Quarterly report pursuant to Section 13 or 15(d)

Information About Qurate Retail's Operating Segments

v3.21.2
Information About Qurate Retail's Operating Segments
6 Months Ended
Jun. 30, 2021
Information About Qurate Retail's Operating Segments  
Information About Qurate Retail's Operating Segments

(10)   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 six months ended June 30, 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

June 30, 2021

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$

775

309

120

284

1,488

Apparel

359

127

162

43

691

Beauty

294

193

16

503

Accessories

272

71

77

420

Electronics

167

32

3

202

Jewelry

76

54

12

142

Other revenue

46

5

7

58

Total Revenue

$

1,989

791

397

327

3,504

Six months ended

June 30, 2021

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$

1,550

633

243

490

2,916

Apparel

649

253

297

87

1,286

Beauty

580

357

35

972

Accessories

510

137

152

799

Electronics

368

65

7

440

Jewelry

174

114

26

314

Other revenue

94

6

14

114

Total Revenue

$

3,925

1,565

774

577

6,841

Three months ended

June 30, 2020

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$

803

286

130

242

1,461

Apparel

302

100

144

35

581

Beauty

325

186

17

528

Accessories

245

63

111

419

Electronics

217

31

4

252

Jewelry

82

47

9

138

Other revenue

36

7

43

Total Revenue

$

2,010

713

422

277

3,422

Six months ended

June 30, 2020

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$

1,484

543

211

383

2,621

Apparel

601

201

264

71

1,137

Beauty

613

331

33

977

Accessories

457

121

187

765

Electronics

391

53

7

451

Jewelry

180

96

22

298

Other revenue

76

3

14

93

Total Revenue

$

3,802

1,348

738

454

6,342

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 June 30,

Six months ended June 30,

2021

2020

2021

2020

amounts in millions

QxH

$

391

 

388

740

 

681

QVC International

144

119

287

216

Zulily

 

9

 

45

15

 

47

Corporate and other

 

37

 

13

56

 

5

Consolidated Qurate Retail

$

581

 

565

1,098

 

949

Other Information

June 30, 2021

 

Total assets

Capital expenditures

 

amounts in millions

 

QxH

$

12,243

 

81

QVC International

2,315

13

Zulily

1,036

11

Corporate and other

 

1,312

 

5

Consolidated Qurate Retail

$

16,906

 

110

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

Three months ended

Six months ended

 

June 30,

June 30,

 

    

2021

    

2020

    

2021

    

2020

 

amounts in millions

 

Adjusted OIBDA

$

581

 

565

 

1,098

 

949

Stock-based compensation

 

(19)

 

(16)

 

(35)

 

(27)

Depreciation and amortization

 

(129)

 

(144)

 

(257)

 

(286)

Operating income (loss)

$

433

405

806

636

Interest expense

 

(118)

 

(95)

 

(235)

 

(192)

Share of earnings (loss) of affiliates, net

 

(22)

 

(28)

 

(54)

 

(64)

Realized and unrealized gains (losses) on financial instruments, net

 

19

 

23

 

60

 

(115)

Other, net

 

(23)

 

(12)

 

(10)

 

1

Earnings (loss) before income taxes

$

289

 

293

 

567

 

266