Despite enduring increased costs, Qurate made gains in the coronavirus-stricken second quarter although not quite up to Wall Street expectations.
Second quarter net earnings were $220 million, or 53 cents per diluted share, versus $118 million, or 28 cents per diluted share, in the year-before period.
Adjusted for one-time charges, net earnings were $226 million, or 54 cents per share, versus $206 million, or 48 cents per share, in the quarter a year previous. A Zacks Investment Research analyst consensus estimate for the second quarter was for 56 cents per adjusted share.
Total revenue was $3.42 billion versus $3.11 billion in the year-earlier quarter. Operating income was $405 million as compared to $336 million in the quarter a year prior.
At the QxH division, including QVC and HSN, revenue advanced 7% in the quarter year over year to $2.01 billion but operating income slipped 4% to $280 million. At QVC International, revenue gained 11% from the year past period to $713 million as operating income increased 38% to $101 million. At Zulily, revenue gained 16% to $422 million as operating income increased 187% to $20 million and at Cornerstone, revenue gained 18% to $277 million as operating income increased 117% to $13 million.
At the QxH division, revenue growth increased in the home, electronics and beauty categories, partially offset by declines in apparel and jewelry. Product margins decreased primarily due to category mix shifts and pricing and promotion initiatives early in the second quarter. Gross margin decreased primarily due to higher fulfillment costs mainly associated with coronavirus-related premium pay to warehouse and logistics employees, lower productivity due to COVID-19 pandemic protocols, reduced pack factor and general freight rate increases.
“We generated strong growth in revenue, OIBDA, and free cash flow in the second quarter, with every business unit and geographic market achieving meaningful sales gains and significant new customer additions,” said Mike George, Qurate president and CEO. “Our agile teams responded to the ongoing shifts in consumer needs during this challenging time to deliver engaging and relevant experiences across our e-commerce, video and social platforms. While economic uncertainty remains, our recent results give us confidence that we can generate sustained growth by continued execution of our strategies to offer unique differentiated products and immersive and trusted shopping experiences across all the digital platforms relevant to today’s consumer, while keeping the health and well-being of our team members and communities our top priority.”