Annual report pursuant to Section 13 and 15(d)

Information about QVC's Operating Segments

v3.22.4
Information about QVC's Operating Segments
 12 Months Ended
Dec. 31, 2022
Segment Reporting [Abstract]  
Segment reporting disclosure Information about QVC's Operating Segments and Geographical Data
The Company evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as net revenue, Adjusted OIBDA, gross margin, average sales price per unit, number of units shipped and revenue or sales per subscriber equivalent. For segment reporting purposes, the Company defines Adjusted OIBDA, as net revenue less cost of goods sold (excluding fire related costs, net of recoveries and Rocky Mount inventory losses, see note 19), operating expenses, and selling, general and administrative expenses (excluding stock-based compensation and restructuring costs). The Company believes this measure is an important indicator of the operational strength and performance of its segments by identifying those items that are not directly a reflection of each segment's performance or indicative of ongoing business trends. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking among the Company's businesses and identify strategies to improve performance. This measure of performance excludes depreciation, amortization, impairment losses, gains on sale leaseback transactions, restructuring and fire related costs, net of recoveries, Rocky Mount inventory losses and stock-based compensation that are included in the measurement of operating income pursuant to U.S. GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with U.S. GAAP.

The Company's chief operating decision maker ("CODM") is the Company's Chief Executive Officer who has ultimate responsibility for enterprise decisions. QVC's CODM determines, in particular, resource allocation for, and monitors performance of, the consolidated enterprise, QxH, and QVC-International. The segment managers have responsibility for operating decisions, allocating resources and assessing performance within their respective segments. QVC's CODM relies on internal management reporting that analyzes enterprise results and segment results to the Adjusted OIBDA level (see below).
For the year ended December 31, 2022, QVC has identified QxH and QVC-International as its two reportable segments. Both operating segments are retailers of a wide range of consumer products, which are marketed and sold primarily by merchandise-focused televised-shopping programs as well as via the Internet and mobile applications in certain markets.
QVC allocates certain corporate costs for management reporting purposes from its QxH segment to the QVC-International segment. These management cost allocations are related to certain functions such as merchandising, commerce platforms, information technology, human resources, legal, finance, brand and communications, corporate development and administration that support all of QVC’s operations. For the years ended December 31, 2022, 2021 and 2020, the costs allocated to QVC-International totaled $46 million, $37 million and $33 million, respectively.
Performance measures
Years ended December 31,
2022 2021 2020
(in millions) Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA
QxH $ 7,359  750  8,277  1,439  8,505  1,547 
QVC-International 2,528  358  3,077  562  2,967  510 
Consolidated QVC $ 9,887  1,108  11,354  2,001  11,472  2,057 
Other information
Years ended December 31,
2022 2021 2020
(in millions) Depreciation Amortization Depreciation Amortization Depreciation Amortization
QxH $ 77  277  105  256  116  270 
QVC-International 34  13  54  14  55  12 
Consolidated QVC $ 111  290  159  270  171  282 
Years ended December 31,
2022 2021
(in millions) Total
assets		 Capital
expenditures		 Total
assets		 Capital
expenditures
QxH $ 10,471  178  13,927  169 
QVC-International 1,933  38  2,214  41 
Consolidated QVC $ 12,404  216  16,141  210 
Property and equipment, net of accumulated depreciation, by segment were as follows:
December 31,
(in millions) 2022 2021
QxH $ 280  575 
QVC-International 192  344 
Consolidated QVC $ 472  919 
The following table provides a reconciliation of Adjusted OIBDA to income before income taxes:
Years ended December 31,
(in millions) 2022 2021 2020
Adjusted OIBDA $ 1,108  2,001  2,057 
Gains on sale leaseback transactions
 520  —  — 
Restructuring and fire related costs, net of (recoveries) (including Rocky Mount inventory losses)
 10  (21) — 
Impairment losses (2,600) —  — 
Stock-based compensation (36) (44) (37)
Depreciation and amortization (401) (429) (453)
Operating (loss) income (1,399) 1,507  1,567 
Equity in losses of investee —  (2) (30)
(Losses) gains on financial instruments (9) 8  3 
Interest expense, net (228) (249) (257)
Foreign currency gain (loss) 32  (9) 6 
Loss on extinguishment of debt (6) (7) (42)
Other Income 20  11  — 
(Loss) income before income taxes $ (1,590) 1,259  1,247 
The following table summarizes net revenues based on revenues generated by subsidiaries located within the identified geographic area:
Years ended December 31,
(in millions) 2022 2021 2020
United States $ 7,359  8,277  8,505 
Japan 1,017  1,167  1,132 
Germany 813  1,027  978 
United Kingdom 565  722  696 
Other countries 133  161  161 
Consolidated QVC $ 9,887  11,354  11,472 
The following table summarizes property and equipment, net of accumulated depreciation, based on physical location:
December 31,
(in millions) 2022 2021
United States $ 280  575 
Japan 104  123 
Germany 36  121 
United Kingdom 25  71 
Other countries 27  29 
Consolidated QVC $ 472  919