QVC Group Inc. Q3 FY2024 earnings call

• Q3 was the most challenging quarter due to macroeconomic climate and events affecting viewership and revenue. Video commerce businesses in the U.S. had revenue decline from lower unit volume and unanticipated headlines. - QxH total TV minutes viewed decreased 4%, industry TV shopping hours watched down 8% in Q3. - Appointed Rosalia Bucaro as new Chief Merchandise Officer at HSN. - Programming highlights include Kevin Hart on QVC and Coldplay's return on QVC. Streaming business saw double-digit growth in Q3. - QVC International results mixed with revenue decline and adjusted OIBDA decline, impacted by higher fulfillment costs. - Cornerstone is implementing a transformation plan to improve profitability in the challenged housing market, focusing on driving revenue and reducing costs in key areas

QxH: Revenue decreased 6% due to lower unit volume and shipping and handling revenue, partially offset by favorable returns. Adjusted OIBDA margin dropped by 40 basis points. Gross margin declined 10 basis points, with product margins improving ~10 basis points but offset by ~35 basis points increase in fulfillment expenses due to higher wage and freight rates. QVC International: Revenue declined 1%, the fifth consecutive quarter of broadly stable revenue performance. Adjusted OIBDA decline was driven primarily by higher fulfillment costs and to a lesser extent lower product margins. Gross margin decreased 120 basis points due to higher fulfillment costs and lower product margins. Cornerstone: Revenue declined 12% in the quarter. Gross margin expanded 290 basis points due to lower year-over-year supply chain costs, while these were offset by the sales deleveraging of operating and SG&A expenses as well as higher outside services related to the transformation plan

• Expect the fourth quarter to be a more normal quarter than Q3 with a strong programming calendar. - Cornerstone's transformation plan is expected to drive meaningful benefit through 2027

• Challenged macroeconomic climate and events competing for airtime impacted viewership and revenue. - Unanticipated headlines like assassination attempts and hurricanes further depressed viewership. - Higher wage and freight rates put pressure on fulfillment costs and margins. - Shipping issues in European operations affected international businesses, especially with goods flowing through canals

Q: On category performance, do you expect the soft categories to remain soft and are you taking actions to change programming to put more strength categories on air?

A: David Rawlinson says category performance was disproportionately impacted by macro factors and events. Home revenue decrease was mostly from culinary and fitness, and expects some categories to bounce back in a normalized environment. We are watching categories closely and changing airtime assets as needed Q: On international customers, any particular markets with down numbers and trend?

A: David Rawlinson says Germany and Japan revenues were flat, QVC U.K. declined 1%. International business is largely stable with some idiosyncratic events, and we feel good about growing customer files in the medium term despite some customer count softness Q: On Cornerstone, any strategic options outside driving earnings improvement?

A: David Rawlinson says Cornerstone has defensible positions, waiting for the housing market bounce back to take advantage, and we are focused on transforming it to be more profitable for when the market recovers