on our most profitable existing customers and not the concentrate as much on chasing the customer file I think as we go back into 2025, now youll start to see us layer back in a more balanced.

David Rawlinson: I think as we go back into 2025 now, you'll start to see us layer back in a more balanced approach to the customer file and to new customer acquisition.

Speaker Change: Probes to the customer file and to new customer acquisition.

Speaker Change: Great. Thank you David and my second question was really around a cornerstone.

Hale Holden: Great. Thank you, David. And my second question was really around Cornerstone. That was the biggest delta miss on my part in terms of expectations. And, you know, I think we've all been waiting for that market to turn. It hasn't, in terms of home furnishing. So I was wondering if there's any change in strategy there, or how do you make sure you don't, you know, flip you to negative, in the meantime, while we're waiting for it to improve?

Speaker Change: What's the biggest delta Miss on my part in terms of expectations.

Speaker Change: I think.

Speaker Change: And for that market to turn.

Speaker Change: It Hasnt in terms of home furnishing. So I'm wondering if there is any change of strategy there or how do you make sure you don't flip the negative in the meantime, while we're waiting for it to improve.

Speaker Change: Yes, it's a great question I think.

David Rawlinson: Yeah, it's a great question. I think everybody in the market's been surprised to see the housing market stay at multi-decade lows in terms of moves and, to an extent, new builds, and those businesses are very highly correlated to the broader market. What's encouraging to me about those businesses today is that this is giving us a lot of opportunity to run something like the program that we ran through Project Athens on QVC and HSN, now on the Cornerstone brand. So a lot of the team that drove a lot of the increased profitability because of Athens is now working with Cornerstone Brands.

Speaker Change: We've been.

Speaker Change: I think everybody in the market has been surprised to see the housing market stay more towards decade lows in terms of.

Speaker Change: In terms of moves and to an extent newbuild and are those businesses are very highly correlated to.

Speaker Change: To the broader market.

Speaker Change: What's encouraging to me about those businesses today.

Speaker Change: Is that this is giving us a lot of opportunity to run something like the program that we ran through project Athens on QVC and HSN now on the cornerstone brands. So a lot of the team.

Speaker Change: That drove a lot of the increased profitability because of that then as now working with cornerstone brands and so we know we have techniques that work that are going to help us with margin and profitability in that business over the next 12 to 18 months and those efforts are now sort of full steam ahead.

David Rawlinson: And so we know we have techniques that work that are going to help us with margin and profitability in that business over the next 12 to 18 months, and those efforts are now sort of full steam ahead and fully stood up. And so we feel good about our ability to drive some bottom-line margin and cost opportunities in that business. In terms of when we get more out of the market itself in the macro, your call is as good as mine. What I would just observe is that there does feel like there's real pent-up demand in the market, and whenever the market gets unstuck, I would not be surprised for us to have a trend that looks very different for a sustained period of time.

Speaker Change: Fully stood up and so we feel good about our ability to drive some bottom line margin and cost opportunities in that business.

Speaker Change: In terms of when the when we get more out of the market itself and the macro you'll recall is as good as mine what I would what I would just observe is that.

Speaker Change: There does feel like there is real pent up demand.

Speaker Change: Market and whenever the market gets unstuck.

Speaker Change: Be surprise.

Speaker Change: For us to have a trend that looks very different for a sustained period of time I think we will go into that into a market turn.

David Rawlinson: I think we will go into that, into a market turn, more profitable, more capable, having established a lot of new capabilities. And I think there's some potential to potentially overperform if we got back to an upmarket, given some of the work we're doing. But it's certainly been, the macro has been depressed for longer than we would have anticipated or than we would have liked.

Speaker Change: More profitable more capable having established a lot of new capabilities.

Speaker Change: I think there is some potential to potentially over perform if we got back to an up market given some of the work we're doing but it has certainly been the macro has been depressed for longer than we would have anticipated or than we would've liked.

Speaker Change: Alright, Thank you very much I appreciate it.

[Company Representative] (Conference Center): Great. Thank you very much. I appreciate it.

Hale Holden: Great. Thank you very much. I appreciate it.

Speaker Change: Thank you and the last question for today comes from Yakov Musharraf with Jpmorgan Chase <unk> Company. Please state your question.

Operator: Thank you. And the last question for today comes from Yakov Mushayev with JPMorgan Chase & Co. Please state your question.

Jacobo: Hi, Thank you this is jacobo for cloud Casella.

Yaakov Musheyev: Hi, thank you. This is Yakov. I'm for Carla Casella. First question, you have an initiative to grow social sales about $1.5 billion. Could you just give us a sense for your progress in the quarter? Did social sales grow sequentially? Were there any call-outs, what is working and what still needs to work on social? And, how much lower are the margins on social versus linear?

Speaker Change: First question do you have an initiative to grow social sales about $1 5 billion could you just give us a sense for your progress in the quarter.

Speaker Change: Social sale grow sequentially or are there any callouts was working and what still needs work on social.

Speaker Change: And how much lower are the margins on social versus linear.

Speaker Change: Yes, great questions.

David Rawlinson: Yeah, great questions. So one conversation we're having internally that we'll get back to this community on is how to give you more insight into both social and streaming. And so look for us to try to find ways to be more descriptive there. You're right to quote the $1.5 billion run rate goal by the end of the three-year period. We think that's very possible. We already today have hundreds of millions of dollars of revenue across social and streaming, and so we're growing from a not insubstantial base there. And we saw a very good performance in Q4 and for the full year in terms of growth year-over-year. And we expect further acceleration of that into 2025.

Speaker Change: So one conversation, we're having internally that we will get back to this community on is how to give you more insight into both social and streaming and so look for us to try to find ways to be more descriptive.

Speaker Change: There you are right.

Speaker Change: Close to $1 $5 billion run rate.

Speaker Change: Goal by the end of the three year period, we think thats very possible.

Speaker Change: We already today.

Speaker Change: Hundreds of millions of dollars of revenue across social and streaming and so we're growing from a not insubstantial base there and we saw very good performance in Q4 and for the full year in terms of in terms of.

Growth year over year.

Speaker Change: We expect we expect further acceleration of that and to enter 2025, both of those businesses have been growing very strongly now for a couple of years 2025 is the year, where we really put more into advertising capabilities building partnerships.

David Rawlinson: Both of those businesses have been growing very strongly now for a couple of years. 2025 is the year where we really put more into advertising capabilities, building partnerships, so we'll have a lot more to say on that, a lot more to say on that later. But everything we saw in the Q4 leads us to believe that it's exactly the right growth agenda to be pushing as we go into the next three years.

Speaker Change: So we will have a lot more to say on that on.

Speaker Change: A lot more to say on that later, but everything we saw in the end.

Speaker Change: The fourth quarter leads us to that leads us to believe that that's exactly the right growth agenda to be pushing as we go into the next three years.

Yaakov Musheyev: Great. Thank you so much. And then also just wondering if you could provide the RCF borrowing today or pro forma for the $25 million pay down?

Speaker Change: Great. Thank you so much and then I was just wondering if you could provide the RPF borrowing today, our pro forma for the 25 no pay down.

Yaakov Musheyev: Great. Thank you so much. And then also just wondering if you could provide the RCF borrowing today or pro forma for the $25 million pay down?

Ben Oren: I don't think we've shared what we've done there with respect to cash. But you saw that in between 30 September and 31 December, as we built free cash flow, we did paid down some of that revolver. We'll continue to use cash to pay down the revolver and then draw to, you know, to pay down debt. So, we'll probably be out with the balance in our Q1 results.

Speaker Change: I don't think we've shared what we've done there with respect to cash.

Speaker Change: But you saw that in between 930, and <unk> 31, as we build free cash flow. We did pay down some of that revolver will continue to use cash to pay down the revolver and then draw too.

Speaker Change: You have to pay down debt so we.

Speaker Change: We will probably be out with the balance in our Q1 results yes.

David Rawlinson: Yeah, to Ben's point, we don't go intra-quarter. Yeah.

Speaker Change: Yes, we don't do <unk>, we don't go intra quarter.

David Rawlinson: Yeah, to Ben's point, we don't go intra-quarter. Yeah.

Yaakov Musheyev: Got it. Okay, what about cash at Winta, Cornerstone, and at the parent level?

Speaker Change: Okay, and what about cash that winter cornerstone at the parent level.

Speaker Change: Okay.

Speaker Change: Yeah, I think we can get there.

David Rawlinson: Yeah, I think we can get the, I mean, it's, it's in the press release, and I quoted it on the call. I can shoot that over to you as well.

Speaker Change: In the press release and they are quoted on the call.

Speaker Change: I can flip that over to you as well.

Yaakov Musheyev: Perfect. Great. That's it for us. Thank you.

Speaker Change: Perfect great. Thanks, that's it for us thank you.

Speaker Change: Thank you.

David Rawlinson: Thank you.

Ben Oren: All right, operator. I think with that, we are done for the day. Thank you all for joining on the QVC Group call, and we look forward to speaking with you next quarter, if not sooner.

Speaker Change: Alright, operator, I think with that we are done for the day. Thank you all for joining.

Speaker Change: On the QVC group call and we look forward to speaking with you next quarter if not sooner.

Operator: Thank you.

Speaker Change: Thank you.

David Rawlinson: Great.

Operator: That concludes today's call.

Speaker Change: Todays thank you everyone.

David Rawlinson: Thank you, everyone.

Operator: All parties may now disconnect. Thank you.

Speaker Change: Pardon me now disconnect. Thank you.

Q4 2024 QVC Group Inc Earnings Call

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