Quarterly report pursuant to Section 13 or 15(d)

Information About Qurate Retail's Operating Segments

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Information About Qurate Retail's Operating Segments
3 Months Ended
Mar. 31, 2022
Information About Qurate Retail's Operating Segments  
Information About Qurate Retail's Operating Segments

(9)   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.

The Qurate Retail chief operating decision maker primarily evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as revenue and Adjusted OIBDA. 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 three months ended March 31, 2022, 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 2021 10-K.

Performance Measures

Disaggregated revenue by segment and product category consisted of the following:

Three months ended

March 31, 2022

QxH

QVC Int'l

Zulily

Corp and other

Total

in millions

Home

$

649

273

61

246

1,229

Apparel

296

117

94

51

558

Beauty

261

145

11

417

Accessories

202

55

49

306

Electronics

147

26

2

175

Jewelry

87

52

9

148

Other revenue

42

2

6

50

Total Revenue

$

1,684

670

232

297

2,883

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

For segment reporting purposes, Qurate Retail defines Adjusted OIBDA as revenue less cost of goods sold, operating expenses, and selling, general and administrative expenses excluding stock-based compensation and, where applicable, separately identified items impacting comparability. 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, and where applicable, separately identified impairments, litigation settlements, restructuring, acquisition-related costs and fire related costs, net (including Rocky Mount inventory losses), that are included in the measurement of operating income (loss) pursuant to GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income (loss), net earnings (loss), 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 March 31,

2022

2021

amounts in millions

QxH

$

225

 

349

QVC International

104

143

Zulily

 

(18)

 

6

Corporate and other

 

24

 

19

Consolidated Qurate Retail

$

335

 

517

Other Information

March 31, 2022

 

Total assets

Capital expenditures

 

amounts in millions

 

QxH

$

12,070

 

30

QVC International

2,126

4

Zulily

635

4

Corporate and other

 

977

 

5

Consolidated Qurate Retail

$

15,808

 

43

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

Three months ended

 

March 31,

 

    

2022

    

2021

 

amounts in millions

 

Adjusted OIBDA

$

335

 

517

Stock-based compensation

 

(15)

 

(16)

Depreciation and amortization

 

(130)

 

(128)

Restructuring and fire related costs, net (including Rocky Mount inventory losses, see note 8)

(84)

Operating income (loss)

$

106

373

Interest expense

 

(117)

 

(117)

Share of earnings (loss) of affiliates, net

 

(1)

 

(32)

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

 

30

 

41

Other, net

 

53

 

13

Earnings (loss) before income taxes

$

71

 

278