Q3 Earnings Analysis:
Revenue was down 6% compared to 2024 to $2,213M and adjusted OIBDA dropped 32% to $169M. eCom revenue is about 63% of revenue and that was down 3% YoY.
QxH US revenue dropped 7% in Q3. Management KEIP impacting SG&A too with an (85 BPS) hit.
Electronics was biggest drop with 14%, beauty at 9%, and then home at 7%. Not one sales category was positive in Q3.
As for existing customers, my M2 was one again RIGHT. ON. THE. MONEY. - I foretasted existing customers to be around 3,671,762 - 3,776,128 and QVC reported 3,662,000. I am seeing a much further break in my M1 which is interesting driven by the fact that QVC customers are declining at a faster pace than previous, but M2 is holding.
While I have read others say you can't forecast this, it appears you can.
They reported Tiktok shop customers at 255K. So while folks continue to focus on the growth of Tiktok it's apparent it's not helping much.
FCF is a mess. This has been the saving grace for QVC and so far in nine months they are ($184M) in FCF. So those who say all is fine.
As for their debt, they stated the following " as a result, the related outstanding debt balance of $2.9 billion will be reclassified from a non-current liability to a current liability as of October 31, 2025. The outstanding debt under QVC's bank credit facility, in addition to QVC's senior secured notes, could become due sooner than October 27, 2026, if QVC does not remain compliant with the consolidated leverage ratio financial covenant under its bank credit facility and a waiver or forbearance from the lenders thereunder is not obtained. This can be triggered if the consolidated net leverage ratio for QVC is greater than 4.5 to 1.0 under QVC's bank credit facility. Therefore, QVC's continuation as a going concern is currently dependent upon ability to refinance or repay the debt balance upon maturity".
I still see this as a pending chapter 11 case. With the FCF where it is and continued declines to revenue, "you gotta know when to hold 'em. Know when to fold 'em".
-Sean |
