Quarterly report pursuant to Section 13 or 15(d)

Information about QVC's Operating Segments

v3.23.3
Information about QVC's Operating Segments
 9 Months Ended
Sep. 30, 2023
Segment Reporting [Abstract]  
Segment reporting disclosure
(9) Information about QVC's Operating Segments

The 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 nine months ended September 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, penalties 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, penalties 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 September 30, 2023 Nine months ended September 30, 2023
(in millions) QxH QVC-International Total QxH QVC-International Total
Home $ 631  220  851  1,868  701  2,569 
Apparel 304  105  409  939  329  1,268 
Beauty 235  141  376  745  417  1,162 
Accessories 204  49  253  619  156  775 
Electronics 124  16  140  316  48  364 
Jewelry 76  44  120  218  118  336 
Other revenue 43  2  45  131  6  137 
Total net revenue $ 1,617  577  2,194  4,836  1,775  6,611 

Three months ended September 30, 2022 Nine months ended September 30, 2022
(in millions) QxH QVC-International Total QxH QVC-International Total
Home $ 621  208  829  1,950  729  2,679 
Apparel 330  100  430  982  334  1,316 
Beauty 252  129  381  766  419  1,185 
Accessories 190  49  239  633  162  795 
Electronics 152  20  172  411  71  482 
Jewelry 73  45  118  231  139  370 
Other revenue 45  3  48  128  8  136 
Total net revenue $ 1,663  554  2,217  5,101  1,862  6,963 

Adjusted OIBDA is summarized as follows:
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
(in millions) Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA		 Net
revenue		 Adjusted
OIBDA
QxH $ 1,617  201  1,663  143  4,836  525  5,101  600 
QVC-International 577  77  554  62  1,775  226  1,862  261 
   Consolidated QVC $ 2,194  278  2,217  205  6,611  751  6,963  861 
Other information
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
(in millions) Depreciation Amortization Depreciation Amortization Depreciation Amortization Depreciation Amortization
QxH $ 15  71  17  70  44  201  62  207 
QVC-International 8  4  4  3  24  12  26  10 
Consolidated QVC $ 23  75  21  73  68  213  88  217 
September 30, 2023
(in millions) Total
assets		 Capital
expenditures		 Property and equipment, net
QxH $ 9,947  83  257 
QVC-International 1,800  33  169 
Consolidated QVC $ 11,747  116  426 
The following table provides a reconciliation of Adjusted OIBDA to operating income and income before income taxes:
Three months ended September 30, Nine months ended September 30,
(in millions) 2023 2022 2023 2022
Adjusted OIBDA $ 278  205  751  861 
Gains on sale of intangible asset and sale leaseback transactions —  277  119  520 
Restructuring, penalties and fire related costs, net of recoveries (including Rocky Mount inventory losses) (19) 137  196  39 
Impairment losses —  (2,600) —  (2,600)
Stock-based compensation (7) (9) (27) (27)
Depreciation and amortization (98) (94) (281) (305)
Operating income (loss) 154  (2,084) 758  (1,512)
(Losses) gains on financial instruments —  —  (1) 1 
Interest expense, net (63) (50) (167) (175)
Foreign currency gain (loss) 6  21  (3) 50 
Gain (loss) on extinguishment of debt —  —  10  (6)
Other income —  —  —  20 
Income (loss) before income taxes $ 97  (2,113) 597  (1,622)