QVC reported that the jewelry sales category experienced a difficult year in 2011, however, combined revenue for all products rose 6 percent year on year to $8.3 billion. U.S. revenue though improved only 3 percent year on year to $5.41 billion while international sales surged 11 percent to $2.86 billion in 2011. Revenue for QVC’s parent company, Liberty Interactive, rose 8 percent year on year to $9.6 billion and cost of sales rose 7.2 percent to $6.1 billion. Net earnings plunged 52 percent to $912 million.
“QVC’s success in 2011 is a result of our strategy to engage customers with compelling content and unique products at a great value. This focus has allowed us to expand our global market leadership in video and ecommerce retail, despite a tough economy,” said Mike George, QVC’s president. “We gained new customers at a record pace by engaging people who love to shop across all our platforms. We sustained our 10 quarter track record of double digit ecommerce growth, and established ourselves as a global leader in mobile retail.”
Specifically for the U.S., QVC’s revenue increased 4 percent in the fourth quarter and the average selling price increased 8 percent to $60.35 per unit, while units sold declined 3 percent. QVC increased shipping and handling charges by 8 percent. Full-year results reflected a 9 percent increase in the average selling price and a 4 percent drop in units sold. The decline in units sold resulted in a decline in shipping and handling revenue bringing the overall revenue growth down to 3 percent.
Fourth quarter and full-year sales in the U.S. showed strength in electronics, home and accessories products while jewelry product sales declined. The company also stated that sales from its online channel, QVC.com, accounted for 40 percent of all revenue for U.S. operations during the fourth quarter, which included Christmas season.
QVC’s international revenue increased 7 percent in the fourth quarter to $857 million, but revenue was negatively impacted by the stronger dollar against the euro and pound sterling. QVC U.K.’s revenue rose 1 percent in local currency for 2011. The network observed marked weakness in fourth quarter for electronics and jewelry, but for the year, there were stronger sales of home and apparel products, which were partially offset by decreases in jewelry.
The QVC channel for Germany recorded revenue growth of 7 percent in local currency for the year. Unlike the markets in the U.S. and U.K. though, sales of jewelry items were strong in Germany as was revenue from home and apparel product categories.
In Japan, QVC’s market was negatively impacted in the second quarter due to the earthquake and tsunami. But sales rebounded and delivered a record fourth quarter for the company. Full-year revenue rose 1 percent in local currency and QVC noted declines in jewelry and beauty category sales.
QVC Italy continued a strong growth trend in its first year. Sales were strong for the home, beauty, jewelry and apparel product categories during the year. QVC Italy successfully launched an ecommerce and mobile optimized website in the fourth quarter.
QVC’s outstanding bank and bond debt was $2.4 billion as of December 31, representing a decline of $360 million from one year earlier.
“QVC finished the year strong with impressive fourth-quarter results, particularly in the U.S. and Japan, despite a challenging macroeconomic environment,” said Greg Maffei, Liberty Interactive’s president.
‘’We made substantial repurchases of our shares, spending $257 million. Separately, today we announced our board’s approval of the recapitalization of our common stock into two tracking stocks, Liberty Interactive and Liberty Ventures. We expect this recapitalization to highlight each tracking stock’s operations and financial aspects of the attributed assets and provide investor choice while maintaining an optimal capital and tax-efficient structure,” he said.