QVC Group, Inc 10-Q for FY2021 Q1

QVC Group, Inc. (QVCAQ)

10-Q 2021-05-07 For: 2021-03-31

Added on April 10, 2026

About this 10-Q

QVC Group, Inc filed this 10-Q on May 7, 2021, covering the quarter ended March 31, 2021 (FY2021 Q1).

Headline figures

Quarter ended March 31, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $3.34B; up 14.3% from $2.92B a year earlier
Net income: $206M; compared with a net loss of $20M a year earlier
Diluted EPS: $0.49; compared with -$0.05 a year earlier

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incorporation or organization)	Identification No.)
State of Delaware (State or other jurisdiction of incorporation or organization)	84-1288730 (I.R.S. Employer Identification No.)

12300 Liberty Boulevard Englewood, Colorado (Address of principal executive offices)	80112 (Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Series A common stock	QRTEA	The Nasdaq Stock Market LLC
Series B common stock	QRTEB	The Nasdaq Stock Market LLC
8.0% Series A Cumulative Redeemable Preferred Stock	QRTEP	The Nasdaq Stock Market LLC


Large Accelerated Filer ☒	Accelerated Filer ☐	Non-accelerated Filer ☐	Smaller Reporting Company ☐	Emerging Growth Company ☐


Series A common stock		379,563,326
Series B common stock		29,353,492


PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited)		I-3
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited)		I-5
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited)		I-6
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited)		I-7
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Equity (unaudited)		I-8
QURATE RETAIL, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited)		I-9
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		I-20
Item 3. Quantitative and Qualitative Disclosures about Market Risk.		I-31
Item 4. Controls and Procedures.		I-31

PART II—OTHER INFORMATION		II-1
Item 1. Legal Proceedings		II-1
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		II-1
Item 6. Exhibits		II-2

SIGNATURES		II-3


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	March 31,		December 31,
	2021		2020

	amounts in millions
Assets
Current assets:
Cash and cash equivalents	$	739	806
Trade and other receivables, net of allowance for doubtful accounts of $111 million and $132 million, respectively		1,245	1,640
Inventory, net		1,374	1,301
Indemnification agreement receivable		293	345
Other current assets		484	473
Total current assets		4,135	4,565
Property and equipment, net		1,222	1,300
Intangible assets not subject to amortization (note 5):
Goodwill		6,601	6,638
Trademarks		3,168	3,168
		9,769	9,806
Intangible assets subject to amortization, net (note 5)		831	779
Other assets, at cost, net of accumulated amortization		614	549
Total assets	$	16,571	16,999


	Three months ended
	March 31,
	2021		2020

	amounts in millions, except per share amounts
Total revenue, net	$	3,337	2,920
Operating costs and expenses:
Cost of retail sales (exclusive of depreciation shown separately below)		2,195	1,933
Operating expense		206	193
Selling, general and administrative, including stock-based compensation (note 2)		435	421
Depreciation and amortization		128	142
		2,964	2,689
Operating income (loss)		373	231
Other income (expense):
Interest expense		(117)	(97)
Share of earnings (losses) of affiliates, net		(32)	(36)
Realized and unrealized gains (losses) on financial instruments, net (note 4)		41	(138)
Other, net		13	13
		(95)	(258)
Earnings (loss) before income taxes		278	(27)
Income tax (expense) benefit		(54)	18
Net earnings (loss)		224	(9)
Less net earnings (loss) attributable to the noncontrolling interests		18	11
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	206	(20)

Basic net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):	$	0.50	(0.05)
Diluted net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):	$	0.49	(0.05)



	Stockholders' Equity
						Accumulated
					Additional	other		Noncontrolling
	Preferred		Common stock		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity

	amounts in millions
Balance at January 1, 2021	$	—	4	—	—	72	3,522	135	3,733
Net earnings (loss)		—	—	—	—	—	206	18	224
Other comprehensive earnings (loss)		—	—	—	—	(120)	—	(9)	(129)
Stock compensation		—	—	—	15	—	—	—	15
Series A Qurate Retail stock repurchases		—	—	—	(41)	—	—	—	(41)
Distribution to noncontrolling interest		—	—	—	—	—	—	(16)	(16)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	(21)	—	—	—	(21)
Other		—	—	—	(2)	—	1	—	(1)
Reclassification		—	—	—	49	—	(49)	—	—
Balance at March 31, 2021	$	—	4	—	—	(48)	3,680	128	3,764


	Three months ended
	March 31, 2021
	Options Granted (000's)	Weighted Average GDFV

Series A Qurate Retail common stock, QVC and HSN employees (1)	853	$	6.74
Series A Qurate Retail common stock, Zulily employees (1)	79	$	6.74
Series A Qurate Retail common stock, Qurate Retail employees (2)	63	$	6.18



				Weighted		Aggregate
				average		intrinsic
	Series A			remaining		value
	(000's)	WAEP		life		(millions)
Outstanding at January 1, 2021	40,553	$	10.61
Granted	995	$	12.90
Exercised	(1,053)	$	5.47
Forfeited/Cancelled	(1,447)	$	14.13
Outstanding at March 31, 2021	39,048	$	10.68	4.1	years	$	115
Exercisable at March 31, 2021	22,876	$	13.86	2.9	years	$	19


	Qurate Retail Common Stock
	Three months ended
	March 31,
	2021	2020

	number of shares in millions
Basic WASO	411	416
Potentially dilutive shares	11	1
Diluted WASO	422	417


					Corporate and
	QxH		QVC Int'l	Zulily	Other	Total

	amounts in millions
Balance at January 1, 2021	$	5,228	921	477	12	6,638
Foreign currency translation adjustments		—	(37)	—	—	(37)
Balance at March 31, 2021	$	5,228	884	477	12	6,601


	Outstanding
	principal at		Carrying value
	March 31, 2021		March 31, 2021		December 31, 2020

	amounts in millions
Corporate level debentures
8.5% Senior Debentures due 2029	$	287		285	285
8.25% Senior Debentures due 2030		505		502	502
4% Exchangeable Senior Debentures due 2029		430		361	362
3.75% Exchangeable Senior Debentures due 2030		432		353	346
1.75% Exchangeable Senior Debentures due 2046		332		612	649
Subsidiary level notes and facilities
QVC 4.375% Senior Secured Notes due 2023		750		750	750
QVC 4.85% Senior Secured Notes due 2024		600		600	600
QVC 4.45% Senior Secured Notes due 2025		600		599	599
QVC 4.75% Senior Secured Notes due 2027		575		575	575
QVC 4.375% Senior Secured Notes due 2028		500		500	500
QVC 5.45% Senior Secured Notes due 2034		400		399	399
QVC 5.95% Senior Secured Notes due 2043		300		300	300
QVC 6.375% Senior Secured Notes due 2067		225		225	225
QVC 6.25% Senior Secured Notes due 2068		500		500	500
3.5% Exchangeable Senior Debentures due 2031		214		441	393
QVC Bank Credit Facilities		75		75	—
Deferred loan costs		—		(47)	(49)
Total consolidated Qurate Retail debt	$	6,725		7,030	6,936
Less current classification				(1,767)	(1,750)
Total long-term debt			$	5,263	5,186


	March 31,		December 31,
	2021		2020

	amounts in millions,
	except share amounts
Liabilities and Equity
Current liabilities:
Accounts payable	$	1,129	1,305
Accrued liabilities		1,088	1,418
Current portion of debt, including $1,767 million and $1,750 million measured at fair value (note 6)		1,767	1,750
Other current liabilities		236	231
Total current liabilities		4,220	4,704
Long-term debt (note 6)		5,263	5,186
Deferred income tax liabilities		1,349	1,359
Preferred stock (note 7)		1,259	1,249
Other liabilities		716	768
Total liabilities		12,807	13,266
Equity
Stockholders' equity:
Series A common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 382,235,148 shares at March 31, 2021 and 382,165,550 shares at December 31, 2020		4	4
Series B common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 29,353,492 shares at March 31, 2021 and 29,366,492 shares at December 31, 2020		—	—
Series C common stock, $.01 par value. Authorized 400,000,000 shares; no shares issued		—	—
Additional paid-in capital		—	—
Accumulated other comprehensive earnings (loss), net of taxes		(48)	72
Retained earnings		3,680	3,522
Total stockholders' equity		3,636	3,598
Noncontrolling interests in equity of subsidiaries		128	135
Total equity		3,764	3,733
Commitments and contingencies (note 8)
Total liabilities and equity	$	16,571	16,999


	Three months ended
	March 31,
	2021		2020

	amounts in millions
Cash flows from operating activities:
Net earnings (loss)	$	224	(9)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		128	142
Stock-based compensation		16	11
Share of (earnings) losses of affiliates, net		32	36
Realized and unrealized (gains) losses on financial instruments, net		(41)	138
Deferred income tax expense (benefit)		2	(43)
Other, net		6	4
Changes in operating assets and liabilities
Decrease (increase) in accounts receivable		382	411
Decrease (increase) in inventory		(81)	(23)
Decrease (increase) in prepaid expenses and other assets		32	62
(Decrease) increase in trade accounts payable		(165)	(240)
(Decrease) increase in accrued and other liabilities		(382)	(317)
Net cash provided (used) by operating activities		153	172
Cash flows from investing activities:
Investments in and loans to cost and equity investees		(118)	(36)
Capital expenditures		(47)	(45)
Expenditures for television distribution rights		(56)	(1)
Cash proceeds from dispositions of investments		2	—
Proceeds from sale of fixed assets		40	—
Other investing activities, net		(1)	8
Net cash provided (used) by investing activities		(180)	(74)
Cash flows from financing activities:
Borrowings of debt		265	743
Repayments of debt		(194)	(942)
Repurchases of Qurate Retail common stock		(41)	—
Withholding taxes on net settlements of stock-based compensation		(21)	(2)
Dividends paid to noncontrolling interest		(16)	(15)
Dividends paid to common shareholders		(13)	—
Other financing activities, net		(3)	6
Net cash provided (used) by financing activities		(23)	(210)
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash		(17)	(6)


Senior debentures	$	911
QVC senior secured notes	$	4,610


		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


	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


	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


	Cash and cash
	equivalents

	amounts in millions
QVC	$	638
Zulily		31
Corporate and other		70
Total Qurate Retail	$	739

		Borrowing capacity
		amount in millions
Fourth Amended and Restated Credit Facility	$	2,853


	Three months ended
	March 31, 2021
	U.S. Dollars		Foreign Currency Exchange Impact		Constant Currency
QxH	8.0	%	—	%	8.0	%
QVC International	21.9	%	7.4	%	14.5	%


	Variable rate debt				Fixed rate debt
			Weighted				Weighted
	Principal		average		Principal		average
	amount		interest rate		amount		interest rate

	dollar amounts in millions
QxH and QVC International	$	NA	NA	%	$	4,664	4.9	%
Zulily	$	75	1.6	%	$	—	—	%
Corporate and other	$	—	—	%	$	1,986	5.3	%


	Series A Qurate Retail Common Stock
				(c) Total Number	(d) Maximum Number
				of Shares	(or Approximate Dollar
				Purchased as	Value) of Shares that
	(a) Total Number	(b) Average		Part of Publicly	May Yet Be Purchased
	of Shares	Price Paid per		Announced Plans or	Under the Plans or
Period	Purchased	Share		Programs	Programs
January 1 - 31, 2021	1,131,344	$	11.15	1,131,344		$414	million
February 1 - 28, 2021	—	$	—	—		$414	million
March 1 - 31, 2021	2,336,742	$	12.21	2,336,742		$386	million
Total	3,468,086	$	11.86	3,468,086


10.1		Form of Performance-Based Restricted Stock Units Agreement under the Qurate Retail, Inc. 2020 Omnibus Incentive Plan, as amended from time to time, for certain officers*
10.2		Form of Restricted Stock Units Agreement under the Qurate Retail, Inc. 2020 Omnibus Incentive Plan, as amended from time to time, for Michael George*
31.1		Rule 13a-14(a)/15d-14(a) Certification*
31.2		Rule 13a-14(a)/15d-14(a) Certification*
32		Section 1350 Certification**
99.1		Reconciliation of Qurate Retail, Inc. Net Assets and Net Earnings to Liberty Interactive LLC Net Assets and Net Earnings**
101.INS		Inline XBRL Instance Document* - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document*
101.CAL		Inline XBRL Taxonomy Calculation Linkbase Document*
101.LAB		Inline XBRL Taxonomy Label Linkbase Document*
101.PRE		Inline XBRL Taxonomy Presentation Linkbase Document*
101.DEF		Inline XBRL Taxonomy Definition Document*
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)*

	QURATE RETAIL, INC.
Date: May 7, 2021	By:	/s/ MICHAEL A.GEORGE
		Michael A. George President and Chief Executive Officer
Date: May 7, 2021	By:	/s/ BRIAN J. WENDLING
		Brian J. Wendling Chief Accounting Officer and Principal Financial Officer

Grant Date:	[____________]
Issuer/Company:	Qurate Retail, Inc., a Delaware corporation
Plan:	Qurate Retail, Inc. 2020 Omnibus Incentive Plan, as amended from time to time
Common Stock:	Qurate Retail, Inc. Series A Common Stock

Performance Period:	The calendar year that began on January 1, [2021] and ends on December 31, [2021]
Company Notice Address:	Qurate Retail, Inc. 12300 Liberty Boulevard Englewood, Colorado 80112 Attn: Chief Legal Officer
Company Website:	www.qurateretail.com
Plan Access:	You can access the Plan via the link at the end of the Agreement or by contacting Qurate Retail, Inc.’s Legal Department.

Vesting Terms upon Protected Termination:	Notwithstanding Section 3(a) of the Agreement, if your employment with the Company or its Subsidiaries terminates pursuant to a Protected Termination (including a Protected Termination pursuant to Section 9.G (Protected Termination Following a Change of Control of QVC) of the Employment Agreement) and the Release Condition is timely met in accordance with the Employment Agreement, the Restricted Stock Units will vest upon the Release Conditions being met.
Vesting Terms upon Death or Termination by Reason of Disability:	Notwithstanding Section 3(b) of the Agreement, all unvested Restricted Stock Units will vest if your employment with the Company or its Subsidiaries is terminated by reason of your Disability or your death only if the Release Condition is timely met in accordance with the Employment Agreement, and if the Release Condition is not so timely met, the Restricted Stock Units will be forfeited.
Company Notice Address:	Qurate Retail, Inc. 12300 Liberty Boulevard Englewood, Colorado 80112 Attn: Chief Legal Officer
Company Website:	www.qurateretail.com
Plan Access:	You can access the Plan via the link at the end of the Agreement or by contacting Qurate Retail, Inc.’s Legal Department.


/s/ MICHAEL A. GEORGE
Michael A. George President and Chief Executive Officer


/s/ BRIAN J. WENDLING
Brian J. Wendling
Chief Accounting Officer and Principal Financial Officer



Qurate Retail Net Assets	$	3,764
Reconciling items:
Zulily, llc ("Zulily") net assets		(610)
Cornerstone Brands, Inc. ("Cornerstone") net assets (1)		(201)
Equity investment in Cornerstone held by Liberty LLC (1)		52
Tax sharing agreement with Liberty Broadband Corporation ("Liberty Broadband")		110
Preferred Stock liability (2)		1,259
Preferred restricted stock unit liability (2)		37
Accrued preferred dividends payable (2)		4
Liberty LLC Net Assets	$	4,415

Qurate Retail Net Earnings	$	224
Reconciling items:
Zulily net (earnings) loss		12
Cornerstone net (earnings) loss (1)		(16)
Cornerstone equity method investment share of earnings (loss)		6
Liberty Broadband tax sharing expense		(9)
Accrued preferred dividends payable (2)		25
Liberty LLC Net Earnings	$	242