Qurate Retail, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Information About Qurate Retail's Operating Segments

Information About Qurate Retail's Operating Segments

3 Months Ended

Mar. 31, 2023

Information About Qurate Retail's Operating Segments

Information About Qurate Retail's Operating Segments

(9) Information About Qurate Retail's Operating Segments

Qurate Retail, through its ownership interests in subsidiaries and other companies, is primarily engaged in the video and online commerce industries. Qurate Retail identifies its reportable segments as (A) those operating segments that represent 10% or more of its consolidated annual revenue, annual Adjusted OIBDA (as defined below) or total assets and (B) those equity method affiliates whose share of earnings represent 10% or more of Qurate Retail's annual pre-tax earnings.

The Qurate Retail chief operating decision maker primarily evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue and Adjusted OIBDA. In addition, Qurate Retail reviews nonfinancial measures such as unique website visitors, number of units shipped, conversion rates and active customers, as appropriate.

For the three months ended March 31, 2023, Qurate Retail has identified the following operating segments as its reportable segments:

●

QxH – QVC U.S. and HSN market and sell a wide variety of consumer products in the United States, primarily by means of their televised shopping programs and via the Internet through their websites and mobile applications.

●

QVC International – QVC International markets and sells a wide variety of consumer products in several foreign countries, primarily by means of its televised shopping programs and via the Internet through its international websites and mobile applications.

●

CBI – CBI consists of a portfolio of aspirational home and apparel brands in the U.S. that sell merchandise through brick-and-mortar retail locations as well as via the Internet through their websites.

Qurate Retail's operating segments are strategic business units that offer different products and services. They are managed separately because each segment requires different technologies, distribution channels and marketing strategies. The accounting policies of the segments are the same as those described in the Company's Summary of Significant Accounting Policies in the 2022 10-K.

Performance Measures

Disaggregated revenue by segment and product category consisted of the following:


		Three months ended
		March 31, 2023
			QxH	QVC Int'l	CBI	Corp and other	Total

	in millions
Home		$	635	237	214	50	1,136
Apparel			295	113	45	70	523
Beauty			246	133	—	9	388
Accessories			192	51	—	50	293
Electronics			110	17	—	2	129
Jewelry			77	39	—	8	124
Other revenue			46	2	—	3	51
Total Revenue		$	1,601	592	259	192	2,644


		Three months ended
		March 31, 2022
			QxH	QVC Int'l	CBI	Corp and other	Total

	in millions
Home		$	649	273	246	61	1,229
Apparel			296	117	51	94	558
Beauty			261	145	—	11	417
Accessories			202	55	—	49	306
Electronics			147	26	—	2	175
Jewelry			87	52	—	9	148
Other revenue			42	2	—	6	50
Total Revenue		$	1,684	670	297	232	2,883

For segment reporting purposes, Qurate Retail defines Adjusted OIBDA as revenue less cost of goods sold, operating expenses, and selling, general and administrative expenses excluding stock-based compensation and, where applicable, separately identified items impacting comparability. Qurate Retail believes this measure is an important indicator of the operational strength and performance of its businesses by identifying those items that are not directly a reflection of each business’ performance or indicative of ongoing business trends. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. This measure of performance excludes depreciation and amortization, stock-based compensation, and where applicable, separately identified impairments, litigation settlements, restructuring, acquisition-related costs, fire related costs, net (including Rocky Mount inventory losses) and gains (losses) on sale

leaseback transactions, that are included in the measurement of operating income (loss) pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income (loss), net earnings (loss), cash flows provided by operating activities and other measures of financial performance prepared in accordance with GAAP. Qurate Retail generally accounts for intersegment sales and transfers as if the sales or transfers were to third parties, that is, at current prices.

Adjusted OIBDA is summarized as follows:


	Three months ended March 31,
		2023	2022

	amounts in millions
QxH	$	139	225
QVC International		72	104
CBI		4	31
Corporate and other		(36)	(25)
Consolidated Qurate Retail	$	179	335

Other Information


	March 31, 2023
	Total assets		Capital expenditures

	amounts in millions
QxH	$	8,454	33
QVC International		1,923	7
CBI		548	3
Corporate and other		1,275	11
Consolidated Qurate Retail	$	12,200	54

The following table provides a reconciliation of Adjusted OIBDA to Operating income (loss) and Earnings (loss) before income taxes:


	Three months ended
	March 31,
	2023		2022

	amounts in millions
Adjusted OIBDA	$	179	335
Stock-based compensation		(16)	(15)
Depreciation and amortization		(100)	(130)
Restructuring and fire related costs, net of recoveries (including Rocky Mount inventory losses, see note 8)		—	(84)
Gains on sale leaseback transactions		113	—
Operating income (loss)	$	176	106
Interest expense		(94)	(117)
Realized and unrealized gains (losses) on financial instruments, net		(47)	30
Gain (loss) on extinguishment of debt		15	—
Other, net		15	52
Earnings (loss) before income taxes	$	65	71

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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+ Details