Hit by the COVID-19 pandemic, Qurate Retail fell short of a Wall Street earnings estimate as revenues slipped.
For the first quarter, net loss was $20 million, or five cents per diluted share, versus net income of $55 million, or 13 cents per diluted share. Income adjusted for one-time events was $114 million, or 27 cents per diluted share, versus $151 million, or 35 cents per diluted share in the year-previous period.
Qurate missed a Zacks Investment Research adjusted diluted earnings per share analyst consensus estimate by ten cents.
Total revenue was $2.92 billion as compared to $3.09 billion and operating income was $231 million as compared to $288 million in the quarter a year before.
Revenue at the QxH division, which includes QVC and HSN, was $1.79 billion versus $1.86 billion in the year-past quarter. QVC international revenue was $635 million versus $644 million; Zulily revenue was $316 million versus $397 million; and Cornerstone revenue was $177 million versus $187 million in the quarter a year earlier.
QxH reported revenue declines in all categories during the quarter. In mid-March, as COVID-19 awareness gained, the division experienced accelerated declines in sales combined with a shift from higher margin fashion products to lower margin home products. In late March, QxH began to see positive sales and new customer growth as it adjusted its merchandising, programming and marketing to meet customers’ changing needs.
At QVC International, U.S. dollar denominated results were negatively effected by exchange rate fluctuations. Zulily revenue declined primarily due to lower unit volume driven by a decrease in new customers, as well as an unfavorable supply chain impact from COVID-19. Cornerstone revenue decreased mainly due to significant demand weakness in March related to COVID-19. Cornerstone temporarily closed its retail stores on March 19, 2020.
“We are seeing encouraging increases in sales and new customers at the start of the second quarter,” said Mike George, Qurate Retail president and CEO. “We experienced significant margin impact from COVID-19 in the first quarter and challenges remain, including a demand shift to lower-margin products and reduced productivity in our fulfillment centers. We continue to assess what this new normal will be. At the same time, we have moved quickly to lean into favorable early second quarter trends, and we will continue to utilize our agile business model to adjust our consumer offerings.”