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
9 Months Ended
Sep. 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 nine months ended September 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

September 30, 2021

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$

679

272

93

258

1,302

Apparel

336

119

132

46

633

Beauty

279

164

15

458

Accessories

210

62

66

338

Electronics

171

24

3

198

Jewelry

95

55

11

161

Other revenue

43

3

8

54

Total Revenue

$

1,813

699

328

304

3,144

Nine months ended

September 30, 2021

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$

2,229

905

336

748

4,218

Apparel

985

372

429

133

1,919

Beauty

859

521

50

1,430

Accessories

720

199

218

1,137

Electronics

539

89

10

638

Jewelry

269

169

37

475

Other revenue

137

9

22

168

Total Revenue

$

5,738

2,264

1,102

881

9,985

Three months ended

September 30, 2020

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$

819

286

115

248

1,468

Apparel

312

115

147

37

611

Beauty

297

168

17

482

Accessories

219

67

94

380

Electronics

197

25

3

225

Jewelry

93

59

12

164

Other revenue

43

3

7

53

Total Revenue

$

1,980

723

395

285

3,383

Nine months ended

September 30, 2020

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$

2,303

829

326

631

4,089

Apparel

913

316

411

108

1,748

Beauty

910

499

50

1,459

Accessories

676

188

281

1,145

Electronics

588

78

10

676

Jewelry

273

155

34

462

Other revenue

119

6

21

146

Total Revenue

$

5,782

2,071

1,133

739

9,725

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 September 30,

Nine months ended September 30,

2021

2020

2021

2020

amounts in millions

QxH

$

325

 

380

1,065

 

1,061

QVC International

115

132

402

348

Zulily

 

(17)

 

27

(2)

 

74

Corporate and other

 

9

 

27

65

 

32

Consolidated Qurate Retail

$

432

 

566

1,530

 

1,515

Other Information

September 30, 2021

 

Total assets

Capital expenditures

 

amounts in millions

 

QxH

$

12,356

 

124

QVC International

2,267

21

Zulily

1,010

17

Corporate and other

 

1,327

 

7

Consolidated Qurate Retail

$

16,960

 

169

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

Three months ended

Nine months ended

 

September 30,

September 30,

 

    

2021

    

2020

    

2021

    

2020

 

amounts in millions

 

Adjusted OIBDA

$

432

 

566

 

1,530

 

1,515

Stock-based compensation

 

(19)

 

(19)

 

(54)

 

(46)

Depreciation and amortization

 

(139)

 

(141)

 

(396)

 

(427)

Operating income (loss)

$

274

406

1,080

1,042

Interest expense

 

(121)

 

(98)

 

(356)

 

(290)

Share of earnings (loss) of affiliates, net

 

(24)

 

(32)

 

(78)

 

(96)

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

 

41

 

(12)

 

101

 

(127)

Gains (losses) on transactions, net

223

224

Other, net

 

 

(65)

 

(10)

 

(65)

Earnings (loss) before income taxes

$

170

 

422

 

737

 

688