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, 2021

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.

Qurate Retail evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue, Adjusted OIBDA, gross margin, average sales price per unit and revenue or sales per customer equivalent. 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, 2021, 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.

●

Zulily – Zulily markets and sells a wide variety of consumer products in the United States and several foreign countries through flash sales events, primarily through its app, mobile and desktop experiences.

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 2020 10-K.

Performance Measures

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


		Three months ended
		March 31, 2021
			QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home		$	775	324	123	206	1,428
Apparel			290	126	135	44	595
Beauty			286	164	19	—	469
Accessories			238	66	75	—	379
Electronics			201	33	4	—	238
Jewelry			98	60	14	—	172
Other revenue			48	1	7	—	56
Total Revenue		$	1,936	774	377	250	3,337


		Three months ended
		March 31, 2020
			QxH	QVC Int'l	Zulily	Corp and other	Total

	in millions
Home		$	681	257	81	141	1,160
Apparel			299	101	120	36	556
Beauty			288	145	16	—	449
Accessories			212	58	76	—	346
Electronics			174	22	3	—	199
Jewelry			98	49	13	—	160
Other revenue			40	3	7	—	50
Total Revenue		$	1,792	635	316	177	2,920

For segment reporting purposes, Qurate Retail defines Adjusted OIBDA as revenue less cost of sales, operating expenses, and selling, general and administrative expenses excluding all stock-based compensation and transaction related costs. 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, certain acquisition accounting adjustments, separately reported litigation settlements, transaction related costs (including restructuring, integration, and advisory fees), and impairment charges that are included in the measurement of operating income pursuant to GAAP.

Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, 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,
		2021	2020

	amounts in millions
QxH	$	349	293
QVC International		143	97
Zulily		6	2
Corporate and other		19	(8)
Consolidated Qurate Retail	$	517	384

Other Information


	March 31, 2021
	Total assets		Capital expenditures

	amounts in millions
QxH	$	12,172	36
QVC International		2,240	5
Zulily		1,071	5
Corporate and other		1,088	1
Consolidated Qurate Retail	$	16,571	47

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


	Three months ended
	March 31,
	2021		2020

	amounts in millions
Adjusted OIBDA	$	517	384
Stock-based compensation		(16)	(11)
Depreciation and amortization		(128)	(142)
Operating income (loss)	$	373	231
Interest expense		(117)	(97)
Share of earnings (loss) of affiliates, net		(32)	(36)
Realized and unrealized gains (losses) on financial instruments, net		41	(138)
Other, net		13	13
Earnings (loss) before income taxes	$	278	(27)

- 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