QRTEA - Earnings call transcript Q4 2018

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Qurate Retail 2018 Q4 Earnings Call.

During the presentation, all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. [Operator Instructions] As a reminder, this conference is being recorded, February 28. to President call of like Chun, to now Vice Senior Investor would turn over the Courtnee I Relations. Please go ahead.

Courtnee Chun

Thank you.

started. Group A on get before Retail call Chairman events, Greg have and Qurate on Qurate which Executive we in notes non-GAAP statement regarding GAAP housekeeping the our filed and we'd with XX-K call couple and forward-looking we adjusted today's currency. such SEC. CFO, Jeff any risks earnings including the meaning expectations change differ materially with forward-looking website. conditions, Before call and XXXX. Actual adjusted Mike and Retail change or company On Litigation forward-looking disseminate with QVC These schedules Mark or uncertainties begin, like OIBDA, any three, to press and definitions contained in preliminary results constant thereto the regard of everyone disclaims of items release metrics, Retail, will certain recent be by remind including to issued measures, Inc., most through to statement we could or found comparable that statements the Reform any EPS includes George; financial Act of certain today, the required in in can as Information the circumstances OIBDA herein a is and any Qurate our statements Today reconciliations, date Retail speak which revisions those call, is reflect any updates Davis; obligation of margin, discuss the due expressly and Retail's XX-Q only including mentioned events the within based. or adjusted Forms Maffei. and Private Securities available we to speaking undertaking along of Carleton; or on this CEO, any Qurate number President one of CFO, this Qurate to

As than standards, expense, Throughout as comparable the this new for at comments the of shipment XXXX, zulily, US, as of branded noted, beginning revenue the the adjust income accordance our review with on believe to our standards our time we offset In rather in accounting to this than our now the this income if balanced impact recognize results delivery. revenue the this performance. was did We a recognizing changed QX credit year-over-year accounting discuss in We an rather card call QVC XXXX. most SG&A we reminder, and course change it in related revenue because revenue recognition at remains of HSN results over our year comments expense. accordance SG&A for as not an with to card we'll and unless offset full year. provides also of new out credit

new so quarter, an will in had impact standard reported on For have reports zulily immaterial impact QX, which the delivery-based the negative outsized discuss. it Retail's did on at fourth Davis an Jeff resulted Qurate results,

recognition revenue available have release. of our accompany to slides are and filings. published changes beginning release in Our reported earnings this finally, and slides in we SEC our quarter, the issued results And the These this the impact are website. earnings morning included our on

hand Mike the George. over to I'll Now call

Mike George

target QXH delivered integration renamed our our morning. the second year stepped everyone. expansion investment, and we and increasing Qurate on HSN, also at substantial and synergy QX, Against store we three sales We engagement. the and decline We drove to significantly completed year in in of quarter in customers, zulily. to largest HSN another welcome, digital Liberty customer in delivered strong new internationally, of at mix XXXX margin of and known first We with year a our asset-backed experienced narrowed HSN. of and customer marketing Courtnee, including double-digit progress company primarily in growth our and became stock, $XXX quarter growth US Retail Ventures, the We and mission, creation formerly QVC you, the year significantly and full $XX also international. in the across the initiatives mobile split-off customer for $XXX the We've at while drive and the this initiatives. total to to Thank at especially by anticipated our pressure growth company. sales more you years QVC focused product accelerated as reflect of by along significant an for growth digital digital reflecting at made the Thank investments amplified pivotal sales acquisition. joining penetration in million impacts and of our domestically year formed history, performance annual XXXX. million strong HSN achieved the making digital are HSN achievements, fourth was million us synergies these in accelerated number and in up US annual in customers new at full XX-year QVC new growth and We the half gains QVC at the

more little line long-term a plans rearchitect color bottom work support work provide hard to our P&L in We to later progress. top I'll but my the growth, a around is and continue in it to remarks.

performance take newly improved we and while the will at HSN us organizations business. and the with unit to announced a lean our targets will each synergy XXXX. anticipated our we networks, in buying integrate cross-promote our fulfillment QVC in raised platform, brands synergy and costs. programming to US customer structure consistent we combined QX. integrate prior we cost and some combined with our of accelerate strengthening reduce enable saw networks line optimize on together bring vendors, starting our trend to In to to a business fall First, we of businesses better late share HSN At scale brands into top saw digital base, marketing, and although across October, both sales and expect QXH Last look quarters, QX the we our new narrowed new innovation capture X% and US that preserving deceleration in the QXH the two The declines capture in let's combined brands. in the quarter. growth building QVC was

customer customers XX% growth quarter, highlight. our largest customer across New in representing QVC in QXH class the year-over-year was X new million the a acquired were quarterly history. up by and

strong of X.X of the acquisition. declining leveraging driver in a top of It's up business. believe has brand and important new immediate modest and for customer XXX,XXX million three QX, the new customers QVC the For we In long-term HSN more and flywheel customer reversing note at consumers. new to believe that strategic performance accelerated promises years new the full-year, benefit, relevant added but measure to X% than priorities today's November at customers HSN grew model our to record. it's QVC five health are highlighted important all-time that an of our line also we accelerate we Investor an growth business Day, ways unique X% in

QVC teams discoveries. the inspiring shoppers In destination First, and and for leadership focus buying generations daily across discovery to driving our engaging HSN we on compelling with QX, across to brands. product product combined we strive be the

digital into lines entertainment focused on discovery an sales new programming, holiday Apple, of compelling new Friday Live!. with core beyond at we with dedicated new and assortments Major and in expanded television brands the product included and a having and the sessions during important gift Black brand, QX based on platforms. finding Amazon increasingly along Isaac for Spanx interested a our set success Weeks. Cyber we're design Qurate We are also to QVC Monday development web its traditional the Maran, platforms Coupled developing number Dyson or exclusive ability digital of and function world. around Brands in kicked records Josie Mizrahi our customers, offer also initiative,

into product our QX QVC are consumer in store And assortments, over consumer successes Urban in gained early categories, multiple by digital-only product QX momentum. Fitbit. particular our digital driven some brands electronics. Nintendo constantly mix balance across now in our electronics and Our while demand, lower-margin Digital and strongly shifted offerings we offers Decay, managing XXX included the into digital-first and brands in in

expanded We mix half These free product-related QVC XXXX, three levels offered over pressure drove margin shipped, and These cash our HSN, as of as Davis costs factors saw digital-only discuss. created quarter intentionally lower pressures: strong products will much with as which product through OIBDA in is at in categories from interrelated typically the adjusted Jeff inventory digital-only assortments. higher margins our of we three year, rebuilt the U.S. OIBDA Easy fulfillment At from of impacts impacted drop flows also sales consumer Pay. electronics, higher our reserves the these are to inherent bad-debt assortment higher

continued including Disney's gifts. brands and of best XXXX, strong During its half Beekman special Other brand, Bath second the all film, of Poppins and reactivated out Thanksgiving event included success support programming sets mobile sold sales Body for and new we had nearly in nearly of our gift period. around of week during the launched holiday which of the & sales highlights ever our XXX Mary XXX% holiday sell-through

viewing programming, HSN the program consecutive Zeta-Jones, viewership minutes destination these as journeys. holiday on second double-digit of broadcast In moved placements in popular at to a choice from on their QX, viewership video across We Style; compelling on seventh Shields recently with coupled TV television like relevant our points with we At dramatic Catherine experience shopping well and X% X% guest of and quarter in elevated engage through Brooke believe contributed erosion strong multi-year tier of and we increase gains minutes shoppers their priority, partners. products declines turnaround content and to television, we of in key and once PM celebrity as the up strategic And growth. At HSN focused stars that's at channel Rachael again QVC, and as half our appearances the Kitchen first Our platforms Ray programming. programs gift-focused compelling a more want and from such as developing viewing AM at a HD with With viewership the top improved to broadcast of from David generations to distribution one increased an HSN, with XXXX. as actions, remain season.

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the app QVC, with on video-centric of app Q with based evokes from this that to content of have customers. for expanded it new experience plus available videos and encourage embodied focus, we complements array our on-demand ability download a customize category QVCX, live iQ conversation yourself. our you an Q app all modernized is Anytime the offering to of speeds All and a interest. shoppable Beauty the flagship I ongoing logo our and our Anytime in And new

and Third, TV the of we're complementing occasional digital marketing performance leaning to of strength increase digital a spend into customers, consumers media drive platform generations the demand of customers, driver, our to which full our U.S. in QVC and the of year we as new for for platforms. at each revenue investment business' X.X% and -- X.X% resulted HSN, expense increased In X% totaling marketing in the QX, marketing respectively. year reach XX%

work shave delivery announced In combine path. Facebook acquisition. As to we customer to usage including also these times, quarter expanding enhancing to in communities. centers customers volume this generations. a for five major and we new fourth strategic this those success power will that of voice. expanded highlighted relevant sponsored to our HSN out consumers skill also at our fulfillment track engaging embraced approach and and fall reaching fourth who disciplined believe we're kit Click-to-Messenger Bethlehem, initiative the to conversation of to scheduled to company our days engagement shape with Alexa we to investment social, HSN ads our part and launched haven't consumers FC committed combined through and XX% while reducing at October, previously Fourth, our the promise. marketing HSN shopping the focused expected We're we're ramp. QVC the We in to studies. freight with first through recent average to and objective multiyear and our the with in enabling and platform relocate the service We're well early influencers as marketing early team and beyond And viral across messages of costs. two at are seen brand our new on this tool full our video -- quarter, extending off continue as the on and also case still build of efforts, in our and handle priorities in that own in media, the of enable to our of customers new to these the combined first all of ways open and social, deepening these has of phase visibility finally, with on expanded allows best Facebook Early the we're We've platform our with the of Messenger performance by unique us Pennsylvania drive lively performance screen, continue over interact and QVC host the results cycle engagement

improved we heightened well results. These results Turning but now adjusted up year to macro topline believe with business Japan, promotional down from higher quarter program. Fourth OIBDA a margin European QX, new played of We costs coupled but results move in German incurred shipping inventory marketing distractions and our our pressures were markdown attributable launch pressures. the offset sale are and International, to Brexit and that in of and loyalty performance increased including and free for by as role, full struggled the expectations. but customer QVC a to the a was standpoint activity disappointing below through also new

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for markets. shared to other annual unique felt quarter. investment across today. are charge effective a we're as said view we clear, team announce in far it growth and To with are markets, specific along in their a the sufficiently the the business. to If part business. this functions our attractive International position fourth allow way expect European into So will we focus multiple-channel any forward change France we in these moves move our a structural a our not it to markets of on our enough under-performed. go we also details recognize if number in that in no be especially better due the reflects impacted appropriate see while that corporate market challenges, see significantly completed us large move the That opportunities, enabling sharpen of existing we negatively we our in has in allocate to France since prudent to In

now Turning team to zulily. to good The deliver in continue revenue QX. growth

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sales in of create and sales much For through headwind tax previous believe experience, XXXX. new comps states we a will

For the growth. and full year, OIBDA revenue double-digit zulily generated adjusted

zulily direct technology video, areas engagement times innovations drive on International and growth business, focused forward, and initiatives capabilities customer operational targeted and in continued and mobile experience Shop China is Looking the category team expansion in delivery our to returns. of by customer improvements like

For by results. to Garnet disappointing, Frontgate the moderated demand improvements, Cornerstone, Frontgate results reported impacted and improved. trends Hill at adjusted Designs the and declined impacted which Ballard strong Road QX revenue. and at Performance negatively Grandin and deliver the OIBDA negative closure in but continued was were quarter of

Frontgate and for in focus Grandin margin to and businesses XXXX of further opportunity experience. the Road, Our assortments customer new of across and the product leaning strengthening each pipeline areas driving include simplified

XXXX Let me for close with on a Qurate Retail. few thoughts

to XXXX. $XXX top $XX focused the XXXX, approximately driving delivered that. by our million planned have the said commitments on we rearchitect evolve We in synergy generations. in that are delivering to excited also growth We're to million customer million on move our in way number demonstrated our focused cost future by of shopping we're of on margins new P&L. XXXX our first, That XXXX to we In $XXX for on need innovations under at and platform currently XXXX faster

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our the agility. model However benefits of underlying our of one is

can. Retail match and our long-term the actions our Jeff focus deep video-rich ways innovation Qurate plays our XXXX and invention storytelling And to came team through staying through for focused for necessary hard resolutely members customers. form to accelerating products our No our our and rapid new us content. inspire close year strengths experiences, one who take and us all of to values, there. consumers and other to can access, opportunities it featuring new I'll to in integrate media businesses our at us position company, addition while expansion In life and the to retailer digital creates performance. engage expertise the varied together last brought financial compelling to segment great in personalized practices curated creating to our highly turn thanking over engaging run and me on shopping stop let on behind With no by XX,XXX

Jeff Davis

meeting. future Thank everyone this join to a many you, at you investor a look meeting I forward It's conference to of pleasure or Mike. morning.

the which reconciliations information and with Retail remarks I press Before applicable non-GAAP that is I'd my to metrics definitions. the will metrics. website And everyone along for we reference release our Qurate regarding GAAP refer on certain earnings to you begin comparable available like remind

for revenue provide our of quarter the Courtnee full in remarks while the mentioned our website In and well was support expectations. below a our and summary fourth performance year. reported adjusted prepared growth our posted remarks slides we our As earnings to quarter to we opening a OIBDA few

primarily revenue from the And X% at and $X.XX. zulily closely quarterly billion HSN impacts of marketing improvement. by and QVC mix more and and adjusted we U.S. led promotion decreased the $X.X results, to product pressure investments. X%. adjusted showed OIBDA forma margin balance EPS sequential We largely revenue continued Looking grew delivered Pro faced from

We costs, the For reflecting higher higher We and captured product EPS midpoint of forma $XX OIBDA margins our X%. integration and year range. was which lower XXXX the plan primarily full met adjusted delivered order of Pro cost-reduction adjusted revenue synergies fulfillment X% of $X.XX. increased million costs. fixed our declined

ship drove The assortments. ASP bad our the revenues Notwithstanding, volume reclassification to after impacts segments. revenue. provide electronics X% including mix of mix ship increased with representing to for margins, to growth within fulfillment normalizing due Adjusted the while which lower business bad was margin OIBDA -- offerings to QX private X% revenue lower to contributing costs expanded of it margin and sub-categories products, from higher And margin reducing higher adjusted grew the rates now X%. carries Turning from the the debt our due number were; XXX in X% mix, of debt X% digital-only income. of contributed and relatively broader Easy-Pay and erosion of This while electronics, of down the points approximately Unit primary higher fourth quarter adjusted a U.S. array P&L risk credit a drop drop customers us higher and of decreased penetration to product several decline consumer for reclassification exposure. label declined reserves of was in income. to card digital-only factors inventory me, in installments. excuse QVC enables remains OIBDA half product modest, up card higher one lower margin and expense, basis of credit

to contributed margin pressure. Second, costs higher performance marketing

by this believe engagement affiliate fix saw and pressure pressures service customer customer up lower and expenses. finally, our is our and California investment associated we growth wages important Ontario, time. centers. focused lower with fulfillment on And were particularly over driving across higher commissions center However, of These the offset ramp an and we

Revenue marketing were and beauty, results well shipping categories home, was accessories, declined Adjusted digital increased fulfillment, we space as and card significant consistent for QVC reserves X% primarily and half HSN, and revenue were adjusted to apparel X% of the challenging decreased the aligning was increased across OIBDA comps penetration and to declined costs. broader quarter, were due amortization in positive At OIBDA the as second credit for new offset X%, driven order the And and count, supported in June. introductions. For to X% revenue revenue quarter, year. recovery assortment excluding with and from declined customer reclassification income, quarter product in also planned higher saw improvement. X%, distribution viewership, build which ASP grew lower member despite fourth primarily bad the by rates improvement the costs. earlier certain costs. plan the to Unit by handling temporary the These customer brand significant XXXX, faced obsolescence Revenue inventory team volume and X%. service in and increase reclassification due TV of trends in the sequential healthcare debt by to a more of our rights partially trends with which warehouse consistent a our down led -- continued a year. These of the

to As mentioned X%, have variable on We structure positive with and was the right XXXX, adjusted last HSN's carriage income Summarizing amortized revenue still payments which sustainable new quarter, which multiyear more revenue down a fourth were work normalizing cost along over quarter more include agreements. included for credit agreements, for of upfront growth. X%. recognition life the declined card reestablish of OIBDA a distribution impact results

to beginning new consistent are power under announced results This a in a U.S. segment. we QXH is combined in distinct QXH. deleverage and unit discussed, in video both. QVC on how with business HSN the bringing QX, Mike managing October the Accordingly anticipate of together combined and new we our we reporting basis that two As a platforms

the performance costs. a higher not and essentially margins ASP product due in did X% flat and in dollars Moving OIBDA to our X% basis. currency growth constant X% U.S. in primarily XX% down currency. lower-margin expectations. meet constant quarter was to fixed Overall, Adjusted declined was decreased International. QVC constant currency Revenues Unit down for was and on

which our for from $XX and was quarter potential and mentioned, inventory charges also was adjusted included OIBDA As OIBDA. related Mike France severance in and in our was $X fourth to results obsolescence million excluded for closure million of million operations of $X affected adjusted the

We potential and continuing an appropriate. costs will as evaluate are to provide update exit

X% X% For and adjusted OIBDA revenue currency. reported Zulily XXXX, XX%. in QVC decline in increased an International and of constant the OIBDA adjusted revenue fourth down of was X% growth quarter

quarter OIBDA of income. revenue higher QX in results at communicated had time many full by the were and offset partially costs, and impact. expect a so and recognized also in of revenue the by decline was impacted of the credit in the of which line change were to due OIBDA X% through was card freight, shipment year QX sales Therefore, adjusted private states, adjusted top revenue to QX corresponding product marketing recognition to The for QX collection tax which margins activation much positively impacted in additional for XXXX. primarily As was last by impact we grew to offsetting continue change fixed label X% higher create increased the headwind a this delivery. neutral results versus change this basis. QX, Normalizing accounting

year, up improved was -- growth generated XX%. higher the was and with profitability For Zulily strong Adjusted revenues OIBDA by up XX%.

Cornerstone. Turning to

to third to results. are through There was activation will the which sales collection the we quarter XXXX. tax fully X% The We down fourth are OIBDA signs as excluding pleased and partially by also was Garnet Zulily, performance business, which for continue growth of delivered record exited X% a in see is in four channels. operations improvement positioning primarily our Similar the or reflects by retail the and Revenue decline expenses. apparel. a impacted QX the reflects improved and revenue the declined a Cornerstone's believe in OIBDA quarter. improvement highlights Hills improved of The sequential adjusted performance adjusted through did fourth driven three higher Cornerstone Improvements brand assortment. brands. Ballard additional which initial strong OIBDA headwind the quarter. was team revenue posted states, in QX. few from of refreshed to in strategic and be new the catalog driven in brands of managing offset fourth Frontgate And the posted digital and by job growth individual of primarily by Designs revenue benefits, adjusted shutdown Improvements' nice lower marketing decline product quarter produced solid year-over-year employee in

Group year, profitable adjusted this full are the we was to X% and reported revenue we the growth team the by progress down and encouraged can over year but believe the return For OIBDA, made time. lower

in now turn In we marketing for our to capital balance out respect investments expenditures. sales used platforms. to HSN summary, Turning to with Flexpay the leverage in year, we working call fulfillment opportunity. technology I'll had increase our Capital increase $XXX in foundation million the This digital previously. fourth sheet continued I our optimization With were XXXX XXXX of higher performance below platforms now approximately making announced new product a focused that late $XXX guidance to sheet, we to largely is XXXX to In future from support, commerce well and expenditures investment due timing over primarily and to $XXX right Thanks. it which in XXXX, network on $XXX areas, last was million a be are replenishing quarter. our discovery, meaningful from receivables as wanted million, believe anticipate in we of programs. as million in $XXX expectations the communicated we to U.S. million line capital Mark. CapEx and in due particularly and as create inventory the to a Pay balance in meaningful we to And expenditures Easy and information

Mark Carleton

allowable welcome. let's Qurate, had notice $X.X cash attributed you'll unrestricted the liquid in million $XXX gets liquidity compared which XXX% OIBDA amount the take XX% QVC end related look management, quarter ratio, defined reporting Inc.'s of cash at IT our Thank leverage to of well picture. that times. a the in X.X X.X and and filed Retail of adjusted principal controls, At credit the today of Qurate as as and you, debt. controls ratio debt, times the grid debt and remedying a Retail XX-K certain pricing and of change of was net investments weaknesses the is Jeff domestic quick a U.K. includes billion from up as OIBDA revenue. of in to to to now complete nets maximum Qurate QVC's total adjusted zulily's to maximum and and leverage HSN approximately meant later access When billion. and foreign $X program covenant accurate general of material now validate agreement,

control to We forward. environment and problems continue in focus breach and our was an any financial remediation implementing the not these are We note the correct going did in not reported strengthening to on results. activities that issue we'll misstatements result external

Maffei to comments. for over final Now it hand I'll Greg

Greg Maffei

Retail also thanks Mark Qurate Thanks, million January the brought repurchased during for the year to total in $XXX our XX, period $XXX quarter, and the and to stock. That million. November that Mike I'd to note Jeff. worth X XXXX of full

for target buyback to will we continue our the As evaluate year transitions, XXXX. the calendar business

date the interest in appreciate Qurate as you for Meeting We Annual New to XX. there. for I'd Operator? And always, your hope open for in like we now continued Retail. questions. November York see We have to Investor call set the our

Operator

question go take Capital Alex our Instructions] first ahead. [Operator Please We you. with will Group. Thank Fuhrman Craig-Hallum from

Alex Fuhrman

taking Great. you very Thank question. much for my

wondering guess But given I certainly QX. I was from growth I and more QVC the both quarter. impressed we very large growth in for about I'm customers guess, should within be thinking revenue the ever know, acquired mean revenue this. customer QVC's QVC how any to really most perhaps about considering HSN. fine up wondering why counts this in You just the I was And seemed hear I'm wasn't

driving thinking should a about churn in while existing in your be to going that's you're that growth know, pipeline and in we growth more as Or be customers base these all just you new XXXX perhaps customer revenue are bringing You in seeing XXXX? customers?

Mike George

question. seeing existing customers. thanks Alex, the for in not We're our heightened any churn

know you be highly time and So have over retention as our stable existing of been continue stable. to rates customers

existing total customer just a easily of revenue small a so be even going and it's big your customer. modest a very any don't given -- a year is impact So new your percent revenue swing of classes very rate per units swamped really modest more matter growth in to a our they purchased could in the on in are by change have --

customer growth it modest. growth fairly are think sustain business have new healthy new on you sign we multiple important that's that's and if an customer is immediate impacts helps a as So relevant strong certainly of years But revenue classes. the

Alex Fuhrman

the much more the was quarter. it big States? like Okay, new upswing international participate of international customers primarily had helpful. Or in business United thanks. a that sounds in just well? part that tougher Did as the That's curious QVC then And

Mike George

existing had QX Both growth was the performance big it U.S. year. course their did fairly customer and And International The grow. international in as wasn't base however. new international of good customers in total and new the over grew more the pronounced U.S.

Alex Fuhrman

That’s helpful. Thank you, Mike.

Mike George

Thanks.

Operator

from America. of question Heather next Balsky will with Our come Bank

Heather Balsky

on front, Hi. headwinds I on when trying first changes key margin guess And just manage going the of tailwinds just year? see do from to can off the outline benefits the into the that? I and/or guess you efforts then next your mix the sort around we Thanks. flip product side

Mike George

Thanks, to want marketing. a financial a in believe to. invest long Well marketing as we -- there's long We're we around the screen which to as maintain -- about think performance committed Sure. tight it as going payout, healthy but is performance on we're Heather. we it it, headwind term

somewhat margins. continue and XXXX XXXX you that in headwind and of to it it saw be us we'll will ramp ramp a So in to

story is big of we other discussed. -- the know QX are mix you these As product impacts

see be our going of but appealing to we other consumer our in the won't expect We know mix be XXXX across harder will certainly QX. don't will need to a in that to have how we get balance what's to it's to assortment. or bit the to headwind, well. variances our saw a better a and So need exactly whether We shape kind performing little businesses

that's our we to focus. happen guarantee that's can't So clearly while going

could then I would we benefits. benefits year. a we be it have do And would headwind, of a substantial while So the ratably say certainly those expect occur throughout it some synergy to moderate.

actions back half see the will our of weighted. Some reduction more the that quarter will example, be for year we others last through benefit, took cost

proprietary around product on more weighted. combining are initiatives our investing leverage So teams product sourcing getting buying more backend in those and benefits sourcing,

a of card back have our which new program, We private agreement label credit half HSN year. will the in on kick the in at

So more back half. some will be benefit the back occur all the on year more balance from half margin we'll the synergies front than half with in will in see the

Heather Balsky

you saw? Thank some in commented and deceleration the cadence you on at talk can about QVC U.S. then And of just of quarter you quarter, deceleration fourth you. the the level the

Mike George

weeks anticipating not were weeks. tend they last time Yeah. low-margin but be Cyber Black where and and the X.X we those where retailers tend fairly periods be, to high in We contrast saw would similar think below unlike I those reported expected, a also We saw the impact. than Week better did to but ourselves Week a Friday be double the had year, margin which slowdown Monday to we who definitely we two, results. bit in other We of found

some just that on of you'll anticipated. a quantification want definitely down to slow period. on that had don't a margin get you're anticipating I more into beyond margin impact modest And but sales probably a a bit somewhat in But recover any so it specific because time impact we greater than

Heather Balsky

consumer it your drove you were anything deceleration or of was there or or in distraction Is promotions that? just that like what think anything terms

Mike George

lot Cyber didn't drivers. when the that buying that It's a shutdown time at noise. quite with responding be to you engaged really Friday, as Certainly to consumer and other external a holiday hard around time period. saw Black distraction frankly she the periods also gift to that periods just on But past -- think you time Monday seem was had giving the customer intense I of moved gift around or time and then speculate

the So bit sales the it weighted more promotional your impact more quarter time of promotional in net sense those had to more making were little a periods. that

got model read can, best beyond accepting we responding put so to sentiment yes got couple hard those it drivers. the just those we So to to in as but to shifts of keep consumer agile

Heather Balsky

you. Thank Great.

Mike George

Heather. Thanks,

Operator

Eric Sheridan from our next question with UBS. We'll take

Eric Sheridan

those about the question. Maybe and Thanks the far acquisition structure rate guys. side? Thanks the evolution on for with of the the product solve at pieces customer end XXXX, understand the front. up Heather's on taking of cost XXXX to the better two and for of along on as following are XXXX change so digital product digital you're in you front acquisition just we both trying How versus you and to front could especially margin respect what think

Mike George

on spend. is so it. -- the marketing constantly it we'll kind increase in front, at for the XXXX, would XXXX. revisit It's We what what performance be on customer could I acquisition of framework November performance continued say out So a Eric marketing Investor Day delivering, and see today laid in by you'll

would time changed the And over in what where think has terms of probably refer in of you as in to curve we'll performance it that of response were to at We with kind to need investments to shared We really and also continue, back work broadly the is to as we period. about and XXXX. better consistent the slope so of assortments those in we performance Day, that I marketing stepped-up but process. But Investor more and business our our growth because about be will that pleased I digital with that you think I saw expect balance those in digital a November diversity in on-air that's assortments. assortments

have sales people product. balance do tune growth make sure on-air lower-margin we're understand trade-off down the find to kind versus weighs sure a they to trying how of and just fine of making is better to something and and not the So to core to right And enhancements. business more we're work versus we we're out business margin that trading digital-only make

margin see piece us try Then bit healthier this the work that year little story you'll really of -- of a course, to balance. big is to other cost synergy. think of a I the the So to get

go of we in inclusive $XX to run in million XXXX $XXX So $XXX rate XXXX the million million. $XX million from to

in some marketing fund of to and we along reinvest would said of digital way part that of business. all investments the take the these is slice synergies in the and them so a And we performance,

better have than in we'll air to job help of more to cover offset the XXXX. able investments offsetting to more we cover, with much these -- air synergies in So do do XXXX were

Eric Sheridan

much. so Thanks

Operator

with our Edward question KeyBanc Markets. Capital Yruma next from take We'll

Edward Yruma

Hey for trying Thanks I'm of the I to first some guess made. between questions. my good there morning. see is you if linkage comments taking some maybe

you some XXXX, how of customer of some much from in maybe particularly how customers traditional of then you of do lower-margin more And follow-up a front, new time product earlier your these these for introduced new video kind more are On pulled perform you users? seen guess to products? Easy customers the when TSVs to habituated time of higher within as the Pay. relative on through debt they I maybe new back driven the And use bad

going Given to Thank that are shift this forward? attributing you're use way in signaling the kind mix, you. of Pay to you Easy any

Mike George

in to linkage, a Thanks we Ed customers. right? bring tend questions. for definitely new the There's So

First weighted they're platforms. heavily to digital our

well store So they're customers. typically enable that's you as attract And And through new to new from they're marketing, customers our electronics going growth on-air definitely customers. higher we to on-air lower-margin when be to which experience attracted bring we as a will that's to more some in going in of going and those buy the electronics going to new bring saw more meant to items. the performance -- digital see to into obviously lean have we that's in

love we quality QX in as are the of a the new that in rate standpoint electronics good And customers news is this classes. we the as So good heightened new in from every bit a customers. preceding business at brought bringing

the We've of other seen customers. no QX count there. quality QX literally of your is to big new increase quality class XXXX of question class the the the XXXX change to despite So, in

although intent to the business the some it on customer a the or growth better consumer love new bring if we also customers, could the new of of back getting, If partially we're love customers the electronics, mix you electronics. new pull of customers impact we that continue is into we consumer recognize the see get balance the our new number by but growth is we quality we on in fold. So, to certainly buoyed

a So, some there's but perfect it's relationship. correlation certainly not

margin growth, balance on customer feel QX Easy but side. sales towards Pay drivers of again, so, customers, usage; to probably getting mix being I got balance like to work think mix, those category growth, tougher the we've we sure the with various weighted on new And make new and do we're little that more right a more

we So, a need there. to find better balance

Edward Yruma

are Great. high, the then customers the that Or turning the video buying And you are you time? and understand digital to that predominantly funnel mix? product through you. of very they margin they they those over be just through I'm follow-up to Are newer kind is as -- introduced the customers? a engaging they when introduced -- I when marketing know other to electronics just when quality earlier product? may point in are they beauty Thank performance XXXX, trying said in the but

Mike George

Yes.

of measure tells quality effective that across are We range it consistent. branching So, buying in products. those you ways, in lots full different definitely that is of the out but customers

traditional TV new they true do higher us items will that sort branch a be it in say have of comes is through likely their higher rate that customer manner. than call impact a because that through customer period over value it out. doesn't time buying at comes But to of propensity Now, to off-air that long digital a a in phone

digital multiple So, categories overall of the their is comparable average and they on buy but they branch out in pretty value kind they and overall stay customer. land, digital

Edward Yruma

Thanks much. so Great.

Operator

next B. We'll with from take Barton Riley Crockett question our FBR.

Barton Crockett

fits click I Great. one guys and given brick I online to see brick-and-mortar brick-and-mortar be have addressed? wanted and that in coming think could where you do mean be Thank with from you And Qurate how of to could question. if the and among Amazon really about momentum moving like background that? I any the of your taking generally you whole substance. and I and it the getting brick-and-mortar better retail consumer think needs Davis given presence if foods, with towards thoughts brick-and-mortar Jeffrey Do for there's think addressed? do so to into put in no the you things that something

Jeff Davis

question. Great

that are it's way the been One to customer environment, different. lot to in opportunity that and the customer story-telling, way quite to in you a this able historically company has like around to of in they're experience, offering this are not that really That Qurate is not -- which is third a whether the discovery. relationship And idea attracted have It's for digital it brick-and-mortar, It's that engaging way that the They a what engage shop. honestly a to quite offering is product. that things customer was me honestly, not a but and offering the that that relationship to a of just physical trying value. have a you get still is people the discovery. the with around company drives

that's real think has Qurate what with I video the Group it's business. of Retail strength commerce

Barton Crockett

mean, there's box? think a I a something to need you would relationship be do important that like to time check calls, But be that over do have Amazon with that working brick-and-mortar Okay. able you to there's helpful think that is

Jeff Davis

you relationships can that look different well has your is to at it always strategically, There within fit own.

stands for. of what dynamic the business your So

in might process and today, opportunity how digital where differently, customer continue to the the about that as presence you interaction believe be our video market strength we presence do there's we with we is share. about grab and If see the but expanding how able you an think with our always our think the along can to is returns to particularly it

Barton Crockett

Okay. there. That's much. great. very you I Thank will leave it

Operator

our with take Victor from Capital. We'll Aegis Anthony last question

Victor Anthony

thanks. and guys Hi,

sort question significantly customers was And And of marketing. going do Are anything they do Are to just you of get the another same expect in decline to in part Is else, coming to about you to about from more and electronics try HSN new a came performance it forward, mostly mix terms QVC quarter, second the results? in different spend should the country? guess, of less in on of one just Maybe at there of different the electronics could that's then customer they from, you the HSN. parts we one and talk guys talked out type mostly mostly same in? the increased that So geographies, that -- I curiosity, affluent? but younger? the will marketing shift is

see digital Just I the reconcile wanted platforms. I've heard that, in Thanks. if to two between could

Mike George

Thanks. Victor. Okay. Thanks

some comes know performance performance in context new customer it’s I that that marketing directly And You that the is about come marketing demographics through main just folks similar the put in through say to to of we around our the in of would in the XX% of the probably broadly [indiscernible]. customers. what it see rest

platforms. So in not slightly majority to performance drive on-air the that definitely digital customer. channels it's are in it's and comes meaningful, still that organically growth. to there helping certain But which it's younger both Within a marketing, bring tend

get, more efficient lifetime spend to is slightly off younger the looking less a a going say, if spend even by let's demos at we we're channel and So might to customer we're bet their little value marketing trade on a that efficient.

that continued segment. data shared numbers trend in and QX. keeping generations. of has percentage modest, at each but with on in have on goal of relevant And a and making shifts that trend, some Day in demos. are we're the up. carefully total sure down Investor continued But eye definitely So We're seeing to across looking kind we shift customers new I of November those at we're younger an important that also both customers

feeling ability spending multi-generational that and much QVC the file. target already feeling at So about good acquisition, about had, prior on healthy on And more definitely focused performance customer our expanded we're our both marketing. produces that HSN. good that to mix HSN to and been ways

a less probably is that more that spend is the managing across the about spend QXH effective. marketing it's team have centralized spend platform. now So increasing it as we the But at formed HSN making

spend the is channel. focused we're HSN our America QVC, point. make more however So falls is spend we your it we're brand of I think in electronics is by question, sure or going marketing most on out and the starting to think make how for that On do and difference it less the the North optimize kind I and getting we be

HSN dependent higher So as was the electronics It than had much you recall, more mix a may to QVC. of acquisition prior consumer on much, electronics. consumer

the And up so business The trying of we're very business. build very both were the beauty business other HSN fashion under-penetrated. the to purposely aspects and

electronics. a really So big different different think and We resources it's beauty electronics starting a grow and electronics through matter airtime. fashion on into HSN We We'll is less other would there take the love we're to leaning of opportunity with these brand still and emphasis. points have our growth. to and categories growth, reliance but

Victor Anthony

Thank great. Okay, very you much.

Mike George

Great.

interest that our talking think I wraps for So look you. call. quarter. next Thank up and again to your support, and forward thank We everyone

Greg Maffei

you. Thank

Qurate Retail (QRTEP) 28 Feb 192018 Q4 Earnings call transcript