Q2 2025 QVC Group Inc Earnings Call

August 7, 2025

Operator: Remind you 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 Forms 10-K and 10-Q filed by QVC Group and QVC with the SEC. These forward-looking statements speak only as of the date of this call, and QVC 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 on which any such statement is based. Please note that we have published slides to accompany the earnings release.

We're looking statements within the meaning of the private Securities Litigation Reform Act of 1095.

Actual events or results could differ materially due to a number of risks and uncertainties, including those mentioned in the most recent forms 10-K and 10-Q.

<unk> by QVC group and QVC with the SEC. These.

These forward looking statements speak only as of the date of this call and QVC 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 there to or any.

<unk> in events conditions or circumstances on which any such statement is based.

Please note that we have published slides to accompany the earnings release on.

On today's call, we will discuss certain non-GAAP financial measures, including adjusted OIBDA, adjusted OIBDA margin free cash flow and constant currency <unk>.

Operator: 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 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 earnings call, we have QVC Group President and CEO, David Rawlinson, QVC Group CFO and CAO, Bill Wafford, and QVC Group Executive Chairman, Greg Maffei. Following today's presentation, we will address questions that were submitted in advance of the call. There will be no live Q&A session. Now I'll hand the call over to David Rawlinson.

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 issued today or our earnings presentation, which are available on our website.

Today speaking on the earnings call, we have QVC group, President and CEO, David Rawlinson <unk>.

QVC group, CFO, and CIO, Bill Wafford, and QVC Group Executive Chairman, Greg Maffei.

Following today's presentation, we will address questions that were submitted in advance of the call there will be no live Q&A session.

Now I'll hand, the call over to David Rawlinson.

Thank you and good morning, everyone. We appreciate you joining us and your continued interest in QVC group.

David Rawlinson II: Thank you, and good morning, everyone. We appreciate you joining us and your continued interest in QVC Group. Coming off a challenging Q1, we continued to manage through what has proven to be a difficult macro environment in Q2. Namely, we continue to experience declining linear TV viewership, as well as ongoing volatility in consumer confidence. QXH minutes viewed declined 15% in the second quarter. Declining consumer confidence in the earlier part of the second quarter was primarily driven by international economic policies and geopolitical events. Our implementation of key initiatives to strengthen our capital structure for the long term remains ongoing. At the same time, we are acutely focused on moving the business forward and implementing our win strategy to drive the future of live social shopping. To this end, we continue to advance the number of cost-cutting efforts and accomplish various milestones this quarter.

Coming off a challenging Q1, we continued to manage through what is proven to be a difficult macro environment in Q2.

We continue to experience declining linear TV viewership as well as ongoing volatility and consumer confidence.

Thanks, mainly to view declined 15% in the second quarter <expletive>.

A decline in consumer confidence in the earlier part of the second quarter was primarily driven by international economic policies and geopolitical events are implementation of key initiatives to strengthen our capital structure for the long term remains ongoing at the same time, we are acutely focused on moving the business.

Forward in implementing our winning strategy to drive the future of loss social shopping.

We continue to advance a number of cost cutting efforts and accomplish various milestones. This quarter in late June we successfully completed the transition of Hsn's operations to studio Park in West Chester, Pennsylvania, bringing our five U S television channels across HST I think.

David Rawlinson II: In late June, we successfully completed the transition of HSN's operations to Studio Park in West Chester, Pennsylvania, bringing our 5 US TV channels across HSN and QVC under one roof. In total, we now feature 52 hours of linear content a day. This will not only generate cost reductions, but is also a major milestone in our WIN Growth Strategy and a testament to the dedication of our team. With a single headquarters for QVC and HSN, we believe we are in a much stronger position to efficiently create content for multiple platforms. To keep our customers engaged through this transition, particularly for our avid and elite customers, HSN launched Hello HSN PA, a month-long marketing campaign across all of our touchpoints.

QVC under one roof.

Total we now feature 52 hours of linear content of the day. This.

This will not only generate cost reductions, but it is also a major milestone in our wind growth strategy and a testament to the dedication of our team with a single headquarters for QVC and HSN. We believe we are in a much stronger position to efficiently create content for multiple platforms.

To keep our customers engaged through this transition, particularly for our avid and elite customers HST and launched Hello, HSA NPA a month long marketing campaign across all of our touch points, we brought our customers with us on this exciting journey through moving thing programming and deals.

David Rawlinson II: We brought our customers with us on this exciting journey through moving theme programming and deals, shout-outs in our top-rated shows, behind-the-scenes social clips with our hosts, and much, much more. Hello HSN PA culminated in a blowout housewarming party in late July. More than 130 customers joined our hosts and guests in person at our new Studio H in West Chester, and we broadcast the party live to the entire HSN community. As HSN President Stacy Bowe told customers in an open letter, HSN may have a new address, but the HSN they know and love isn't going anywhere. The fun is here to stay. We also welcomed 11 of our HSN hosts to Studio Park, and three others will commute to Pennsylvania for the remainder of the year.

Shout outs in our top rated shows behind the scenes social clips with our host and much much more Hello, HSN culminated in a blowout housewarming party in late July more than 130 customers joined our hosts and guests in person at our new studio H in Westchester.

And we broadcast the party love to the entire HSN community as.

As HSN President's safety Boto customers in an open leather HSN may have and new address with HSN, They know and love isn't going anywhere. The plan is here to stay we also welcomed 11 of our HSN host to studio par and three others will commute to Pennsylvania for the remainder of the <unk>.

Year.

In addition, we continue to take strategic strategic steps to diversify our sourcing and reduce our dependence on any single country and related tariff pressures during our last call. We mentioned monitoring the tariff impact being prudent about placing new.

David Rawlinson II: In addition, we continue to take strategic, strategic steps to diversify our sourcing and reduce our dependence on any single country and related tariff pressures. During our last call, we mentioned monitoring the tariff impact, being prudent about placing new orders and canceling certain orders with high-tariff countries, actively sourcing from new countries, negotiating with vendors to share any tariff impacts, and potentially taking price action when necessary. In June, we launched Christmas in July, a large home decor event with items largely sourced from countries impacted by tariffs. Although the tariff rates varied, we did not see significant impact to demand for items with tariff price adjustments.

Orders and canceling certain orders with high tariff countries actively sourcing from new countries.

Negotiating with vendors to share any tariff impact and potentially taking price action when necessary.

In June we launched Christmas in July a large home decor event with items largely sourced from countries impacted by tariffs.

Although the tariff rates, Barry we did not see significant impact to demand for items with tariff price adjustments.

Our longer term strategy of sourcing diversification continues and as we shared last quarter. We are still targeting that no single country will represent more than one third of our sourced goods in the U S by the end of the year.

David Rawlinson II: Our longer-term strategy of sourcing diversification continues, and as we shared last quarter, we are still targeting that no single country will represent more than 1/3 of our sourced goods in the US by the end of the year. As a reminder, at the end of 2024, we committed to finding an additional $100 million worth of OIBDA opportunities by examining all areas of spending across the company. In Q2, we saw the favorable impact of our organizational changes in our expenses. We also saw the benefits from our IT outsourcing initiative, allowing us to reinvest in marketing and technology that drives our growth businesses. Also, we completed the operational move of HSN, including standing up a new content organization and merchandise function. Returning our company to growth continues to be difficult as certain macroeconomic challenges persist. It will take time to ramp up.

As a reminder, at the end of 2024, we committed to finding an additional $100 million worth of OIBDA opportunities by examining all areas of spending across the company.

In Q2, we saw the favorable impact of our organizational changes and our expenses.

We also saw the benefits from our outsourcing initiatives, allowing us to reinvest in marketing and technology that drives our growth businesses.

Also we completed the operational move of HSN, including standing up a new content organization and merchandise function.

Returning our company to growth continues to be difficult as certain macroeconomic challenges persist. It will take time to ramp up. However, we believe the current strategy. We have in place are wind growth strategy is the right one and is already delivering results I'd like to walk through some of the wins we saw.

David Rawlinson II: However, we believe the current strategy we have in place, our WIN Growth Strategy, is the right one and is already delivering results. I'd like to walk through some of the wins we saw just this quarter and why we're excited for what is to come. Our social and streaming channels continue to grow, and we estimate that the percentage of QXH revenue that was attributable during Q2 through these platforms is approaching double digits. This is an increase from what we saw in Q1. Social and streaming revenue experienced over 30% growth versus Q2 of 2024. As we will discuss more fully below, Q2 experienced substantial growth in new social customers, with well over 100,000 new customers finding us through TikTok Shop alone. In streaming, we continue to expand content and distribution.

This quarter and while we are excited for what is to come.

Our social and streaming channels continue to grow and we estimate that the percentage of <unk> revenue that was attributable during Q2 through these platforms is approaching double digits. This is an increase from what we saw in Q1.

Social and streaming revenue experienced over 30% growth versus Q2 of 2024, as we will discuss more fully below Q2 experienced substantial growth and new social customers with well over 100000, new customers finding us through time.

Shop alone.

And streaming we continue to expand content and distribution.

QVC and HSN recently joined <unk>, a popular live TV streaming service with approximately one 3 million paid subscribers. This launch reflects our strategic initiative to drive a lot of shopping content to everywhere customers are spending their time, we also recently law.

David Rawlinson II: QVC and HSN recently joined Philo, a popular live TV streaming service with approximately 1.3 million paid subscribers. This launch reflects our strategic initiative to drive live shopping content to everywhere customers are spending their time. We also recently launched an ad-supported version of QVC2 on several leading FAST platforms. Additionally, Season Two of Busy This Week on streaming is off to a strong start. Season Two reached over 1 million households, 80% of which were new. In fact, in Q2, streaming monthly active users grew over 80% to nearly 1.5 million users, and streaming minutes watched grew 25% in the quarter. Building off the strategic agreement we discussed last quarter with TikTok, we hosted our first TikTok Shop Super Brand Day, kicking off the second year of the Age of Possibility.

<unk> and AD supported version of TBC too on several leading SaaS platforms.

Additionally season to a busy this week on streaming is off to a strong start season, two reached over 1 million households, 80% of which were new in fact in Q2 streaming monthly active users grew over 80% to mutiny.

One 5 million users and streaming minutes watched grew 25% in the quarter.

Building off the strategic agreement, we discussed last quarter with Tic Toc, we hosted our first take tops sorry, first we hosted our first tick Tock shop Super brand day kicking off the second year of the age of possibility over 80 of our top affiliate.

It creators joined us for the event, along with 40 of our Q 50, ambassadors, including Huda heartbeat genetic or Billy Jean King and more <unk>.

David Rawlinson II: Over 80 of our top affiliate creators joined us for the event, along with 40 of our Q50 ambassadors, including Hoda Kotb, Jennie Garth, Billie Jean King, and more. The event was our highest viewed and most engaged QVC-hosted live stream to date. We are integrating TikTok creators into customer events like QVC's Foodie Fest, and are seeing the success of our push into the ever-crucial streaming and social businesses. We now have 8.4 million followers across all of our social media accounts, a 700,000 increase from last quarter, and we've uploaded our full QVC catalog into Meta Shop for a seamless shopping experience on Facebook and Instagram. Notwithstanding the successful accomplishments we achieved this past quarter, given QVC Group's unique business model, certain elements of the tougher macro environment continue to apply pressure on our business.

That was our highest viewed and most engaged QVC hosted livestream today.

We are integrating take top creators into customer events like Qvc's <unk> path and are seeing the success of our cost into the ever crucial streaming and social businesses.

We now have eight 4 million followers across all of our social media accounts, a 700000 increase from last quarter and we've uploaded our full QVC catalog into meta shop for a seamless shopping experience on Facebook and Instagram.

Notwithstanding the successful accomplishments, we achieved this past quarter, given TBC group's unique business model certain elements of the tougher macro environment continue to apply pressure on our business.

Total revenue declined in Q2 by 9% in constant currency <unk> revenue declined 11% QVC International revenue declined 3% in constant currency and cornerstone revenue declined 8%.

David Rawlinson II: Total revenue declined in Q2 by 9% in constant currency. QXH revenue declined 11%, QVC International revenue declined 3% in constant currency, and Cornerstone revenue declined 8%. As a result of top line softness, consolidated adjusted OIBDA declined 19% in constant currency in the second quarter, an improvement from the first quarter, which was down 31% versus last year. While these results are not yet where we want them to be, we are working to remain agile as we navigate the current landscape. Drilling down on our capital structure, thanks to the hard work of everyone at QVC Group, over the past few years, we've made meaningful progress in reducing our net debt by over $1.5 billion since the end of 2021.

As a result of topline softness consolidated adjusted OIBDA declined 19% in constant currency in the second quarter, an improvement from the first quarter, which was down 31% versus last year.

Okay.

While these results are not yet not yet where we want them to be we are working to remain agile as we navigate the current landscape.

Drilling down on our capital structure, thanks to the hard work of everyone at QVC group over the past few years, we've made meaningful progress in reducing our net debt by over one 5 billion. Since the end of 2021, our goal is to create more flexibility for.

David Rawlinson II: Our goal is to create more flexibility for our transformation and put ourselves on the strongest and most sustainable path forward. Improving gross margins and aggressively managing costs also continue to be top of mind. As you can see on slide 8 in our presentation, on a trailing twelve-month basis, customer count declined on a sequential basis with a decrease of approximately 3% versus March 2025. Please note, this does not include any new customers purchasing through our TikTok shop. Existing customers continue to purchase at healthy levels, spending on average $1,622 and purchasing 31 items in the 12 months ended June 30. At QVC, our best customers, who buy 20 or more items annually, also continue to purchase at very attractive levels.

Our transformation and put ourselves on the strongest and most sustainable path forward.

Improving gross margins and aggressively managing costs also continue to be top of mind.

As you can see on slide eight in our presentation on a trailing 12 month basis customer count declined on a sequential basis with a decrease of approximately 3% versus March of 2025.

Please note. This does not include any new customers purchasing through our tech talk shop.

Existing customers continue to purchase at healthy levels spending on average $1622 and purchasing 31 items and the 12 months ended June 30 and.

And at QVC, our best customers, who buy 20 or more items annually also continued to purchase at very attractive levels and the 12 months ending June 30th They bought 76 items and spent 300 $990 on average up approximately 1% versus last year.

David Rawlinson II: In the 12 months ending 30 June, they bought 76 items and spent $399 on average, up approximately 1% versus last year. Total QxH customer count declined 12% in the quarter, driven by a 10% decrease in existing customers, a 21% decrease in new, and a 16% decrease in reactivated customers. The decline in linear TV households continues to put pressure on our customer count year-over-year. Our traditional customer reporting does not include any new customers who purchase from our TikTok shop. We estimate that well over 100,000 new customers purchased through our TikTok shop in Q2. There are still many unknowns in this relatively immature business. We continue to grow our catalog and improve our technology, and we expect to have more robust customer-level analytics and reporting in the coming quarters.

Total <unk> customer count declined 12% in the quarter driven by a 10% decrease in existing customers, a 21% decrease in new and a 16% decrease and reactivated customers.

The decline of linear TV households continues to put pressure on our customer count year over year, our traditional customer reporting does not include any new customers, who purchase from our tech talk shop, we estimate that well over 100000, new customers purchased through our tick tock.

<unk> in the second quarter.

There are still many unknowns in this relatively immature business, we continue to grow our catalog and improve our technology and we expect to have more robust customer level analytics and reporting in the coming quarters, notably.

When we.

David Rawlinson II: Notably, when the estimated new TikTok Shop customers are now added to traditional customer reporting, we saw the number of new customers grow substantially year-over-year and a halving of the rate of decline in the overall customer file. We believe this is a strong and early sign of success in our social strategy. When we look within our categories, we saw declines in all categories with the exception of electronics compared to last year. Although apparel was down, we experienced strength from several of our core apparel brands, including Kim Gravel, Denim & Co., Diane Gilman, and LOGO by Lori Goldstein, and also saw success in accessories driven by handbags and luggage.

When the estimated new tick tock shop customers are now added to traditional customer reporting we saw the number of new customers grow substantially year over year.

Housing of the rate of decline in the overall customer file. We believe this is a strong and early signs of success and our social strategy.

When we look within our categories. We saw declines in all categories with the exception of electronics compared to last year, Although apparel was down we experienced strength from several of our core apparel brands, including Kim Gabel, Denim <unk> company, Diane Gilman and logo by Lori Goldstein and also.

Also saw success and accessories, driven by handbags and luggage.

The Christmas in July event, we kicked off in June through strong sales with customers responding to our food offerings, along with new items from favorite brands like Valerie Parr Hill, Bethlehem lights, and homework spot slatkin.

David Rawlinson II: The Christmas in July event we kicked off in June through strong sales, with customers responding to our food offerings, along with new items from favorite brands like Valerie Parr Hill, Bethlehem Lights, and HomeWorx by Slatkin. Our home business was down 12%, but we saw success in our private label, bed and bath, home environment, and smart home categories. Tariffs, a worry factor in our inventory mix, impacted deliveries and product availability. Moving to QVC International, we saw revenue decline 3% in constant currency compared to prior quarters, a broadly stable revenue performance. We continue to experience top-line pressure in Japan, but revenue in our European markets was only down approximately 1%. Total customer count declined 4% in the quarter, driven by a 3% decrease in existing customers, a 5% decrease in new customers, and an 8% decrease in reactivated customers.

Our home business was down 12%, but we saw success in our private label bedding, and Bath home environment, and smart home categories tariffs of worry factor in our inventory mix and impacted deliveries and product availability.

Moving to QVC International we saw revenue declined 3% in constant currency compared to prior quarters, a broadly stable revenue performance. We continue to experience top line pressure in Japan, where revenue in our European markets was only down approximately 1% total.

Or count declined 4% in the quarter driven by a 3% decrease in existing customers, a 5% decrease in new customers and an 8% decrease in reactivated customers.

Finally for our cornerstone brands revenue declined 8% in the second quarter, an improvement from our first quarter results driven by our transformation efforts.

David Rawlinson II: Finally, for our Cornerstone Brands, revenue declined 8% in the second quarter, an improvement from our first quarter results, driven by our transformation efforts. To wrap up, while some of the uncertainty we experienced last quarter has persisted in Q2, we remain guided by our confidence in our business, strategy, and leadership. We continue to do what we do best, creating an opportunity for shoppers to explore, dream, and connect. We've evolved with the changing consumer preferences towards newer channels and platforms like streaming, TikTok, and Facebook, and are now beginning to see those efforts positively impact our business. We will continue to be a class leader here, while also tightly managing costs and the balance sheet. Now I'll turn the call to Bill to review Q2 financial results for each of our businesses.

To wrap up.

While some of the uncertainty we experienced last quarter has persisted in Q2, we remain guided by our confidence in our business strategy and leadership, we continue to do what we do best creating an opportunity for shoppers to explore dream and connect.

We've evolved with the changing consumer preferences towards newer channels and platforms like streaming tick tock and Facebook and are now beginning to see those efforts positively impact our business. We will continue to be a class leader here, while also tightly managing costs and the balance sheet.

Now I'll turn the call to Bill to review Q2 financial results for each of our businesses.

Thank you David and good morning, everyone unless otherwise noted my comments compare financial performance for the three months ended June 32025 to the same period in 2024.

Bill Wafford: Thank you, David, and good morning, everyone. Unless otherwise noted, my comments compare financial performance for the three months ended June 30, 2025, to the same period in 2024. Starting with QxH. Revenue declined by 11% due to lower unit volume and less shipping and handling revenue, with a partial offset in favorable returns rate and higher average selling price. From a category perspective, home revenue decreased 12%, driven by reduced demand in culinary and pressure in many of our today's special value events. Apparel revenue decreased by 9%, consistent with what we experienced in Q1. Beauty revenue fell by 13% in Q2, although we did see wins in brands like bareMinerals, ELEMIS, and Tatcha. Accessories experienced another challenging quarter with a 15% decline, driven again by footwear and loungewear.

Starting with <unk> X H <unk>.

Revenue declined by 11% due to lower unit volume and less shipping and handling revenue with a partial offset and favorable returns rate and higher average selling price.

From a category perspective home revenue decreased 12% driven by reduced demand in culinary and pressure in many of our today's special value of events.

Apparel revenue decreased by 9% consistent with what we experienced in Q1.

Beauty revenue fell by 13% in Q2, although we did see wins in brands like bare minerals elements and touch.

Accessories experienced another challenging quarter with a 15% decline driven again by footwear and loungewear.

Electronics grew 44% driven by smart home computers audio and gaming.

Bill Wafford: Electronics grew 4%, 4%, driven by smart home, computers, audio, and gaming. Operating loss was primarily driven by a $2.4 billion non-cash impairment charge related to goodwill and trade names. Adjusted OIBDA margin contracted 165 basis points. Gross margin declined approximately 15 basis points, with higher product margins and favorability and obsolescence, more than offset by fulfillment pressure and sales deleverage. Product margins increased by 50 basis points, driven by better return rates, partially offset by lower shipping and handling revenue and initial margin. Obsolescence favorability of 25 basis points is driven by the overlap of an abnormally high balance in Q2 2024. Fulfillment expenses were unfavorable 90 basis points due to increased freight rates and sales deleverage. On an aggregate dollar basis, operating expenses decreased 13% and SG&A expenses were flat.

Operating loss was primarily driven by a $2 4 billion noncash impairment charge related to goodwill and trade names.

Adjusted OIBDA margin contracted 165 basis points.

Gross margin declined approximately 15 basis points with higher product margins and favorability in obsolescence more than offset by fulfillment pressure and sales deleverage.

Product margins increased by 50 basis points, driven by better return rates, partially offset by lower shipping and handling revenue and initial margin.

Obsolescence favorability of 25 basis points is driven by the overlap of an Abbott abnormally high balance in Q2 2024.

Fulfillment expenses were unfavorable 90 basis points due to increased freight rates and sales deleverage.

On an aggregate dollar basis operating expenses decreased 13% and SG&A expenses were flat.

Operating expenses decreased $16 million, largely driven by lower commissions.

Bill Wafford: Operating expenses decreased $16 million, largely driven by lower commissions. SG&A expenses were flat, driven by lower personnel costs, offset by higher marketing costs. SG&A was unfavorable by approximately 175 basis points due to sales deleverage. Moving to QVC International. My comments will focus on constant currency results. Revenue declined 3%, reflecting a 3% decrease in units shipped and a 2% decrease in average selling price, partially offset by a favorable returns rate. From a category perspective, QVC International experienced sales growth in apparel, while home and accessories categories were flat, and beauty and jewelry and electronics declined. Germany net revenue increased 1%, while Japan revenue declined 7% and the UK declined 1%. Adjusted OIBDA decreased 8% and adjusted OIBDA margin declined 60 basis points.

SG&A expenses were flat driven by lower personnel costs offset by higher marketing costs.

SG&A was unfavorable by approximately 175 basis points due to sales deleverage.

Moving to QVC International My comments will focus on constant currency results.

Revenue declined 3%, reflecting a 3% decrease in units shipped and a 2% decrease in average selling price.

Really offset by a favorable returns right.

From a category perspective, QVC international experienced sales growth in apparel, while home and accessories categories were flat.

We're flat and beauty and jewelry and electronics declined.

Germany net revenue increased 1%, while our Japan revenue declined 7% in the UK declined 1%.

Adjusted OIBDA decreased 8% and adjusted OIBDA margin declined 60 basis points.

Gross margin decreased 40 basis points due to sales deleverage and fulfillment pressure, partially offset by product margin gains.

Bill Wafford: Gross margin decreased 40 basis points due to sales deleverage and fulfillment pressure, partially offset by product margin gains. Fulfillment pressure is due to higher variable wage rates in Europe. Product margin strength was due to favorable returns rate, offset by initial margin pressure. Operating expenses were flat, and the margin was unfavorable due to sales deleverage. SG&A expenses decreased 2% due to lower personnel expenses. SG&A margin was unfavorable by approximately 10 basis points due to sales deleverage. Moving to Cornerstone. Revenue declined 8% in the quarter as we continue to experience soft demand for furniture and decor and from continued challenges in the home sector. Adjusted OIBDA margin decreased approximately 30 basis points, driven by costs for outside services related to Cornerstone's transformation plan and sales deleverage, partially offset by product margin and fulfillment. Turning to cash flow and the balance sheet for the quarter.

Fulfillment pressure is due to higher variable wage rates in Europe product margin strength was due to favorable returns rate offset by initial margin pressure.

Operating expenses were flat and the margin was unfavorable due to sales deleverage.

SG&A expenses decreased 2% due to lower personnel expenses SG&A margin was unfavorable by approximately 10 basis points due to sales deleverage.

Moving to cornerstone.

Revenue declined 8% in the quarter as we continue to experience soft demand for furniture and decor and from continued challenges in the home sector.

Adjusted OIBDA margin decreased approximately 30 basis points driven by cost for outside services related to cornerstones transformation plan and sales deleverage, partially offset by product margin fulfillment.

Turning to cash flow and the balance sheet for the quarter.

In the first half of 2025 free cash flow was a use of $156 million.

Bill Wafford: In the first half of 2025, free cash flow was a use of $156 million, compared to a source of $164 million last year. The decrease in cash flow was primarily due to a reduction in cash provided by operations and higher payments for QVC distribution rights. As a reminder, our QVC distribution payments fluctuate year-over-year, depending on renewal cycles. Looking at the QVC Group, Inc. debt profile. As of June 30, 2025, net debt was $4.7 billion, and the QVC Group revolver had $1.925 billion drawn. QVC Group had total cash of $897 million, of which $330 million was at QVC Inc., $200 million was at Liberty Interactive, LLC, and $262 million was at QVC Group.

Compared to a source of $164 million last year.

The decrease in cash flow was primarily due to a reduction in cash provided by operations and higher payments for TV distribution rights as a reminder, our television distribution payments fluctuate year over year, depending on renewal cycles.

Looking at the QVC Group, Inc debt profile.

As of June 32025, net debt was $4 7 billion and the QVC group revolver had $192 5 billion drawn.

QVC group had total cash of $897 million of which $330 million was at QVC, Inc. $200 million was it Liberty interactive LLC and $262 million at QVC group.

Our leverage ratio as of June 32025, as defined by the QVC revolving credit facility was three nine times, excluding cornerstone compared to our maximum covenant threshold of four five times.

Bill Wafford: Our leverage ratio as of 30 June 2025, as defined by the QVC revolving credit facility, was 3.9 times, excluding Cornerstone, compared to our maximum covenant threshold of 4.5 times. Please note that covenant OIBDA includes the Adjusted OIBDA of QVC Inc., as Cornerstone was removed as a borrower under QVC's credit agreement as of 1 April 2025. In light of the numerous macroeconomic factors and current leverage levels, as we previously announced on 23 May 2025, the board of directors unanimously decided to suspend payment of our quarterly dividend for preferred stockholders. Additionally, to further increase our financial flexibility, we made the decision to borrow $975 million of the funds available on a revolving credit facility in July 2025.

Please note that covenant OIBDA includes the adjusted OIBDA at QVC, Inc. As cornerstone was removed as a borrower under Qvc's credit agreement as of April one.

In light of the numerous macroeconomic factors and current leverage levels as we previously announced on May 23, 2025, the board of directors unanimously decided to suspend payment of our quarterly dividend for preferred stockholders.

Additionally to further increase our financial flexibility, we made the decision to borrow $975 million of the funds available on our revolving credit facility in July 2025.

These decisions reflect the boards focus on and commitment to taking the necessary steps to preserve cash and enhance long term value for our business customers partners and investors.

Bill Wafford: These decisions reflect the board's focus on and commitment to taking the necessary steps to preserve cash and enhance long-term value for our business, customers, partners, and investors. As you heard from David, we are focused on taking the necessary steps to strengthen our capital structure. We are in the process of evaluating a range of proactive financial and strategic alternatives. This review is ongoing and no decisions have been made at this stage. We will provide updates if and when there are material developments that warrant further communication. Finally, as we previously announced on 16 May 2025, our board approved a 1-for-50 Reverse Stock Split of the company's Series A common stock and Series B common stock.

As you heard from David we are focused on taking the necessary steps to strengthen our capital structure. We are in the process of evaluating a range of proactive financial and strategic alternatives. This review is ongoing and no decisions have been made at this stage, we will provide updates if and when there are material developments that warrant further communication.

Finally, as we previously announced on May 16th 2025, our board approved a one for 50 reverse stock split of the company's series, a common stock and series B common stock.

Diverse the reverse stock split was approved by stockholders at our annual meeting on May 12, 2025, and took effect after market closed on May 22025.

Bill Wafford: The reverse stock split was approved by stockholders at our annual meeting on 12 May 2025, and took effect after market closed on 22 May 2025. On 27 May, the company elected to have QVCGB suspended from trading on the Nasdaq Capital Market, and QVCGB began quotation on the over-the-counter market on 28 May. Finally, on 9 June 2025, we received notice that our Series A common stock had regained compliance with Nasdaq, and as a result, QVCGA and QVCGP stocks continue to trade on Nasdaq. Now I'll turn the call over to Greg.

On may 27th the company elected to have QVC GB suspended from trading on the NASDAQ capital market and <unk> began quotation on the over the counter market on May 28.

Finally on June 19, 2025, we received notice that our series a common stock had regained compliance with NASDAQ Anders as a result, <unk> and QVC GP stocks continue to trade on Nasdaq.

Now I'll turn the call over to Greg.

Thank you Bill.

This was another challenging quarter.

Greg Maffei: Thank you, Bill. This was another challenging quarter for QVC Group, and we aren't where we want to be. We remain unable to offset the declines in linear in a challenging environment, but we're pleased to see the growth in social and streaming. As I said, and you heard it from the above, we are making good progress in social and streaming, and we continue to lean in here. We are balancing execution and a cost focus with investing in these growth businesses. We are also working on our capital structure and our balance sheet, and we are proactively evaluating financial and strategic alternatives. We were pleased to regain compliance with the Nasdaq. With that, we'll address the questions we received prior to the call. Thank you, operator.

QVC group, when we aren't where we want to be.

We remain unable to offset the declines in linear.

Challenging environment, we were pleased to see the growth in social and streaming.

And you heard us from the above we are making good progress in social and streaming and we continue to lean in here.

Balancing execution.

Cost focus with investing in these growth businesses.

We are also working on our capital structure.

On our balance sheet, and we are proactively evaluating financial and strategic alternatives.

We were pleased to regain compliance with NASDAQ.

And with that we.

We will address questions received prior to the call.

Thank you operator.

Thank you Greg as I mentioned before we received a number of questions submitted prior to the call.

Operator: Thank you, Greg. As I mentioned before, we received a number of questions submitted prior to the call. Our first question is for David and comes from Carla Casella at J.P. Morgan. David, can you share some trends in new customers versus reactivated customers versus core customers?

Our first question is for David and comes from Carla Casella of Jpmorgan.

David can you share some trends and new customers reactivated customers core customers yes.

Yes. Thank you for the question as I mentioned during the call our traditional customer count does not include any new customers, we have purchasing through tick tock shop, our trailing 12 month customer count declined 3% versus Q1 <unk> versus <unk>.

David Rawlinson II: Yeah, thank you for the question. As I mentioned during the call, our traditional customer count does not include any new customers we have purchasing through TikTok Shop. Our trailing twelve-month customer count declined 3% versus Q1, and versus last year, our total customer count was down about 12%. But as I mentioned before, we know that over 100,000 new customers bought from us through our TikTok Shop, and comparing that to Q2 2024, that would improve our new customer count to +7% versus the reported -21%. We expect that social will continue to help drive new and reactivated customers like we saw in Q2. A few other things I'd call out. We are seeing some stability in the average customer spend.

Last year, our total customer count was down about 12%, but as I mentioned before we know that over 100000, new customers bought brought.

Bought from us through Arctic talk shop, and comparing that to Q2 2024 that would improve our new customer count to plus 7% versus the reported negative 21%. We expect that social will continue to help drive new and reactivated customers like we saw in Q2.

Other things I'd call out we are seeing some stability and average customer spend best customer spend is up 1% this quarter and existing customer retention is also improving about 100 basis points versus last year.

David Rawlinson II: Best customer spend is up 1% this quarter, and existing customer retention is also up, improving about 100 basis points versus last year.

Thank you.

Next question also for you David.

Operator: Thank you. Next question, also for you, David. Can you share the percentage of sales coming from the core business, and has that changed?

Can you share the percentage of sales coming from the core business and has that changed.

Sure.

We estimate that social and streaming revenue is approaching low double digits as a percentage of <unk> revenue that obviously still leaves 90% of revenue in Q ex Asia, driven by core linear and digital however, our social and streaming businesses grew over 30%.

David Rawlinson II: Sure. We estimate that social and streaming revenue is approaching low double digits as a percentage of QXH revenue. That obviously still leaves 90% of revenue in QXH, driven by core, linear, and digital. However, our social and streaming businesses grew over 30% in Q2 versus last year, and is now a larger percentage of QXH revenue than they were in the first quarter. And so, I would say less is coming out of our core, given just some of the trends that we are seeing there. And then with a significant growth in social and streaming, we would continue to expect to see a shift with increasingly more social and streaming revenue as a percentage of total revenue over time.

<unk> in Q2 versus last year and is now a larger percentage of <unk> revenue than they were in the first quarter.

And so I would say.

Less is coming out of our core given just some of the trends that we are seeing there and then with the.

A significant growth in social and streaming we would continue to expect to see a shift with increasingly more.

Social and streaming revenue as a percentage of total revenue overtime.

Okay. Thank you.

And our final question is a two part question around tariffs.

Operator: Great. Thank you. And our final question is a two-part question around tariffs. First, can you share the tariff impact expected for fiscal 25, and what are your top ways to mitigate tariffs? And then second, follow on, did you see any tariff impact in the second quarter? And are your vendors passing on increased tariff costs?

Did you see.

Can you share that tariff impact expected for fiscal 'twenty, five and what are your top ways to mitigate tariff and then second follow on Doug.

Would you see any tariff impact in the second quarter.

Your vendors passing on increased aircraft Gregg a lot there.

We're monitoring the tariff impact we're taking a lot of the steps that we've discussed we're being prudent about placing new orders and canceling certain existing orders from high tariff countries. We're managing sourcing we're actively negotiating with vendors and in some circumstances.

David Rawlinson II: Great. A lot there. We're monitoring tariff impact. We're taking a lot of the steps that we've discussed. We're being prudent about placing new orders and canceling certain existing orders from high tariff countries. We're managing sourcing, we're actively negotiating with vendors, and in some circumstances, we've implemented price changes. We're still working towards our target that no single country will represent more than 1/3 of our sourced goods in the US by the end of the year. That is a big change from where we were, which is more than 1/2 of our goods coming from a single country, and so that's a major effort, and we think that's one of the major. That diversification will be a major source of stability going forward. But we continue to see volatility.

As we've implemented price changes, we're still working towards our target that no single country will represent more than a third of our source goods in the U S. By the end of the year that is.

Big change from where we were which is more than half of our goods coming from a single country and so thats a major effort and we think that's one of the major that diversification will be a major source of stability going forward, but.

But we continue to see volatility you've seen lots of changes even in the last few days.

David Rawlinson II: You've seen lots of changes even in the last few days. We saw the first real impact of tariffs in our Christmas in July event, which kicked off in June. We completed an inventory assessment. For that, we limited some orders and buys, and then we also took some price actions on the things we were selling during the Christmas in July event. As I said, tariffs will continue to be fluid, and we continue to adjust in changes in rates, including to the most recent ones. But what was encouraging about the Christmas in July event is we did not see big drop offs in demand in response to the price changes that we made in that event.

The first real impact of tariffs and our Christmas in July event, which kicked off in June we completed an inventory assessment for that we limited some orders and buys and then we also took some price actions on the things we were selling during the Christmas in July event.

As I said tariffs will continue to be fluid and we continue to adjust and changes in rates, including to the most recent ones, but what was encouraging about the Christmas in July event, as we did not see big drop offs and Jim and demand.

In response to the price changes that we made in that event and so it gives us some confidence about our ability to.

David Rawlinson II: And so it gives us some confidence about our ability to navigate, continue to navigate our way through some of the current tariff challenges. And last comment I have is that we should also remember that our international business had minimal tariff impact, and I would just remind everybody not to forget about that business. Our international business makes up over 25% of our revenue and is more insulated from some of the impacts of the tariffs. With that, I think that is all the questions. I want to thank you again for your interest in the QVC Group, and I want to thank you for your interest in our results and look forward to continuing to share our story and continue to visit as we make more progress on this transformation.

Navigate continue to navigate our way through some of the current tariff challenges.

And last comment I have is that we should also remember that our international business had minimal tariff impact and I would just remind everybody not to forget about that business. Our international business makes up over 25% of our revenue and is more insulated from some of the impacts of the <unk>.

Erez.

With that I think that is all the questions I want to thank you again for your interest in the.

QVC group and I want to thank you for your interest in our results and look forward to continuing to share our story and continue to visit as we make more.

More progress on this transformation.

Thank you. This will conclude today's conference you may disconnect. Your lines at this time and thank you for your participation.

Greg Maffei: Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.

Q2 2025 QVC Group Inc Earnings Call

Request a DemoDemo

QVC

QVC Group

Earnings