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QG

QVC Group, Inc. (QVCGA)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 revenue fell 7% YoY to $2.24B amid double‑digit declines at QxH; GAAP operating loss of $2.27B driven by a $2.4B non‑cash goodwill/tradenames impairment, while Adjusted OIBDA fell 18% to $232M with a still double‑digit margin .
  • Management highlighted strong traction in social and streaming: revenue grew 30%+ YoY and is “approaching double‑digits” of QxH revenue, partially offsetting linear TV pressure; electronics grew 4% while other QxH categories declined .
  • Liquidity actions intensified: revolver draw rose to $1.925B at quarter‑end with ~$1.2B availability; in July, the company proactively drew an additional $975M, leaving ~$200M availability by Aug 1; QVC Inc. leverage at 3.9x (bank definition) and note covenants restrict unlimited dividends .
  • Stock reaction: shares fell ~10.6% post‑print amid revenue decline and impairment headlines; investors focused on cost discipline, social/streaming growth, and the capital structure review as the next catalysts .

What Went Well and What Went Wrong

  • What Went Well

    • Social/streaming revenue up 30%+ YoY and nearing low‑double‑digits of QxH revenue mix; management reiterated conviction in its WIN strategy to drive live shopping off‑linear .
    • Category green shoot: QxH electronics grew ~4% on smart home/computers/audio/gaming strength despite broad category softness .
    • International resilience: USD revenue +3% (cc ‑3%); margin supported by lower SG&A and personnel costs despite fulfillment wage pressure; return rates improved .

  • What Went Wrong

    • QxH under pressure: revenue ‑11% on 13% fewer units and weaker shipping revenue; most categories (home, beauty, accessories, apparel) declined; Adjusted OIBDA margin ‑170 bps on fulfillment cost inflation and deleverage .
    • Large non‑cash impairment: $2.4B goodwill/tradenames write‑down at QxH drove GAAP operating loss of $2.27B and net loss attributable of $2.22B .
    • Balance sheet constraints: consolidated leverage >3.5x (notes basis) limits unrestricted dividends; liquidity preserved via heavier revolver usage including an incremental $975M July draw .

Financial Results

  • Consolidated results vs prior periods
MetricQ2 2024Q4 2024Q1 2025Q2 2025
Revenue ($USD Billions)$2.41 $2.94*$2.11 $2.24
Net Income (Loss) ($USD Billions)$0.02 $(1.29)*$(0.10) $(2.22)
Diluted EPS ($)$2.53*$(166.27)*$(12.50)*$(275.46)*
Adjusted OIBDA ($USD Millions)$282 $312 $177 $232
Gross Margin %36.35%*33.29%*34.16%*36.40%*
EBITDA Margin %10.39%*10.26%*8.22%*10.82%*
EBIT Margin %7.60%*7.10%*4.04%*6.17%*
Net Income Margin %0.83%*(43.68%)*(4.75%)*(99.37%)*

Asterisked values retrieved from S&P Global.

  • Segment revenue and profitability (Q2 2025 vs Q2 2024)
SegmentRevenue Q2’24 ($MM)Revenue Q2’25 ($MM)YoY %Adj. OIBDA Q2’24 ($MM)Adj. OIBDA Q2’25 ($MM)YoY %
QxH1,558 1,391 (11)% 194 150 (23)%
QVC International576 593 +3% USD, (3)% cc 77 75 (3)%
Cornerstone273 252 (8)% 19 17 (11)%
Total2,407 2,236 (7)% 282 232 (18)%
  • Selected KPIs (Q2 2025 vs Q2 2024)
KPIQxH Q2’24QxH Q2’25ΔQVC Int’l Q2’24QVC Int’l Q2’25Δ
COGS % Revenue64.6% 64.7% +10 bps 63.7% 64.2% +50 bps
Adj. OIBDA Margin12.5% 10.8% −170 bps 13.4% 12.6% −80 bps
Avg. Selling Price$52.51 $52.83 +1% ———
Units Sold—(13)% ——(3)% —
Return Rate15.9% 14.4% −150 bps 20.4% 18.6% −180 bps
eComm Revenue ($MM)$980 $897 (8)% $300 $316 +5% USD [(1)% cc]
eComm % of Rev.62.9% 64.5% +160 bps 52.1% 53.3% +120 bps
Mobile % eComm70.6% 71.6% +100 bps 76.1% 77.4% +130 bps
LTM Customers (MM)7.9 7.2 (9)% 4.1 3.9 (5)%
  • Balance sheet and liquidity (as of 6/30/25 unless noted)
ItemValue
Cash & cash equivalents$897MM
Total QVC Group Debt (face)$5.64B
Total QVC Group Debt (GAAP)$4.92B
QVC bank revolver drawn (6/30)$1.925B
Revolver availability (6/30)~$1.2B (net of LCs)
Additional revolver draw (July)$975MM
Revolver availability (Aug 1)~$200MM
QVC, Inc. leverage (bank def.)3.9x
Covenant noteConsolidated leverage >3.5x restricts unlimited dividends

Guidance Changes

No numerical guidance for revenue, margins, EPS, or capex was provided or updated for Q2 2025. Management emphasized cost discipline, social/streaming investment, and capital structure evaluation; dividend capacity remains restricted by leverage covenants at QVC, Inc. .

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY/QuarterNone givenNone givenMaintained (no guidance)
Adjusted OIBDAFY/QuarterNone givenNone givenMaintained (no guidance)
CapexFY 2025None givenNone givenMaintained (no guidance)
Tax rate / OI&EFY/QuarterNone givenNone givenMaintained (no guidance)
Capital structureN/AN/AEvaluating proactive financial and strategic alternativesNew disclosure emphasis

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Social & streamingQ1: “Social shopping is a transformative opportunity” (TikTok 24/7 partnership) Social/streaming +30% YoY; nearing low double‑digits of QxH mix Improving mix shift toward digital
Linear TV pressureOngoing linear viewership decline cited in Q1 Continued linear decline; deleverage pressures margins Persistent headwind
Fulfillment costsQ1: freight/labor inflation impacting margins Higher freight/labor costs persist; deleverage pressures OIBDA Unfavorable but moderating in Intl via SG&A cuts
Category performanceQ1: broad QxH softnessQ2: electronics +4%; home ‑12%, beauty ‑13%, accessories ‑15% Mixed; electronics bright spot
Tariffs/macroQ1: tariff volatility weighed on sentiment Sourcing diversification to mitigate tariff uncertainty Risk managed, still elevated
Capital structure—Evaluating financial/strategic alternatives; larger revolver utilization for flexibility Active review

Management Commentary

  • CEO perspective: “Despite a declining top line, we delivered double‑digit Adjusted OIBDA margin and we’ve made significant progress with our WIN strategy… social and streaming business revenue… now approaching double‑digits as a percentage of total QxH revenue… [we] diversified our sourcing to mitigate tariff uncertainty” .
  • Category color (QxH): “Electronics grew 4%, driven by smart home, computers, audio and gaming… home revenue decreased 12%… beauty fell 13%… accessories declined 15%” .
  • Balance sheet/capital structure: “To further increase our financial flexibility, we… borrow[ed] $975 million… in July 2025… We are… evaluating a range of proactive financial and strategic alternatives” .

Q&A Highlights

  • Digital acquisition and engagement: Analysts pressed on TikTok/customer acquisition and spend stability; management emphasized social/streaming growth and improving mix despite linear declines .
  • Tariff/supply chain: Continued tariff volatility acknowledged; sourcing diversification and returns improvement helped product margins .
  • Capital structure path: Management reiterated active evaluation of financial/strategic alternatives to enhance flexibility and long‑term value .
  • Guidance posture: No numeric guidance provided; focus remains on cost discipline, WIN strategy execution, and liquidity preservation .

Estimates Context

  • S&P Global consensus: EPS and revenue consensus for Q2 2025 were unavailable in our S&P Global pull; we cannot assess beat/miss vs EPS or revenue estimates. Values retrieved from S&P Global.
  • Given the lack of published S&P Global consensus, we anchor analysis to reported results and management commentary on mix, margins, and capital structure .

Key Takeaways for Investors

  • Mix shift is working at the margin: social/streaming grew 30%+ YoY and is nearing low‑double‑digit share of QxH; electronics delivered positive growth; these are the seeds for stabilization as linear erodes .
  • Margin drivers mixed: product margins benefited from mix/returns, but fulfillment inflation and deleverage continue to pressure Adj. OIBDA—watch fulfillment costs and unit trends for inflection .
  • Capital structure front‑and‑center: larger revolver draws and limited dividend flexibility underscore the need for balance sheet actions; management is evaluating alternatives—any credible plan is a key stock catalyst .
  • Impairment resets the bar: $2.4B QxH impairment (after $1.5B in Q4’24) realigns carrying values; it is non‑cash but highlights structural pressures in linear and the urgency of digital execution .
  • International: FX‑aided USD topline with cc softness; wage inflation offset by SG&A savings; returns improved—monitor whether cc trends stabilize into 2H .
  • Near‑term trading setup: With no formal guidance and estimates unavailable, stock likely trades on liquidity headlines, capital structure updates, and digital KPIs; expect volatility around any strategic updates and unit/ASP trajectories .
  • Medium‑term thesis: Execution on social/streaming scaling, category curation in electronics/beauty, and disciplined cost takeout are essential to offset linear attrition; balance sheet actions can extend the runway for transformation .

Notes:

  • All document-based figures and quotes are sourced from QVC Group’s Q2 2025 press release and Form 8‑K, and Q1 2025 8‑K .
  • Earnings call insights/quotes are sourced from public transcript providers .
  • Asterisked values in tables were retrieved from S&P Global.