| | | Hello 60,
I have seen this report on the FRISK score for Qurate. I had not yet seen the SA article though so thank you for sharing.
<< Qurate Retail has a 9.99% to 50% chance of filing bankruptcy within the next 12 months based on FRISK scoring.>>
I find this to be most unlikely given they have the cash and assets to float them at minimum for a few years (assuming no improvements which isn't reality). The chance of bankruptcy in the next 12 months seems like this is being overblown by Wall Street.
Qurate has positive working capital, positive net working capital, has been FCF positive for years, debt is trending down, and interest expense is manageable (today). While cord cutting is an issue their biggest declines can all be tied to their massive disruption at their DC. I think because the leverage was already higher this impact to performance is now front running a bankruptcy for Wall Street. Maybe they can't correct by 2027, but in the next 12 months I find this unlikely - especially with Rocky Mountain issues resolving and Zulily gone which will improve OIBDA. If they send their upcoming Q3 and Q4 reports out and customers are continuing to decline at QVC then I will gladly admit I was wrong here as that would be a strong indicator trouble is beyond repair, but until then their declines have a logical reason.
The article then compares them to a company like Revlon who had negative FCF, debt trending up, and negative working capital. The article also makes a hypothetical "suppliers could shut them off like Bed Bath and Beyond", but then fails to make the connection that BBBY had revenues that collapsed after 2019, debt that was trending up, and negative working capital.
IMO Qurate is not in the same situation as a Revlon, Bed Bath and Beyond, or even a Borders - at least for now anyway which is what the article, and Wall Street, are only looking at.
-Sean |
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