Quarterly report pursuant to Section 13 or 15(d)

Information about QVC's Operating Segments

v3.23.2
Information about QVC's Operating Segments
 6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
Segment reporting disclosure Information about QVC's Operating SegmentsThe Company's chief operating decision maker ("CODM") is the Company's Chief Executive Officer who has ultimate responsibility for enterprise decisions. QVC's CODM determines, in particular, resource allocation for, and monitors performance of, the consolidated enterprise, QxH, and QVC-International. The segment managers have responsibility for operating decisions, allocating resources and assessing performance within their respective segments. QVC's CODM relies on internal management reporting that analyzes enterprise results and segment results to the Adjusted OIBDA level (see below).
For the three and six months ended June 30, 2023 and 2022, QVC identified QxH and QVC-International as its two reportable segments. Both operating segments are retailers of a wide range of consumer products, which are marketed and sold primarily by merchandise-focused televised-shopping programs as well as via the Internet and mobile applications in certain markets.
Performance measures
The Company evaluates performance and makes decisions about allocating resources to its operating segments based on financial measures such as net revenue, Adjusted OIBDA (defined below), gross margin, average sales price per unit, number of units shipped and revenue or sales per customer. For segment reporting purposes, the Company defines Adjusted OIBDA, as net revenue less cost of goods sold (excluding fire related costs, net of recoveries and Rocky Mount inventory losses, see note 10), operating expenses, and selling, general and administrative expenses (excluding stock-based compensation and restructuring costs). The Company believes this measure is an important indicator of the operational strength and performance of its segments by identifying those items that are not directly a reflection of each segment's performance or indicative of ongoing business trends. In addition, this measure allows management to view operating results and perform analytical comparisons and benchmarking among the Company's businesses and identify strategies to improve performance. This measure of performance excludes depreciation, amortization, impairment losses, gains on sale of intangible asset and sale leaseback transactions, restructuring and fire related costs, net of recoveries, Rocky Mount inventory losses and stock-based compensation that are included in the measurement of operating income pursuant to U.S. GAAP. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with U.S. GAAP.
Disaggregated revenue by segment and product category consisted of the following:
Three months ended June 30, 2023 Six months ended June 30, 2023
(in millions) QxH QVC-International Total QxH QVC-International Total
Home $ 602  244  846  1,237  481  1,718 
Apparel 340  111  451  635  224  859 
Beauty 264  143  407  510  276  786 
Accessories 223  56  279  415  107  522 
Electronics 82  15  97  192  32  224 
Jewelry 65  35  100  142  74  216 
Other revenue 42  2  44  88  4  92 
Total net revenue $ 1,618  606  2,224  3,219  1,198  4,417 
Three months ended June 30, 2022 Six months ended June 30, 2022
(in millions) QxH QVC-International Total QxH QVC-International Total
Home $ 680  248  928  1,329  521  1,850 
Apparel 356  117  473  652  234  886 
Beauty 253  145  398  514  290  804 
Accessories 241  58  299  443  113  556 
Electronics 112  25  137  259  51  310 
Jewelry 71  42  113  158  94  252 
Other revenue 41  3  44  83  5  88 
Total net revenue $ 1,754  638  2,392  3,438  1,308  4,746 
Adjusted OIBDA is summarized as follows:
Three months ended June 30, Six months ended June 30,
2023 2022 2023 2022
(in millions) Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA
QxH $ 1,618  185  1,754  232  3,219  324  3,438  457 
QVC-International 606  77  638  95  1,198  149  1,308  199 
   Consolidated QVC $ 2,224  262  2,392  327  4,417  473  4,746  656 
Other information
Three months ended June 30, Six months ended June 30,
2023 2022 2023 2022
(in millions) Depreciation Amortization Depreciation Amortization Depreciation Amortization Depreciation Amortization
QxH $ 14  67  22  66  29  130  45  137 
QVC-International 8  5  10  4  16  8  22  7 
Consolidated QVC $ 22  72  32  70  45  138  67  144 
June 30, 2023
(in millions) Total
assets		 Capital
expenditures		 Property and equipment, net
QxH $ 10,217  61  262 
QVC-International 1,884  18  177 
Consolidated QVC $ 12,101  79  439 
The following table provides a reconciliation of Adjusted OIBDA to operating income and income before income taxes:
Three months ended June 30, Six months ended June 30,
(in millions) 2023 2022 2023 2022
Adjusted OIBDA $ 262  327  473  656 
Gains on sale of intangible asset and sale leaseback transactions 6  243  119  243 
Restructuring and fire related (costs), net of recoveries (including Rocky Mount inventory losses)
 211  (16) 215  (98)
Stock-based compensation (11) (10) (20) (18)
Depreciation and amortization (94) (102) (183) (211)
Operating income 374  442  604  572 
(Losses) gains on financial instruments —  —  (1) 1 
Interest expense, net (67) (63) (104) (125)
Foreign currency (loss) gain (3) 21  (9) 29 
Gain (loss) on extinguishment of debt 10  (6) 10  (6)
Other income —  —  —  20 
Income before income taxes $ 314  394  500  491