QRTEA - Earnings call transcript Q1 2019

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Qurate Retail Incorporated, 2019 Q1 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 today, May 10th, 2019. to President conference of like Chun, to now Vice Senior Investor would turn over the Courtnee I Relations. Please go ahead.

Courtnee Chun

Thank you.

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

over I'll Now, turn George. Mike to the call

Michael George

Thank from was disappointing, declines but by were OIBDA zulily, also you, our and both at Courtnee, In significantly. QX, down to the sales which at of we Jeff good declined, everyone. rate as and through performance reduced my on profits. and Adjusted on morning led a QXH QXH revenue continue and improving I'll QX, to will flow International focus discuss comments and Cornerstone. zulily QVC from focus

landscapes quarterly changing, the what as the helpful thought to into taking another in think in about that be QXH; and years, business and and results retail across context. media We're starting what's the it reiterate, dive to multiple So response, would how current XX-plus change. we're midst our actions in I evolutions, before our with gone of I has through evolution, important results,

digital what's partially So cutting On and explosion growth the side, nevers of changing? by viewing, the TV offset media the cord of and in the traditional we decline media continued see consumption. cord

build relationships. teams, we're strong In and on strengths on creating to opportunities changing and particular, presented the competitive strategies we're and brick see undergoing digitally of brands Commerce growing ease and native and and ways aligning ever influencers, price new our resources overarching course business, priorities meet the our and QXH landscape. experiences with of which side, promotional of mortar comparisons, HSN, the continued our substantial of integrated market to shift by social and to new we focused cycles. e-commerce of both On customer the rapid the our of rise product challenges intensity combined the our all the our types the life change, And contribute in levels shortening two this evolve acquiring business own our that

further and we delivery best the at core new while world, rising strive differentiation, has market with the undiscovered, our need be and been in faster promise First, expectations. enhancing always customer's the to for all best variety, to discovery. product today's product the success. to value, we This And the curation of increase and at meet expand must be our

Second, win to we in need digital.

build they viewers, platform into new largest relationships grow uniquely working leveraging for broadcast driving hard digital opportunity as and this generations We are of deliver and now experiences get to properties, occasions experiences. supplementing marketing one attract digital also to channel leverage consumers to our to consumers. frictionless our channel storytelling marketing have customers digital and also shopping. purchase the evolved giving online amazing viewers purchases. want, attracting an digital. retailers we Increasingly, inspire e-commerce our TV need of a platform networks, US, to channels, commerce what and we're with mobile non-TV they the faster, we're to to to drive consumers to we our and want, the Once when creating immediate new Broadcast powerful is marketing in buy compelling, And that

service customer other be short-term relocate growth can how commissions products create content incurring more in OIBDA broadcast last pressures are growing and and service performance enhance including yield, environment, P&L. we on talked Quite fulfillment and impacting expanding along marketing, acquisition businesses. pressure proprietary in believe a TV by digital in for more promotional actions, our as reductions creating other cost these maintaining our more digital-only offers simply, continued adjusted higher our and offset about on we Now competitive our call, margin We with these changes original synergies assortments, to cost expenses promise. platforms, centers, and some changes and

as evolve level timing these results in Through remains But changes. management, committed of these and flow based are changes, quarterly the business. in and flex the we overarching of can focus balanced financial But of the growth line on more a that to goal expect healthy been investing volatile many have expect we mismatches growth of remain to navigate we benefits we recognize up all we some cash business down and of as costs We with seeing. and remain managing and future. we're our margin in We costs long-term. success top tight we late the for our drive variable, these to on free the the results

will on acceptable We results, initiatives. by chase we've then encouraged prudently the unprofitable sales in and bumpy the not And we of number where achieve will see we despite traction of we're synergies the seen a some we reinvest areas returns.

these QX changes brands leadership to unit, we and this all and ongoing which and of company. distraction and HSN significant is going now will better the quarter number full well, this first for the integration merchandising synergies, our also us US operating is strategic generating our QVC drove benefits and was short-term to to bumps, a and structure one teams changes, processes, Nonetheless, our work integrating of long-term. metrics QXH the turning delivering So of as HSN business to the especially our anticipated position and align turnaround results; challenges. contributing the believe the tools, combined integration of Despite for

sales sales to business in our off-air growth on-air lower of in Our a strong the items. offset wasn't sufficient declined quarter,

of that sales. calendar that on-air our sales app total a not And platforms. subset reminder some phone, appear in sales through of appeared course website. products that definitions; day. QXH the off-air on-air, sales digital-only There ordered Those whether product about appear income digital is through about And sales of a of a never on day, customer XX% the that have sales, sales. a third that products sales on-air network and sales. did on are or our regardless called, TV products off-air represent X% of our network under on about are just they on they're of of of sales are over the just of two-thirds total QXH Off-air Now, sales of the largely are sales

by Our seasonal declining categories. was The in in fitness QX, sales and the trend underperformed. driven feature in we particular on-air gardening categories several

Our customer of timing. spring readiness in we underestimated timing impact part the for Easter also negative believe significantly, fashion. modestly in the because sales food and impacted negatively shift cookware Easter We slowed

slowed our at Partially offset We beauty HSN. has growth brands strong at over popular which declined, business, most years Finally, of some our as a solid by QVC. for source growth sales been many believe growth across saw this softness Beauty, Prestige expanding with of the and we in points. number of innovation reflects product contrast, off-air number overall combination of a categories. of challenges In the our beauty distribution

especially margin exclusive items from new also items Our strong advantage erosion substantially of are an the to digital online, slowed, especially beauty can we business and QX. margin strongly by apparel revenue lower off-air sales, were categories and of this through, from is sales important and OIBDA while in margin to the customers proprietary the as and adjusted component grew removed wider customers. these sales, grew of also And among the occasional as take Electronics available as only flow contributors assortments assortments. we the encouraged our QX quarter, decline, we QX. electronic Despite in narrowed off-air

best more big comments. be quarter, my and how me opening on priority curation many To mentioned further I overview let we're the discovery. Now that company-wide the now of efficiently late tackling to making elaborate the this develop the product priorities, teams HSN with organization we're first two is better category combined Again, in believe two in achieve goal, our are and organizations year brands. our and investments and optimize and strategies, to we assortments last source the US leadership buying We compelling products capabilities. QVC our across positioned

working to lead our design, are new alone, harmonizing new launched of processes capabilities lead brands XXX development of reduce HSN. realizing expanding more also our We're product QVC sourcing the chain brands. brands. proprietary only organization, faster, buying In and which across However, our over simplifying these the aligning processes curate digital practices we efforts, Through stages early benefits. were new through discovery accelerating for QX best the across supply to and in due these and XXX onboard we to development very than and assortments and vendors introduction tools times, managing times, we're of

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Decay, and and this Beauty in September. specifically to exclusive I'll categories: launch QVC. strong on Urban the a brands launching are We're Plexaderm, including opportunity from brands where Tweak'd with time. a personalities partnership initiatives smaller is tour promising the brands, products, Now, our Cosmetics, combination priority how New at saw and multi-city from offer help new we customer for expand entrepreneurial quarter, is Batallure digital to our partnering We're like and In newer in IT extending of identify philosophy more beauty, Smashbox continuing these brands. Fashion, HSN Origin, the first include adding of of at first with This discovery proprietary In provide differentiation our we in are strategic platforms, comment or declines exclusive brand by brands, culinary, to from expected categories our like portion beauty offset core in brands more Beauty, brands exciting XXXX. create only GLAMGLOW. established to business cosmetics our Park Face, bring to and and storytelling choice Skin significant three Beekman Carmindy Nature, substantial results assortments competitors. product the than driving our beauty a in range especially starting June discovery expanding on-air

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occasions they in win of attracting when customers what priority to more digital overarching want opportunities establishing purchase on and is second creating they new to platforms generations for want, Our digital, buy our new consumers.

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we existing see for expanding as complementary occasions. So customer new digital purchase attracting and a customers platform

this up reiterate, XX count despite QXH a wrap customer On QXH, of to customer remain business strong. So basis, comments up. our month volatility, our period my trailing I'd on heightened is of the fundamentals

customer improving XX high purchasing retention items are existing demonstrate on to the rates engagement, XX our last over average and high Our stable still months.

We're flow appropriate long-term. in and optimization cash remains driving long-term making top daily, quality strategies. for the investments growth, Our that balance free margin line healthy goal growth carefully our decisions

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Jeffrey Davis

morning you, everyone. Thank and good Mike

disappointing, As across Mike and segments. key our QX mentioned, margin we business growth on was our performance overall progress initiatives while made long-term improvement

We're As promotional $XXX particularly synergies protect the we XXXX. have cumulative $XXX profitable the to realize and by quarter end and remain QXH on million marketing moderated track cost cost and chasing of -- $XX synergies approximately total avoid investments at million of progressed, less sales, now to Zulily. cumulative million margin delivered we of and now to

We sensible the these -- approximately we'll savings. be XX% half reinvest second to choices expect portion invest weighted of synergies year, a the these to to of make and continue to

benefit product from accounting, our decreased last handling with benefit call, with shipping, QXH covers from combined by XX reporting the US earnings margin, initial starting points Ship for segments, impact, includes QXH; freight segment. as are revenue, revenue bad carriage debt the is the discussed penetration; Easy-Pay. led which OIBDA lower which metrics unit decline in volume. business result plus basis basis and QVC margin and of and Adjusted an as mix vendors from associated approximately reduced associated financial rates in commissions now XX a of HSN decreased our HSN we points with renegotiated to change X% a XXX X% increased the year-over-year, QXH agreements, primarily Turning point digital Drop which and in new results basis

an the offset increased partially costs basis items brands, adjustments from and management, liquidation replenishment startup including with of current inventory Ingenious fulfillment, phase points including two exited such by reserve associated these from from obsolescence XX network XX and were fully optimization, Designs. and as inventory basis points points business basis we Now recognized the to and a actions HSN strategy to headwind expect finally that near-term improve to from the execute network profitability our marketing. pressure. our XXXX, increased XX of then be optimization which continue through creates We taken duplicative

from on certain think additional the lesser how a assortment associated positive managing that returns only we shipping drop with Starting the contribution expenses mix, minimum on and product are the sequentially, hiring's However, primarily we as certain margins than To efficiencies overall diminish. we post the exit technologies, face with about assortment; stabilize complete posed return. a to improved performance provide freight mix on to our the product-by-product, liquidation. ramp In incremental expect margins rate our inventory points, mix and of margin in increases fulfillment retail customer. actions comparison of QXH vendor operating due by obsolescence are QX to partially don't margins exit impact commissions, improvement thoughtfully and these and to basis and from appropriate OIBDA product meet improve replenish to primarily certain items, adjusted delivering landscape. current duplicative I'll other up and by we would context taken brands, initiatives. digital reserves Mike space, digital-only levels, eliminating in extent, XXX strengthen has challenges, in inventories QX, that installation of product these to discussed offset new lower the pressures directly reduced

these the sales growth relative which our we able Additionally, on in in feature and QX, we mix focused although categories margin are were to and to like higher more digital of items. improve beauty, fashion increasing moderated margins. rates differentiation QX, only actions Consequently,

incremental launch, incremental as While shortening costs to avoiding capacity. expenses including and investments there drop provides obsolescence center well, many it inventory with eliminating the associated variable and fulfillment remains charges, costs carrying product time ship and benefits

total to relatively business, of will we While continue a small growing component the it remain plan revenue. digital-only

marketing a customers channels, acquisition, shopping tool it and sales deployed of and marketing; Turning existing customer search new and to including their incremental amongst to buying display, prospects journeys. paid marketing, drive current customers. at affiliate multiple each new encouraging performance is performance augment -- influencer social, We stage the and sites, each to across

spend our continue marketing We to during grow this as initiative. lean QX performance we into

revenue overall, marketing net totals quarter. just X.X% spend QXH for the However, of total

investments. and marketing by customers channel of approach due their to continuing sales while lifetime for quality our rigorous three-year from strategies and contribution and incremental marketing period. most new discount product spend track We which targets We conservative margin purchasing propensity. believe of take across different marketing established acquired. sales mix and reasonable We carefully existing channels marketing channels are value projected We actions, We assess investment customer the incremental then over customers to monitoring heavily a expect -- we us incremental a awareness and efficient. existing to payback picture set measure on sales return spending and ramp a which gives from in performance a

spend, remained including we of across and customers strong metrics Finally, overall all the value organically through inclusive of purchase marketing, the first our quality customers acquired performance and track, and new stable category, of percentage from footwear acquisition the new high and accessories who our high finally, quarter. customers new the in apparel, customers value and we're where growth repurchase channel, within seeing categories,

now fulfillment take look investment. Let's optimization a at our

costs. the previously our current multi-phase increase impacted delivery As multi-year, and concentrated not on and project in speeds, on phase million facilities Coast. will facility the East are productivity. nine better this reduced XXXX. Working implementation it's footprint, again and pack XXXX be will in lease, We drive footprint $XX distributed XXXX, that primarily initiative service initially largely by completed higher national factors our from this improved initial seven scheduled announced, until to We new to [ph] anticipate be OIBDA site adjusted reduce

the contributions are We to avoidance adjusted in on we closing. in facilities to XXXX expect significant positive OIBDA addition CapEx

otherwise Moving my all to International; currency now comments noted, address a on unless constant QVC performance on basis.

we are better brands and Our promotions assortments, improved also a a in XXXX the which lower XX% The Olympics. and as inventory to lapping delivered particularly significant mix flow-through pricing. lower improvement promotional well drive to from decline International to the highly inventory compared and pricing. management Japan anticipate led product QX. markets by business demand margins the by down enhancing OIBDA around driven fine-tuning course the X% saw improving we and X% value. The improving new year-over-year stronger and delivered a by process Adjusted in by improvement our due strengthened sequential results Winter tools as positive improved position the our product XXX Germany markets, Across UK, benefited performance systematically We over our margins. comparison higher all driven primarily demand pipeline, in to to was margins due was QX of softer product environment. the category our offset across was management storytelling with year. with In and launched profit comp

dollars dedication, will remaining ASP, related As adjusted first previously product specifically included associated announced from store its Most largely Zulily's costs basis margin. QVC marketing, China by of XX% adjusted operating revenue, other operations counterbalance, restructuring are regarding marketing. excuse Switching direct business, on offset their To margins over XXXX. by which to experience and thank partially moderate The acquisition is overall in the respect closed And finally X% in on for and Zulily's note technology support in in platforms which part business higher revenue it headcount engagement. costs down new in Television customer de-levered in margins. recorded the XX primarily by QX. favorable offset SG&A talent protect OIBDA freshness our and benefit product excluding costs improvements from to period. customer throughout will me its drive direct point professionalism is the of headcount, higher in Zulily's its of a to France the all digital commitment Network growth. the excluded and areas retention decline China to as want decline team impart by OIBDA. costs modest are acquisition adjusted was that will It's driven therefore enhance to Zulily decreased Zulily; gross members lower applications. investments down net and reallocating innovating With and and be engagement, We our income technology to be important transportation strategy The a France. profitable sourcing, we wind margin wind on in investing customer transportation long-term March focuses and to our business and led to investment down shut And experience XXth, OIBDA customer we higher was headcount a we product from this the continuing strategically or in are Cornerstone; quarter. realized as investment and transaction to in website and and Zulily included driving in -- began

due improved steady experienced in brands points home sequentially of margin, partially improvements, XX gross free to expenses. improved product compressed Despite fixed This to year-over-year stranded activities shipping. adjusted by the promotional costs XX Garnet the points basis OIBDA by decline basis offset was and Our due improvement marketing increased Ballard an increased at from and margins lower Hill. margins led Designs. shutdown Gross Ballard Frontgate the and Designs

to the were approximately sheet, flow in capital QX. cash expenditures; Moving and balance capital now other $XX million expenditures

investments. And rates cash the payments year. CapEx million course investments are XXXX. normalized The confident return we In in commerce that flow us to technology optimization and we X.X% more platforms X.X% over and disappointing, due approximately customer improved to over and We summary, results products, timing to primarily CapEx to over net For year, $XXX to to swings continuing of anticipate position liabilities. related is Mark. and growth of digital these of $XXX for accrued margins, the revenue the QX were between the The while to of free to normalize cash healthy US With over and our other I'll flow anticipate expect be and payables long-term. fulfillment XXXX we platform were now back and over conversion turn the call increase million. full network new the that, information accrued

Mark Carleton

Thank Jeff. you,

times. end times around Greg X.X compared as Let's $XXX amount net in and of ratio billion in as of that, liquidity liquid ratio agreement defined maximum was Qurate QVC's of I'll OIBDA attributed At take total credit adjusted had allowable our leverage a picture. at debt. And to a to over look debt Maffei. the quick principal and Retail it quarter, to investments the X.X million the cash $X.X of with turn

Gregory Maffei

Mark. Thanks,

in During February Xst period April Qurate to the Retail the million of quarter, its XXth, $XXX purchased we stock.

in As for of Qurate continued open we evaluate results, the to continue business to Retail. evolves operator, With I'd our and XXXX. buyback that, appreciate like your up strategy We in balance interest we the our volatility experience questions. for will

Operator

Evercore now Wintermantel will go Please first We ISI. Instructions] of take from ahead. question [Operator our Oliver

Oliver Wintermantel

guys. a can then you be HSN and what Thank year. of impact for agreement, the what Good question had in though, bit new the would think importantly carriage about first was just you impact the full more speak regarding I morning more the quarter a you. the if that little maybe

Michael George

want Jeff, you cover that? to

Jeffrey Davis

Sure.

associated basis couple thereafter. year, point have proceed the commissions these next would we're of impact that will includes us differential, this penetration we the additional digital, quarter, rest we our about kind improvement, mentioned only as the helps commissions XXX I So year-over-year. not basis we it But mentioned, we it through reduce of points, now synergies will have of to contracts as from of and normalize the about the the then fourth also change. XXX of the getting that overall the the with of And renegotiated been in continue the once includes change, as as about which as have commissions. accounting as half type of again think well accounting that quarters Of

Oliver Wintermantel

you. on you Got in at to mentioned impact margins what a Could do policy. then the And there think return a change maybe that Thank you Zulily, speak that secondly, will that you it. the be? little bit Thank and would be from you.

Jeffrey Davis

that are I'll The complete. Oliver. changes largely of one. return policy Thanks, take

been we year, So to last middle essentially moved the probably testing of and last months, course beginning, part sort forms of of of XX we've various policies over return the returns. a XXX%

kind baked been results. the of So that's into

of to margins. QX continue impact would we should out still started as change. then specifically last through margin there's year, has have it's discrete it that middle and impact anniversaried and So that hard -- largely But to see it on some to we break a

Oliver Wintermantel

Thanks very much. Good luck.

Michael George

Thank you.

Operator

ahead. Edward from Please go Our next Yruma question come KeyBanc Capital of will Markets.

Edward Yruma

new the first, growth you've customers and digital given this good for nice persist, the to of turn I new click customers, over could questions. channels, if down morning view customers customers to guess Hi, you and are little the back acquired going should but thanks of did and some new new channels. there, color of going XX they how are guys a they did maybe customers were acquired had broadcast bit, digital many them past you kind taking know kind I Analyst of articulated Those maybe that that performance months. we Day, into on through you seeing forward?

Michael George

I high would of Thanks, have Edward. at been our level, metrics say stable. a customers on all

there see to broadcast necessarily being a customers, But the the side of or for as Their a viewing. kind of customers They don't paid off-air of the decline certainly directly. what they harder healthy array us expected. are whether But little the marketing of value acquired have of online customers mix marketing across impact the end are acquired customers value aggregate of have through TV customers of online a TV Phone they're an performed value. are understand as broad acquired customer, it's growing, engaging -- So the in skews exactly mix But lower kind purchasers, become then out. those value. new impact new new sort valuable engaging business, less the staying the offset organically customer signals not result to stable. up a over those we're hard little still those seeing we to of multiple And customer they middling although They growing and a changes, customer. very these categories, is in bit in where nice are mix valuable. is marketing is organic to digital online a customers are most phone shrinking, the than customer's time

Edward Yruma

to kind a viewed as in follow-up trends guess and response other you opening I viewership? have your changes if I in may, of And guys in one I cited cutting, did you. to kind Thank minutes know cutting cord of starting you cord cite see historically remarks. are you positive

Michael George

is rate us, good our grow renegotiate that Yes, is work contracts get that money, programming position growth really on a QV think maybe but have we channel viewing of with getting save a committed HSN bit part we ability side interesting -- to continued little minutes. helping of on to side have and I pleased by stronger, because better better the I that to be And and lot to for both position, carriage give of us anything think HSN viewership. bump worked in as also the to contracts, a is channel if

good up and time belief that as offset to any wrapping That people time the certainly creating digital obviously to the of we digital, on why a access Cord about said, it with feel pretty total being. offset of with experiences, true we're we're TV in homes that has risk use again have recognize we performance in So or the long-term able But that marketing at viewership we're one compelling that to a homes Cutting performance have declined Pay has for grown, ours for that's number fewer can viewership, TV we over erosion it's but discrete that marketing has get viewership. part still we focused up potential well. now, to held time getting again,

Edward Yruma

much. Great. Thanks so

Michael George

Thank you.

Operator

will of Please question next Bank America. go of Heather Balsky Our ahead. come from

Heather Balsky

Was US's got well questions. less I about in talk taking little it H? the One, as curious you seeing comment Zulily. just driven about during can Thank you sort about the more for And you decline of bit I performance on by when was QXH questions. what negative marketing QXH, quarter? I efficient then you think QVC talking two for or meant. comment a just second, just Thanks. were as you could media a Zulily, you made am social if my

Michael George

really because it performance general, the are away Heather. optimize QXH. we your brand, and versus across first a of want manage from we trying talking Generally total individual about whole how to In as regarding growing Thanks, we're to HSN. question get QVC

I social returns. second to the it's somewhat we efficient the it at Q, marketing spend. that has trying get infer a but want gives and question QVC, lower part marketing, it really from to on the tend of rest manage sales direct not higher it's safe impact mix, QXH, of an marketing our individual results, decline returns in less habit that of a it's don't kind to tolerate few -- at that, to regular meaningful size an slowdown tend So we the use key said, believe saw QVC, of categories. referenced On in the because at about important the the have as are spend, disclosure channels that story, minority part of the of the in much that and the business. so we of of kind we to particularly the all given erosion those our of All marketing we channel we concentrated is how not marketing because marketing halo your on-air indirect social size other of definitely that think a to social marketing We

interplay our So mentioned, marketing -- part Zulily while new the mix of higher The I that can and balanced QXH, reduces risk any channel. ramping one up early challenge part a we're we're erosion greater, learning is different with channels we much And customers feel and in their each like other. higher how we because are because on have as mix. of is mix spend, for in their we channels of nice marketing a social much of

Heather Balsky

for you Thank that.

Michael George

you. Thank

Operator

Eric Our will next UBS, Sheridan go please ahead. of from come question

Eric Sheridan

taking the question. for Thanks

give output, is when of in to how little to a the achieve that granularity against meaning realign made on you investor synergy bit this should a side, need from we think the when of that you to little Can synergies should out the give transaction you're granularity be goal. it the investments can about the on we more will we expect laying business profile if goals? growth time. the how your versus some growth, some positive terms you to going out How about playing think long-term presentations, the bit In take in and medium that investors thinking more can noticed the a about

just next And should piecing of to a eight four about the come allocation. over on -- part of back. then of or broadly return the the question, maybe the to we going second versus think investments the slope capital quarters this how sort So that's the just

capital on Thanks to through reposition capital transition, inorganically you going allocate the way the can the versus against expect in guys. there this return we're be any and business. While investors what M&A business will whether versus changes trying to

Michael George

Thanks, Eric.

start, me Greg on, different maybe in Let and capital could I'll and to Jeff comment also ask weigh choices.

as centers is of our fulfillment up in big initiatives. from get half, year benefits when see the second-half with this start we're now, and first the target XX% weighted. You for goal the to next year's know, P&L those rolling the the second again new the in you we through specific how for step pretty about think And and some coming as about synergies another you about of on -- other we we so been online have hitting modestly synergies

definitely So well investment, performance those big fairly laid would toggle up I out. -- that and second can returns the that is of seeing. we category say on the is marketing one based as we're down

speaking, we you've that align always standpoint. seen, increase if offset further. kind the it, marketing from at not it a the it the could increase getting returns Generally we're and synergy to may feel continue to is timing perfectly we goal that increases, Our they of even from savings strong performance can rates

the I on talked the to for now cost us particularly biggest pressure largely variable side about, business Jeff think right related at that that this turning HSN margin around. is

Designs QX the things. and in a from both business, half. the impact We meaningful although that lighter was heard impact in wholly steepest point little parts substantial through year, HSN business you I That pretty the QX inventory the a would on that gets of back our So liquidity curve of will we that which say operations; on owned a having last with basis a a continue it liquidation, P&L. and bit closing couple Ingenious is the were are year retail wholesale late probably announced

We the our of also we're substantially ramped of that inventory up peak at and HSN sort inventory.

be we're year-over-year We've a into and as as year, that's don't a pressure we the pressure, get course And in next as not that well. So lot had trying then year. obsolescence to rates but margin some on the to late we go it change we a but -- will the done the that pressure. year through through and a sequential normalize normalize out, assortments of also will the pressure HSN over year year year-over-year

a what from strong year. flow? year separate continuing of think are from half on it's and would probably fairly structural see you are -- in as the our costs, product add point, vantage aspects sales basis, sort mix into you structural my back a QX, pressure what on of and Jeff, I in the moderately go better there certainly other things is, of kind that more So what improving next further we of

Jeffrey Davis

-- is No, think I covered you I off important. just that think everything I

Gregory Maffei

and Eric, So investments. Mike I'll view on the, Jeff in to my comment,

of the combination, time of synergies, are utilizing investments and QXH There it. has a why some and about and ongoing of that some other investments, which to flow do I'll I those had in the can commented had before try investment, and I purchasing operations non-expense also enormous areas. the internal many critical, Q of first free past, short-term share basically of frame processes. gain and a what just obviously or operations the fulfillment repurchase. and on we the hold I'll investments centers, are the Mike QXH call with of ongoing we visibility reworking the to of around the on lean share in earlier FCs, we of what another at in success and the outlined series I going we've and they're I of some relate reassessment for that set note the are least like be opportunity ongoing call the expense and repurchase. think in things particularly these all All direction off that saw timid cash P&L series we're period, acquisitions like the would certainty think some success And are and things

main really you flow. has If good Liberty reallocated at cash from quite portion GSI came them been investment look which the allocated our a free charter, or in QVC in successful of

is know, core our outlined, as And and streamlining, so, improving first focus you Mike business. Jeff have fixing, QXH the

free We will flow find things cash had potentially third investments with acquisitions that those party we even uses continue and repurchase to some and outside because both success look and at in that. the share attractive we've the of

Eric Sheridan

Thanks guys. the for so much color,

Michael George

Eric. Thanks,

Operator

Our ahead. next Group. will Craig-Hallum question Please Capital Fuhrman go of come from Alex

Alex Fuhrman

the curious the type of if productivity some starting sufficient content and I'm share Great, channels? interested just about taking of hear of content the perhaps you best that with can content in overnight of there a you running thanks QVC my that very cost to in and to was for I you're I'm that thoughts any a curious question. some see run of hours, bit those much some starting productivity layer on are X, if us maybe little just other type to on from hours to of if

Michael George

QVC the Alex, We it's question. -- thanks on early X. for days

and to the than nice seeing a cost life QVC productivity and than less want productivity X are say, too this stage. conclusions I its at much, but with of predecessor don't lower But we were productivity with So at iQ. many hours. draw obviously Network, definitely I would QVC seeing X, better Beauty those much we

think approach I do two from nicely you have a this lot of networks a best work formula think -- we and content having us. especially to going good draw is for of So this it's live to

the overnights the have that variable great of you best have cost taped in content a though on that overnights Trump's find a content. even producing the so with lower We in still main of it's live tested We live that kind the factored of productivity, even question. channel, in

on on X overnights, volume enough that, do formula with stick clip the think QVC live for channel in and do test the that will the that's on main good also based a overnight us. I and we [ph] but we'll X QVC the So

Alex Fuhrman

your of Okay, I of the forgive Easter if having thanks impact an mentioned some planning if timing And me missed that the then, very seasonal much, and this, Mike. I, you assortment. of but on

how that timing, you a if meaningful amount QX that there Just QX think into to much results shift the revenue in curious sense of, QX, I reflect might been that have could year-to-date of from in reported extent mean or feel you shift impacted was given shift in just what and give you that given a your the you the of trend that us timing.

Michael George

weren't we as great did think Easter we that that, a big to as of as We saw well sort up could Easter. pressure anticipating to of in normal heightened the again don't some certainly to and have. really seeing job run try had of explainer I hesitant that We certainly we're maybe think We our pressure in little as it February point impact to quarter.

to our a kind in the unfortunately time it kind of it kind get had it's nor of really don't in programming miss, of back some it that subsequent want was shift schedule -- driver, because to a a in that we that I back when that impact, QX, I would a major So get miss, and you but have period. suggest wouldn't want this say you

Alex Fuhrman

sense. makes you. that Okay, Thank

Michael George

Thanks.

Operator

question ahead. comes Our go of from Please next Davidson. Forte Tom DA

Tom Forte

my Great, question thanks one Greg. have question. I for for taking

give ability a given on to consistent way some as you. are for some Retail thoughts through cash to of potentially near-term the situations? free the given these the work opportunity what Greg, Thank significant So challenges to taking of generate flow an private Qurate it and it

Gregory Maffei

the public that think are one it's in That's evaluating of leading our open were format. partners as locked that we time and think to I keeping right ways comments creating, go on and to that the the evaluate any we're densities I and what in you. But I'd a with say the we we value is Thank value create be value of that are earlier them and question. and We my would the public, like partners. line with I to evaluating good private always general, our where in into share particular repurchase about liquidity, them think we steroids some still we currency we the repurchases. as and scenario in that, share would not general, we're favor that, guess

we we have have cash flow, free balance sheet noted, As large you capacity. have

when do purchase results and So we in confidence visibility there. the share opportunity see to the is

Tom Forte

Greg. you, Thank

Gregory Maffei

you. Thank

Operator

Our from Anthony final question Please ahead. will come of Victor Aegis Capital. go

Victor Anthony

first cord least never to of for that the and questions; existed cutting media part trends past from cord market the growth on shift those Two better at you the are the the traditional of consumption decade. that trends media cited, one digital shift have consumption, and away to

impact pronounced So in first That's why quarter? is it the having a more one.

challenges France, led on I'm but you that your you Second structural if and not upon the in touched script, some to sure market. this you exit cited unique

you've I've stock. been since market is this the exited the covering I think first

unique challenges you those seeing the what just those Thanks. like are talk Italy? you challenges European can maybe about in you what -- and other So are markets challenges

Michael George

world, with coupled that's past Thanks, These quarters changing a new, I see and our right. I we choppier to specific changing a combination referenced fact clearly changing choppier Victor. pulled world, we've we acquisition and world having. we're to evolving trends. have want And it's performance an be Yes, them a than results point we long-term to discussions, this of with and living the large complicated had yeah, is and major being I made with model nothing we're a delivering wasn't bumpier drivers than and talked about I certainly over of but to typically think that integration those it that familiar trends are trend. as but I be do a handful that to trying that's accustomed stand of you're will reflects it mean and an a in the QX, acknowledgment And have more very need hopefully multi-quarter about acknowledgement now for things a delivered.

all we're believe much transparency business, committed those as we because and through where are what trying as long-term they're drive so, stay bumps of we you, pushing the short-term. implies to can those we the right that the to about changes, with to And can, for of changes best to seeing hard health and we those in as

about issues France, question the the were On I would say, pretty specific to France.

biggest in people France France. get in which challenge viewing XX on it could just very TV quality distribution platform, as sort core We of related of networks is a TV environment, not kind to in the distribution. was DTT the So of time core their most spend where in -- unfavorable

negative location, expected. distant all had to over than homes. we being accessible a we we up much could on So improve ended very it more channel impact wasn't and that time thought We

I issues think were France. other in there softer

was that fact versus, Italy, which developed most entered in when market. a e-commerce in the Just it developed e-commerce the market say was France, we low very

But higher a situation think were around in unique France. pressures the I was carriage. So fairly challenge TV the intrinsically biggest competitive

Victor Anthony

you. Thank

Michael George

Victor. final think question. the I Thanks, that's And

Courtnee Chun

again you for your Thanks think thank We that's to with much. Qurate. you coming at very speak in hope and all our of to Thank next in Operator? you see quarter. I interest or you right. conferences listeners

Michael George

Thanks everyone.

Operator

conference. for you concludes today's This participation. your Thank

disconnect. may You now

Qurate Retail (QRTEP) 10 May 192019 Q1 Earnings call transcript