Qurate Retail, Inc. (QRTEA) | Investment Case

1. Company Snapshot

1.a. Company Description

Qurate Retail, Inc., together with its subsidiaries, engages in the video and online commerce industries in North America, Europe, and Asia.The company markets and sells various consumer products primarily through merchandise-focused televised shopping programs, Internet, and mobile applications.It also operates as an online retailer offering women's, children's, and men's apparel; and other products, such as home, accessories, and beauty products through its app, mobile, and desktop applications.

The company serves approximately 200 million homes worldwide.The company was formerly known as Liberty Interactive Corporation and changed its name to Qurate Retail, Inc.in April 2018.

Qurate Retail, Inc.was founded in 1991 and is headquartered in Englewood, Colorado.

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1.b. Last Insights on QRTEA

Recent drivers behind Qurate Retail's performance include: * Declining sales and challenging macroeconomic conditions, as mentioned by CEO David Rawlinson during the Q3 2024 earnings call. * Decreasing gross margins, which the company aims to maintain through disciplined cost management. * A decline in QVC's holiday sales, as the company's recent announcement of a holiday marathon lineup may not be enough to offset the negative sentiment. * A significant discount on Qurate Retail's 8.0% Series A Cumulative Preferred Stock, which is currently trading at 40 cents on the dollar, offering a 20% dividend yield. * The company's focus on debt reduction and strategic growth, with $873 million in cash and $1.8 billion in credit availability. * The transfer of Qurate Retail's equity listing to the Nasdaq Capital Market, which may not have a significant impact on the company's performance.

1.c. Company Highlights

Last Price	0.36
Change Percentage	-0.33%
Open	0.37
Previous Close	0.36
Market Cap ( Millions)	214
Volume	1646589
Year High	1.42
Year Low	0.31
M A 50	0.36
M A 200	0.53

FCF Yield	27.05%
Dividend Yield	0.00%
ROE	184.31%
Debt / Equity	-252.31%
Net Debt / EBIDTA	656.30%
Price To Book	-0.02
Price Earnings Ratio	-0.02
Price To FCF	3.7
Price To sales	0.01
EV / EBITDA	6.65

2. QVC Group's Q2 2025 Earnings: A Challenging Quarter Amidst Strategic Shifts

QVC Group reported a decline in total revenue by 9% in constant currency, with consolidated adjusted OIBDA declining 19% in constant currency for Q2 2025. The company's EPS came out at $0.22, missing estimates of $0.31. The revenue decline was driven by an 11% drop in QxH revenue, primarily due to lower unit volume and shipping and handling revenue. Adjusted OIBDA margin contracted 165 basis points. The operating loss was largely driven by a $2.4 billion noncash impairment charge related to goodwill and trade names.

Publication Date: Aug -23

                                    📋 Highlights
                                    Revenue & Adjusted OIBDA Decline::
                                                Total revenue down 9%, consolidated adjusted OIBDA down 19% in constant currency, driven by macro challenges and linear TV declines.
Social/Streaming Growth::
                                                30% of QxH revenue from social and streaming platforms, with 100,000+ new customers acquired via TikTok Shop in Q2.
Impairment Charge Impact::
                                                $2.4 billion noncash impairment charge on goodwill/trade names caused significant operating loss and 165 bps margin contraction.
Net Debt Reduction::
                                                Decreased by $1.5 billion since late 2021; $975 million borrowed in Q2 to enhance flexibility, with dividend suspension for preferred shares.

                                

Segment Performance

QVC International revenue declined 3% in constant currency, with varied performance across regions: Germany saw a 1% increase in net revenue, while Japan and the UK experienced declines of 7% and 1%, respectively. Cornerstone revenue also declined by 8%, with adjusted OIBDA margin decreasing by approximately 30 basis points. The company's Cornerstone brands are facing challenges, but the growth in social and streaming channels is a positive note, with over 30% of QxH revenue coming from these platforms in Q2.

Strategic Shifts and Financial Flexibility

Despite the challenges, QVC Group is making progress in its WIN growth strategy, with a significant number of new customers acquired through TikTok shop. The company has also taken steps to improve financial flexibility, including suspending the payment of its quarterly dividend for preferred stockholders and borrowing $975 million from its revolving credit facility in July 2025. QVC Group is evaluating proactive financial and strategic alternatives to strengthen its capital structure, having reduced net debt by over $1.5 billion since the end of 2021.

Valuation and Outlook

With a 'Free Cash Flow Yield' of 37.53%, the stock appears to be attractively valued. However, the 'ROE' of 320.26% and 'ROIC' of -17.58% indicate mixed performance. The 'EV/EBITDA' ratio stands at -1.95, suggesting that the market is pricing in significant challenges for the company. Analysts estimate revenue growth of 0.4% for next year, indicating a slow recovery. The company's strategic shifts towards social and streaming channels are positive, but the overall financial performance remains a concern.

3. NewsRoom

QVC Group, Inc. Announces 2025 Virtual Annual Meeting of Stockholders

Feb -21

Source: businesswire.com

Qurate Retail Officially Becomes QVC Group

Feb -21

Source: businesswire.com

Qurate Retail: I Am Buying The Heavily Discounted Preferreds

Jan -27

Source: seekingalpha.com

New Year, New Brands to Discover at QVC

Jan -15

Source: prnewswire.com

Qurate Retail, Inc. to Present at the ICR Conference 2025

Jan -07

Source: businesswire.com

Qurate Retail, Inc. Transfers Equity Listing to the Nasdaq Capital Market

Dec -03

Source: businesswire.com

Entrepreneur and Designer Dee Ocleppo Hilfiger Launches Exclusive Collection with QVC

Nov -26

Source: prnewswire.com

Qurate Retail: Opportune Time For Company To Buy Back Stock?

Nov -22

Source: seekingalpha.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.84%)

6. Segments

QxH

Expected Growth: 7.88%

QxH's 7.88% growth is driven by increasing demand for home and electronics products, effective marketing strategies, and a strong e-commerce platform. Additionally, the company's focus on product innovation, strategic partnerships, and efficient supply chain management have contributed to its growth momentum.

QVC International

Expected Growth: 7.92%

QVC International's 7.92% growth is driven by increasing e-commerce penetration, expansion into new markets, and a strong brand presence. Additionally, the company's focus on digital transformation, improved customer experience, and strategic partnerships have contributed to its growth. Furthermore, Qurate Retail's diversification efforts and investments in emerging markets have also supported QVC International's growth momentum.

Cornerstone Brands, Inc

Expected Growth: 8.23%

Cornerstone Brands, Inc's 8.23% growth is driven by its strong e-commerce presence, diversified portfolio of brands, and strategic investments in digital marketing. Additionally, its focus on home and outdoor products resonates with consumers seeking comfort and wellness during the pandemic. Effective inventory management and supply chain optimization also contribute to its growth momentum.

Corporate and Other

Expected Growth: 4.83%

Qurate Retail, Inc.'s Corporate and Other segment growth of 4.83% is driven by strategic cost savings initiatives, improved operational efficiencies, and a focus on digital transformation. Additionally, the company's efforts to optimize its capital structure and reduce debt have contributed to the segment's growth.

7. Detailed Products

QVC

QVC is a televised shopping network that offers a wide range of products, including jewelry, electronics, beauty products, and more.

HSN

HSN is a televised shopping network that offers a wide range of products, including electronics, home goods, and more.

Zulily

Zulily is an e-commerce platform that offers daily deals on a wide range of products, including clothing, home goods, and more.

Frontgate

Frontgate is a luxury home goods brand that offers high-end products, including furniture, decor, and more.

Grandin Road

Grandin Road is a home decor brand that offers a wide range of products, including furniture, decor, and more.

Ballard Designs

Ballard Designs is a home furnishings brand that offers a wide range of products, including furniture, decor, and more.

8. Qurate Retail, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Qurate Retail, Inc. operates in a competitive industry with many substitutes available to customers. However, the company's strong brand portfolio and e-commerce capabilities help to mitigate the threat of substitutes.

Bargaining Power Of Customers

Qurate Retail, Inc. faces significant bargaining power from its customers, particularly in the e-commerce channel. Customers have many options and can easily switch to competitors, which puts pressure on prices and margins.

Bargaining Power Of Suppliers

Qurate Retail, Inc. has a diverse supplier base and is not heavily dependent on any single supplier. This reduces the bargaining power of suppliers and allows the company to negotiate favorable terms.

Threat Of New Entrants

While there are barriers to entry in the retail industry, new entrants can still disrupt the market. Qurate Retail, Inc. must continue to innovate and invest in e-commerce capabilities to stay competitive.

Intensity Of Rivalry

The retail industry is highly competitive, and Qurate Retail, Inc. faces intense rivalry from both online and offline competitors. The company must focus on differentiating its brands and improving operational efficiency to maintain market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	94.53%
Debt Cost	3.95%
Equity Weight	5.47%
Equity Cost	17.29%
WACC	4.68%
Leverage	1727.27%

11. Quality Control: Qurate Retail, Inc. passed 1 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Sally Beauty Holdings

A-Score: 4.5/10

Value: 7.7

Growth: 3.3

Quality: 5.1

Yield: 0.0

Momentum: 8.0

Volatility: 3.0

1-Year Total Return ->

Qurate Retail

A-Score: 4.0/10

Value: 9.7

Growth: 1.2

Quality: 5.4

Yield: 5.0

Momentum: 1.0

Volatility: 1.7

1-Year Total Return ->

ThredUp

A-Score: 3.9/10

Value: 4.4

Growth: 4.9

Quality: 3.3

Yield: 0.0

Momentum: 10.0

Volatility: 1.0

1-Year Total Return ->

Conn's

A-Score: 3.6/10

Value: 10.0

Growth: 1.8

Quality: 4.4

Yield: 0.0

Momentum: 5.0

Volatility: 0.3

1-Year Total Return ->

MarineMax

A-Score: 3.3/10

Value: 8.3

Growth: 4.0

Quality: 2.3

Yield: 0.0

Momentum: 2.5

Volatility: 2.7

1-Year Total Return ->

iPower

A-Score: 2.8/10

Value: 9.6

Growth: 1.6

Quality: 4.4

Yield: 0.0

Momentum: 1.0

Volatility: 0.0

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-10.56%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

4.68%

Qurate Retail, Inc. - US74915M1009

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on QRTEA

1.c. Company Highlights

Lower Quality

More Volatile

Lower Growth

Revenues Miss

Earnings Miss

Cheaper

Weak Momentum

2. QVC Group's Q2 2025 Earnings: A Challenging Quarter Amidst Strategic Shifts

Segment Performance

Strategic Shifts and Financial Flexibility

Valuation and Outlook

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.84%)

6. Segments

QxH

Expected Growth: 7.88%

QVC International

Expected Growth: 7.92%

Cornerstone Brands, Inc

Expected Growth: 8.23%

Corporate and Other

Expected Growth: 4.83%

7. Detailed Products

QVC

HSN

Zulily

Frontgate

Grandin Road

Ballard Designs

8. Qurate Retail, Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Qurate Retail, Inc. passed 1 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

0.36$

Current Price

0.36$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA