Qurate Retail Inc., fueled by across-the-board revenue gains and a business model that seems right for the times, reported that its adjusted operating income in the first quarter rose 35 percent to $517 million, compared to $384 million in the year-ago quarter.
First-quarter net income of $206 million compared to a loss of $20 million in the year-ago period.
Revenue rose 14 percent to $3.34 billion, from $2.9 billion in the year-ago quarter.
E-commerce revenue increased 19 percent to $2.1 billion, representing 61 percent of total revenue.
The company said last quarter, which ended March 31, was its best quarter since early 2018 when QVC merged with its then main rival HSN to form the Qurate Retail Group.
In a breakdown of revenues by division, QxH increased 8 percent; QVC International increased 22 percent and on a constant currency basis rose 15 percent; Zulily increased 19 percent, and Cornerstone rose 41 percent.
“These were truly blowout results,” Mike George, president and chief executive officer of Qurate Retail Inc., told WWD.
“Every business unit grew strongly. We had strong growth in new customers. Our performance was nicely balanced across categories, with fashion starting to rebound.”
In a breakdown of adjusting operating income by division, QxH rose 19 percent to $349 million and QVC International rose 47 percent to $143 million.
Cornerstone turned a corner, generating $27 million in adjusting operating income from a loss of $2 million a year ago, and Zulily rose 200 percent to $6 million.
“We are confident in our ability to continue to drive good growth over time,” George added. “Clearly there are benefits from the stay-at-home environment. What has fundamentally changed is that consumers are much more engaged and comfortable with online platforms. We really don’t see that going backward,” even as COVID-19 vaccinations continue to roll out, social distancing requirements get lifted, and stores and restaurants see better business.
He said Qurate should continue to benefit by building “a much broader digital ecosystem” encompassing social commerce, video streaming, websites, apps, as well as utilizing traditional TV, and building a “diverse and flexible assortment model.…We can capture that diverse spend we are starting to see from our customer,” said George. “We are just in a really good position to capture consumer interest in all things digital. We are convinced that our format is more relevant than ever.
“This past year has solidified our confidence in the long-term prospects for the business.”
However, there are concerns though the retail industry over inflation, including rising freight and product costs. Apparel sales are widely seen on the rise, but apparel has a high rate of returns, though that’s offset somewhat by wider margins in apparel compared to other types of merchandise.
For the first quarter, George observed, “fashion started a little slowly. But by March, we were seeing really nice growth in each fashion segment.”
During the last quarter, apparel and beauty each accounted for 15 percent of sales; accessories accounted for 12 percent; jewelry, 5 percent; home, 40 percent; consumer electronics, 10 percent, and other, 3 percent.
George said he sees Qurate capitalizing on growth opportunities in continuing to capture new audiences, creating and tailoring content to be more relevant to the platform it’s presented on be it Facebook Live, TikTok or YouTube, or Qurate’s own streaming app, or traditional or smart TV. “There are all these ways for consumers to find us. We are focused on how to create content relevant to each of those platforms.” Qurate also operates websites.
George said that a second big focus was on providing product discovery. “We can do it uniquely. We can present a broader range of product and tell very powerful stories.” In beauty, for example, “We are really leaning into multicultural beauty in a way that speaks to consumers under-represented by beauty manufacturers.”
He said the company sees opportunities to focus more on customization, such as customizing hair color choices, or providing customers with tools and devices to create “a salon-like experience at home, whether that’s hair care, nail care or facial care.”
George cited plants and gardening as an area for huge growth. “We can take this consumer into the great nurseries around the world” as well as bringing experts in gardening into the programming.
“We love the marriage of special content and inspirational stories distributed over a range of platforms.
“We are absolutely at a critical inflection point in our company’s history which has arrived after many years of investment, expanding our platforms, expanding product offerings and investing in original content,” George said. “The virtual and digital lifestyle that has emerged in the pandemic has enabled us to have outsized growth and has put us in a unique position to take us to a new level of growth and performance.”
As previously announced, George will leave the company at the end of this year and a search for his successor is in progress.