QVC Group, Inc. Q4 FY2023 earnings call

• 2023 was transformative with Project Athens initiatives yielding strong results, including adjusted OIBDA growth in Q4, free cash flow generation, and inventory reduction by 22% year-over-year.
• Divested Zulily MA to optimize portfolio. Reduced gross debt by approximately $1 billion in 2023.
• QxH improved programming, saw high customer engagement with linear minutes viewed up 15%, and QVC Plus/HSN Plus streaming minutes up 23%.
• QVC International grew constant currency revenue and adjusted OIBDA for the second consecutive quarter, with strength in UK home category and initiatives like integrated experience launch.
• Cornerstone focused on cost management, opened new retail stores, and saw adjusted OIBDA growth in Q4.
• Organizational change: Stacy Bowe to take over as President of HSN.

QxH: Revenue declined 4% in Q4 2023, primarily due to lower unit volume but offset by 3% growth in average selling price. Adjusted OIBDA margin increased 360 basis points with gross margin expansion of 450 basis points. A $326 million non-cash goodwill impairment charge was recognized. QVC International: Constant currency revenue grew slightly with a 1% increase in average selling price offset by 1% decrease in unit volume. Adjusted OIBDA increased 2% and adjusted OIBDA margin was flat. Cornerstone: Revenue declined 12% in Q4 2023, but adjusted OIBDA grew due to favorable supply chain costs and lower catalog and personnel expenses.

• Expect balanced growth on top and bottom line after 2024, with stability in revenue and customer file during Project Athens period in 2024.
• Continue Project Athens initiatives to drive adjusted OIBDA improvement, reaching run rate through 2025.
• Anticipate continued growth in streaming business with similar growth rates to 2023.

• Supply chain issues: Exposure to Red Sea shipping (15% of QVC US and HSN volume through Suez Canal), delays and higher costs in Europe due to canal transit. China tariff impacts on inventory and supply chain.
• TV distribution costs: TV distribution payments averaged $100 million over two years, with 2024 expected to be less than 2023 but not de minimis.
• Competitive pressures: More competitive digital and new customer acquisition space in US, vs less competitive markets in international regions.

Q: Regarding 2024 revenue growth and customer file stability, David Rawlinson responded that they aim for balanced growth on top and bottom line after 2024, targeting stability in revenue and customer file during Project Athens period.

Q: Jason Bazinet asked about international vs US performance dichotomy. David Rawlinson noted less competitive digital markets and stable linear TV markets in international regions, plus stable management teams there.

Q: William Reuter asked about programming shifts and debt. David Rawlinson talked about shifting airtime to strength categories, and Greg Maffei stated they expect to repay 2024 notes with cash/revolver and no material asset sales like 2022.

Q: Carla Casella asked about inventory risk and shipping impacts. Greg Maffei explained reduced inventory risk due to lower days of supply, drop ship model, and vendor return agreements. David Rawlinson discussed shipping through Red Sea and some delays/ higher costs.

Q: Karru Martinson asked about price increase ability and Project Athens OIBDA opportunity. David Rawlinson said they still have ability to take price, with balance between price and unit volume, and continued OIBDA growth opportunities through Project Athens initiatives.