Compendium of Missteps, Bad Luck Doomed Qurate’s Holiday Quarter
Full-year 2021 revenue at Qurate Retail, parent of QVC and HSN operating under the singular QxH brand label in the U.S., declined 1% to $14 billion, “reflecting the weakness in the back half of the year primarily related to supply chain constraints, product scarcity and cost actions,” said CEO David Rawlinson on a Q4 earnings call Friday. December brought a “meaningful deterioration” in the business, as revenue declined mid-teens, he said.
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Besides the supply chain woes, the company blames December’s weakness on customers “concluding their holiday shopping earlier than normal,” said Rawlinson. Internal surveys found nearly half of QVC and HSN customers had virtually finished their holiday shopping by early December, catching the company somewhat by surprise, he said.
The mid-December fire that “significantly damaged” QVC’s Rocky Mount, North Carolina, distribution facility also hampered “our ability to ship product and meet guaranteed gift delivery times,” said Rawlinson. The facility, which will be closed for “the foreseeable future,” handled up to 30% of QVC’s U.S. volume and was QVC’s main U.S. returns center for hard goods, he said.
Noting Qurate’s Q4 revenue declined 9% to $4.06 billion, Rawlinson said: “We did not expect our fourth quarter results to deteriorate at this rate,” and “obviously we are not pleased.” Challenges in “execution” further aggravated the company’s troubles, including merchandise choices it made “that did not perform, particularly in home and electronics,” he said.
Rawlinson conceded the company also did a poor job navigating its supply chain woes during the holiday quarter. “Disruptions continued to impact our ability to procure product on a timely basis,” he said. About 30% of trans-Pacific vessels were canceled “within days or weeks of scheduling by the carriers,” he said.
Congestion at the West Coast ports spread to the East Coast ports, especially to Savannah, which QxH uses as a hub, said Rawlinson. “Vessels at anchor at U.S. ports were delayed five to 45 days, making shipping times hard to predict, and a shortage of U.S. road trucking capacity further exacerbated shipping challenges.”
Most of QxH’s purchase orders “arrived later than scheduled, and of those purchase orders, the average delay time was about four weeks,” said Rawlinson. Electronics sales declined 12% in Q4 mainly from“product availability” challenges in audio and gaming, he said.
Outside of HSN’s and QVC’s traditional base in linear TV, the opportunity in livestream shopping is “very substantial,” and yet Qurate is seriously “under-indexed” in that channel, "relative" to its potential for growth, said the CEO. “We have to pivot the business so that we are taking advantage of those spaces,” he said.