Is Amazon squeezing QVC, too?
QVC's drop comes as online shopping giant Amazon.com boosts clothing sales and video marketing to working-aged women, QVC's main customers. Revenues were up just 2 percent, disappointing investors (though Seattle-based mobile-sales specializt Zulily noted slaes were up 23% and margins rose to 8% from last year's 5%.) "We did experience a deceleration in (U.S.) demand" late in the quarter, CEO Michael George told stock analysts in his quartelry conference call.
Sales "haven't turned so rapidly south on anyone else that I can point to," FBR Capital Markets analyst Barton Crockett said during the call.
"What makes you confident that this isn't just... Amazon getting success in fashion, and taking market share not just from department stores but maybe from QVC?" Crockett persisted.
George says QVC customers have told his surveyors they aren't going to Amazon, at least not for stuff QVC also sells in large quantities. They tell QVC that "we shop (at Amazon) for our pet food, cleaning supplies and so forth," but not much for clothing or home goods. He said the company expects sales will recover later this year.
QVC reported strong sales of Amazon Echo, the voice-activated speaker system. The company moved 50,000 units of the system, which typically retails for over $120. "We were able to effectively explain this new technology to our customer, and offer her a better price," George said.
Costs increased with the opening of a West Coast warehouse; QVC's first digital-only channel (BeautyiQ); and a new online video content stream at Facebook, along with "higher write-offs" from QVC's Easy Play installment plan, which has been scaled back to cut losses.
QVC's venture capital arm profited by selling its stake in CommerceHub, and expects to sell its Expedia sales soon. The company spent $146 million in the quarter buying back its own shares to prop up the stock price.