QVC Group Inc.
11/05/2025 | Press release | Distributed by Public on 11/05/2025 14:57
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this Quarterly Report on Form 10-Q constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding business, product and marketing strategies, including QVC's WIN strategy; revenue growth at QVC, Inc. ("QVC"); economic and macroeconomic trends (including the impact of tariffs); statements regarding the carrying value of intangible assets; our ability to continue as a going concern; projected sources and uses of cash; repayment of debt; fluctuations in interest rates and foreign currency exchange rates; and the anticipated impact of certain contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business. You can identify some of these forward-looking statements by the use of forward-looking words such as "anticipate," "believe," "plan," "estimate," "expect," "intend," "should," "may" and other similar expressions, although not all forward-looking statements contain these identifying words. Where, in any forward-looking statement, we express an expectation or belief as to future results or events, such expectation or belief is expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. You should not place undue reliance on the forward-looking statements made in this Quarterly Report on Form 10-Q. The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated:
•customer demand for our products and services and our ability to attract new customers and retain existing customers by anticipating customer demand and adapting to changes in demand;
•competitor responses to our products and services;
•increased digital TV penetration and the impact on channel positioning of our programs;
•the levels of online traffic to our businesses' websites and our ability to convert visitors into customers or contributors;
•uncertainties inherent in the development and integration of new business lines and business strategies;
•our future financial performance and condition, including availability, terms, deployment of capital and our level of indebtedness; and our ability to continue as a going concern;
•our ability to effectively manage our installment sales plans and revolving credit card programs;
•the cost and ability of shipping companies, manufacturers, suppliers, digital marketing channels, and vendors to deliver products, equipment, software and services;
•the outcome of any pending or threatened litigation;
•availability of qualified personnel;
•the impact of the seasonality of our businesses;
•changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission and Environmental, Social and Governance commitments, and adverse outcomes from regulatory proceedings;
•changes in the nature of key strategic relationships with partners, distributors, suppliers and vendors, including our increased reliance on social media platforms as a marketing tool;
•domestic and international economic and business conditions and industry trends, including the impact of inflation and increased labor costs;
•increases in market interest rates;
•changes and uncertainty surrounding tariffs, trade policy and trade relations with China, the United Kingdom ("U.K.") and other countries;
•consumer spending levels, including the availability and amount of individual consumer debt and customer credit losses;
•the effects of our subsidiaries' debt and other financial obligations and ability to meet those obligations, including covenants in our debt agreements;
•downgrades to QVC's credit ratings;
•the effects of any impairment of our subsidiaries' goodwill and intangible assets;
•system interruption and the lack of integration and redundancy in the systems and infrastructures of our businesses;
•advertising spending levels;
•changes in distribution and viewing of television programming, including the expanded deployment of video on demand technologies and Internet protocol television and their impact on home shopping programming;
•rapid technological changes;
•failure to protect the security of personal information, including as a result of cybersecurity threats and cybersecurity incidents, subjecting us to potentially costly government enforcement actions and/or private litigation and reputational damage;
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•the regulatory and competitive environment of the industries in which we operate;
•natural disasters, public health crises (such as COVID-19 and its variants or future pandemics or epidemics), political crises, and other catastrophic events or other events outside of our control, including climate change;
•threatened terrorist attacks, political and economic unrest in international markets and ongoing military action around the world;
•failure to successfully implement business improvement initiatives and growth strategies; and
•fluctuations in foreign currency exchange rates.
For additional risk factors, please see Part I, Item 1A. Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2024 (the "2024 10-K"), Part II, Item 1A. of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2025, Part II, Item 1A. of our Quarterly Report on Form 10-Q for the quarter ended June 30, 2025 and Part II, Item 1A. in this Quarterly Report on Form 10-Q. These forward-looking statements and such risks, uncertainties and other factors speak only as of the date of this Quarterly Report on Form 10-Q, and we expressly disclaim any obligation or undertaking to disseminate any updates or revisions to any forward-looking statement contained herein, to reflect any change in our expectations with regard thereto, or any other change in events, conditions or circumstances on which any such statement is based.
The following discussion and analysis provides information concerning our results of operations and financial condition. This discussion should be read in conjunction with our accompanying condensed consolidated financial statements and the notes thereto and the 2024 10-K.
The information herein relates to QVC Group, Inc. and its controlled subsidiaries (collectively "QVC Group," the "Company," "Consolidated QVC Group," "us," "we" or "our" unless the context otherwise requires).
Overview
We own controlling and noncontrolling interests in a broad range of video and online commerce companies. Our largest businesses and reportable segments are our operating segment comprised of QVC U.S. and HSN, Inc. ("QxH") and QVC International. QVC markets and sells a wide variety of consumer products in the United States ("U.S.") and several foreign countries via highly engaging video-rich, interactive shopping experiences, primarily by means of its televised shopping programs and the Internet through its domestic and international websites and mobile applications. Cornerstone Brands, Inc. ("CBI"), consists of a portfolio of aspirational home and apparel brands, and is a reportable segment.
Our "Corporate and other" category includes corporate activity along with various cost method investments.
As part of its ongoing strategy to expand into a live social shopping company, QVC Group has undertaken various organizational and strategic changes. In connection therewith, QVC Group and Liberty Media Corporation ("LMC") transitioned various general and administrative services currently provided by LMC to QVC Group under the services agreement to the management of QVC, including legal, tax, accounting, treasury, information technology, cybersecurity and investor relations support. As part of that transition, all then current officers of QVC Group (with limited exceptions) stepped down from their officer positions, during the first half of 2025, and these positions were assumed by members of the QVC management team, effective as of April 1, 2025. LMC continued to support QVC Group throughout the transition period, which was substantially completed during the third quarter of 2025.
Reverse Stock Split
On May 22, 2025, the Company filed an amendment to its Restated Certificate of Incorporation (the "Charter Amendment") with the Secretary of State of the State of Delaware to effect a reverse stock split of the Company's Series A common stock, par value $0.01 per share ("QVCGA"), and Series B common stock, par value $0.01 per share ("QVCGB" and, together with QVCGA, the "Common Stock"), at a ratio of 1-for-50 (the "Reverse Stock Split"). There was no change to the number of QVCGA and QVCGB shares currently authorized. The Charter Amendment was authorized by the stockholders of the Company at the Company's Annual Meeting of Stockholders held on May 12, 2025.
Pursuant to the Charter Amendment on May 22, 2025, every 50 shares of QVCGA and QVCGB were automatically converted into one share of QVCGA and QVCGB, respectively, without any change in par value per share. The number of shares of Common Stock reserved for issuance under the Company's 2020 Omnibus Incentive Plan (the "2020 Incentive Plan"), the number of shares subject to the then-outstanding awards under the 2020 Incentive Plan and the purchase or exercise price or payout value based on a number of shares of the then-outstanding awards under the 2020 Incentive Plan were proportionately adjusted. The Company did not issue fractional shares of Common Stock in connection with the
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Reverse Stock Split. Instead, stockholders who were otherwise entitled to receive a fractional share of Common Stock following the Reverse Stock Split received a cash payment (without interest) in lieu of such fractional shares.
The Company's Common Stock began trading on the Nasdaq Capital Market on a split-adjusted basis at the opening of trading on May 23, 2025. On May 27, 2025, the Company elected to have QVCGB suspended from trading on the Nasdaq Capital Market and QVCGB began quotation on the OTCQB Venture Market on May 28, 2025.
Unless noted, all shares of Common Stock, including Common Stock underlying stock options and restricted stock units, as well as all conversion ratios, exercise prices, conversion prices and per share information in the condensed consolidated financial statements have been retroactively adjusted to reflect the 1-for-50 Reverse Stock Split, as if the split occurred at the beginning of the earliest period presented in this Quarterly Report on Form 10-Q.
Strategies
On November 14, 2024, QVC announced the WIN strategy, targeting top-line growth through three central priorities: (i) 'Wherever She Shops' - aims to enhance customer interactions across diverse platforms; (ii) 'Inspiring People & Products' - fosters rich, engaging content experiences; and (iii) 'New Ways of Working' - emphasizes leveraging technology and process enhancements to streamline operations and fuel innovation. With the WIN strategy, QVC plans to broaden content outreach by creating dynamic, purpose-built experiences that resonate across social media and digital streaming channels. By optimizing QVC's production studios and fostering continuous improvement, QVC envisages content creation as an integrated, efficient process that adapts to various platforms without losing the essence of its brand. QVC aims to grow audiences and redefine shopping experiences, ensuring that it meets its customers wherever they are while building on its heritage for sustained success.
On January 29, 2025, the Company announced the consolidation of its QVC and HSN operations at QVC's Studio Park location in West Chester, PA, and the closing of the St. Petersburg, FL campus. The consolidation is part of QVC's organizational and strategic changes intended to support its WIN strategy. As a result, QVC accelerated depreciation related to the closure of the St. Petersburg, FL campus, which was completed as of September 30, 2025, and recorded $16 million and $45 million of incremental depreciation during the three and nine months ended September 30, 2025, respectively. On March 27, 2025, QVC announced a plan to reorganize teams across the company as part of the WIN strategy, which is intended to increase revenue through growth initiatives while maintaining Adjusted OIBDA margin. As a result of the reorganization, QVC recorded $36 million and $20 million of restructuring (benefits) costs at QxH and QVC International, respectively, during the nine months ended September 30, 2025. In September 2025, HSN entered into agreements to sell the St. Petersburg properties to independent third parties. As of September 30, 2025, the related long-lived assets of $22 million, all within QxH, were included in assets held for sale noncurrent in the consolidated balance sheet. The sales are expected to be completed within the next twelve months.
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In August 2025, the Board of Directors (the "Board") of QVC Group implemented a revised compensation structure for QVC Group's senior executives (collectively, the "Senior Executives") and a large number of existing participants in QVC Group's incentive compensation programs (together the "Eligible Employees").
•QVC Group has determined to guarantee to each Eligible Employee who remains employed through the end of 2026 cash payments generally equal to the following: (i) for nine senior executives, 50% of their target variable compensation for 2025 and 100% of their target variable compensation for 2026, and (ii) for all other Eligible Employees (except the Senior Executives), 50% of their target variable compensation for 2025 and 2026 (the payments described in (i) and (ii), the "Guaranteed Compensation"). With the exception of the Senior Executives as described below, 25% of the 2025 Guaranteed Compensation related to all other Eligible Employees was substantially earned and paid as of September 30, 2025, with the remainder to be paid no later than mid-January 2026. Additionally, the 2026 Guaranteed Compensation for all other Eligible Employees, with the exception of the Senior Executives as described below, will be earned and paid on a quarterly basis through the end of 2026.
•To ensure that the Senior Executives are motivated to achieve important operational goals of the Company, a portion of their Guaranteed Compensation is subject to meeting certain performance conditions.
•All other Eligible Employees (except the Senior Executives) remain eligible to earn the portion of their annual bonus that is not part of the Guaranteed Compensation.
•To provide a stronger retention benefit to certain employees, the Company has agreed to prepay (i) the Guaranteed Compensation for the Senior Executives and (ii) existing retention benefits for other specified employees (including the Senior Executives). Prepaid compensation to Senior Executives will be subject to repayment on an after-tax basis if certain employment and, as applicable, performance conditions are not satisfied.
As a result of this compensation change substantially all of the 2025 restricted stock grants and a portion of a 2025 performance award grant were canceled as of September 30, 2025. Additionally, the expense associated with the impacted awards (the 2025 restricted stock grants and a portion of a 2025 performance award grant) will no longer qualify as stock-based compensation expense, on a prospective basis.
Trends
QVC's future net revenue will depend on its ability to grow through digital platforms, retain and grow revenue from existing customers, and attract new customers. QVC's future net revenue may also be affected by (i) the willingness of cable television and direct-to-home satellite system operators to continue carrying QVC's programming service; (ii) QVC's ability to maintain favorable channel positioning, which may become more difficult due to governmental action or from distributors converting analog customers to digital; (iii) changes in television viewing habits because of video-on-demand technologies and internet video services; (iv) QVC's ability to source new and compelling products; and (v) general economic conditions.
The current economic uncertainty in various regions of the world in which our subsidiaries and affiliates operate, has impacted and could continue to adversely affect demand for our products and services since a substantial portion of our revenue is derived from discretionary spending by individuals, which typically falls, to varying degrees, during times of economic instability and inflationary pressures. Economic tensions and changes and uncertainty relating to international trade policies, including, for example, the recent widespread tariffs announced by the U.S. on its major trading partners, higher tariffs on imported goods and materials, actions taken in response (such as retaliatory tariffs or other trade protectionist measures or the renegotiation of free trade agreements), have increased inflationary cost pressures and recessionary fears. Although the majority of tariffs were paused while the U.S. negotiated trade deals to remove trade barriers or tariffs, most of these have now been implemented and there continues to be uncertainty as to whether and when the U.S. may impose new, reinstated or adjusted tariffs on goods imported from China or other countries, and global financial markets have experienced and may continue to experience disruptions, including increased volatility and diminished liquidity and credit availability. If economic and financial market conditions in the U.S. or other key markets, including Europe and Japan, continue to be uncertain or deteriorate, QVC's customers may respond by further suspending, delaying or reducing their discretionary spending. Any further suspension, delay or reduction in discretionary spending could adversely affect revenue. Accordingly, our ability to increase or maintain revenue and earnings could be adversely affected to the extent that relevant economic environments decline. Such weak economic conditions may also inhibit QVC's expansion into new European and other markets. We currently are unable to predict the extent of any of these potential adverse effects. Additionally, these economic and financial market conditions may result in consumers remaining
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highly distracted. In the U.S., TV shopping and entertainment hours declined, while news and business TV viewership rose, reflecting shifting consumer attention.
The Company has continued to see inflationary pressures during the period including higher wages and merchandise costs consistent with inflation and tariff impacts experienced by the global economy. As a result of existing and any new or additional tariffs, the cost of merchandise has and is expected to continue to increase; as a result QVC has in certain circumstances implemented price adjustments and undertaken an inventory review process and QVC may seek alternative sources of supply for merchandise. Further, the full impact of recent governmental actions on macroeconomic conditions and on QVC's business is uncertain, difficult to predict and depends on a number of factors, including the extent and duration of tariffs, any reversal or temporary suspension of announced tariffs, the availability of exemptions, changes in the amount and scope of tariffs, the imposition of new tariffs and other measures that target countries may take in response to U.S. trade policies, the result of legal and other challenges on the tariffs, and possible resulting general inflationary pressures in the global economy, as well as the availability and cost of alternative sources of supply for merchandise. If these pressures persist, inflated costs may result in certain increased costs outpacing our pricing power in the near term.
Due to goodwill and tradename impairments related to the QxH reporting unit during the second quarter of 2025, the fair values of such intangible assets do not significantly exceed theircarrying value. The Company will continue to monitor QVC's reporting units' current business performance versus the current and updated long-term forecasts, among other relevant considerations, to determine if the carrying value of its assets (including goodwill and tradenames) is appropriate. Future outlook declines in revenue, cash flows, or other factors could result in a sustained decrease in fair value that may result in a determination that additional carrying value adjustments are required, which could be material.
Results of Operations-Consolidated
General. We provide in the tables below information regarding our consolidated Operating Results and Other Income and Expense, as well as information regarding the contribution to those items from our principal reporting segments. The "Corporate and other" category consists of those assets or businesses which we do not disclose separately.
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For a more detailed discussion and analysis of the financial results of the principal reporting segments, see "Results of Operations-Businesses" below.
Operating Results
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| amounts in millions | |||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||
| QxH | $ | 1,416 | 1,521 | 4,175 | 4,618 | ||||||||||||||||||
| QVC International | 566 | 571 | 1,696 | 1,719 | |||||||||||||||||||
| CBI | 231 | 252 | 682 | 756 | |||||||||||||||||||
| Consolidated QVC Group | $ | 2,213 | 2,344 | 2,344 | 6,553 | 7,093 | |||||||||||||||||
| Operating Income (Loss) | |||||||||||||||||||||||
| QxH | $ | 48 | 107 | (2,286) | 307 | ||||||||||||||||||
| QVC International | 43 | 57 | 134 | 177 | |||||||||||||||||||
| CBI | (9) | (2) | (10) | 6 | |||||||||||||||||||
| Corporate and other | (22) | (10) | (38) | (28) | |||||||||||||||||||
| Consolidated QVC Group | $ | 60 | 152 | (2,200) | 462 | ||||||||||||||||||
| Adjusted OIBDA | |||||||||||||||||||||||
| QxH | $ | 135 | 182 | 407 | 561 | ||||||||||||||||||
| QVC International | 58 | 70 | 196 | 222 | |||||||||||||||||||
| CBI | (2) | 6 | 10 | 31 | |||||||||||||||||||
| Corporate and other | (22) | (8) | (37) | (23) | |||||||||||||||||||
| Consolidated QVC Group | $ | 169 | 250 | 576 | 791 | ||||||||||||||||||
Revenue. Consolidated QVC Group revenue decreased 5.6% or $131 million and 7.6% or $540 million for the three and nine months ended September 30, 2025, respectively, as compared to the corresponding periods in the prior year. Revenue declined in all segments during the three and nine months ended September 30, 2025 compared to the corresponding periods in the prior year. See "Results of Operations-Businesses" below for a more complete discussion of the results of operations of QVC and CBI.
Stock-based compensation. Stock-based compensation includes compensation primarily related to options, restricted stock awards and restricted stock units for shares of our common stock that are granted to certain of our officers and employees.
We recorded $7 million and $3 million of stock-based compensation for the three months ended September 30, 2025 and 2024, respectively, and $15 million and $22 million of stock-based compensation for the nine months ended September 30, 2025 and 2024, respectively. The increase for the three months ended September 30, 2025 compared to the corresponding period in the prior year was due to an increase in market price of QVC Group's Series A common stock. The decrease for the nine months ended September 30, 2025 compared to the corresponding period in the prior year was primarily due to the decline in the probability of satisfying performance objectives, partially offset by increase in the market price of QVC Group's Series A common stock.
Operating income (loss). Our consolidated operating income decreased $92 million and $2,662 million for the three and nine months ended September 30, 2025, respectively, as compared to the corresponding periods in the prior year.
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For the three months ended September 30, 2025, operating income decreased $59 million at QxH, $14 million at QVC International and $7 million at CBI. Additionally, operating loss within Corporate and other increased $12 million primarily due to higher consulting expenses.
For the nine months ended September 30, 2025, operating income (loss) decreased $2,593 million at QxH, $43 million at QVC International and $16 million at CBI. The decrease in operating income (loss) at QxH was primarily due to the impairment of goodwill and tradenames recorded during the second quarter of 2025. Additionally, operating loss within Corporate and other increased $10 million, primarily due to higher consulting expenses, partially offset by decreased legal expenses. See "Results of Operations-Businesses" below for a more complete discussion of the results of operations of QVC and CBI.
Adjusted OIBDA. To provide investors with additional information regarding our financial results, we also disclose Adjusted OIBDA, which is a non-GAAP financial measure. We define Adjusted OIBDA as operating income (loss) plus depreciation and amortization, stock-based compensation, and where applicable, separately identified impairments, litigation settlements, restructuring (benefits) costs, acquisition-related costs, and (gains) losses on sale-leaseback transactions. Our chief operating decision maker and management team use this measure of performance in conjunction with other measures to evaluate our businesses and make decisions about allocating resources among our businesses. We believe this is an important indicator of the operational strength and performance of our businesses by identifying those items that are not directly a reflection of each business' performance or indicative of ongoing business trends. In addition, this measure allows us to view operating results, perform analytical comparisons and benchmarking between businesses and identify strategies to improve performance. Accordingly, Adjusted OIBDA should be considered in addition to, but not as a substitute for, operating income, net earnings (loss), cash flows provided by operating activities and other measures of financial performance prepared in accordance with U.S. generally accepted accounting principles.
The following table provides a reconciliation of Operating income (loss) to Adjusted OIBDA:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| amounts in millions | |||||||||||||||||||||||
| Operating income (loss) | $ | 60 | 152 | (2,200) | 462 | ||||||||||||||||||
| Depreciation and amortization | 103 | 95 | 310 | 290 | |||||||||||||||||||
| Stock-based compensation | 7 | 3 | 15 | 22 | |||||||||||||||||||
| Impairment of goodwill and intangible assets | - | - | 2,395 | - | |||||||||||||||||||
| Restructuring (benefits) costs (note 10) | (1) | - | 56 | 18 | |||||||||||||||||||
| Gain on sale leaseback transaction | - | - | - | (1) | |||||||||||||||||||
| Adjusted OIBDA | $ | 169 | 250 | 576 | 791 | ||||||||||||||||||
Consolidated Adjusted OIBDA decreased 32.4% or $81 million and 27.2% or $215 million for the three and nine months ended September 30, 2025, respectively, as compared to the corresponding periods in the prior year.
For the three months ended September 30, 2025, Adjusted OIBDA decreased $47 million at QxH, $12 million at QVC International and $8 million at CBI. Additionally, Adjusted OIBDA within Corporate and other decreased $14 million primarily due to higher consulting expenses.
For the nine months ended September 30, 2025, Adjusted OIBDA decreased $154 million at QxH, $26 million at QVC International, and $21 million at CBI. Additionally, Adjusted OIBDA within Corporate and other increased $14 million primarily due to higher consulting expenses, partially offset by decreased legal expenses. See "Results of Operations-Businesses" below for a more complete discussion of the results of operations of QVC and CBI.
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Other Income and Expense
Components of Other income (expense) are presented in the table below.
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| amounts in millions | |||||||||||||||||||||||
| Interest expense | $ | (134) | (117) | (363) | (353) | ||||||||||||||||||
| Realized and unrealized gains (losses) on financial instruments, net | (7) | (36) | (43) | (53) | |||||||||||||||||||
| Other, net | 25 | 1 | 35 | 22 | |||||||||||||||||||
| Other income (expense) | $ | (116) | (152) | (371) | (384) | ||||||||||||||||||
Interest expense. Interest expense increased $17 million and $10 million for the three and nine months ended September 30, 2025, respectively, as compared to the corresponding periods in the prior year, primarily due to higher outstanding debt during 2025 and additional interest expense related to the non-payment of the 8.0%Series A Cumulative Redeemable Preferred Stock ("Preferred Stock") dividend (see note 8 to the accompanying condensed consolidated financial statements).
Realized and unrealized gains (losses) on financial instruments, net. Realized and unrealized gains (losses) on financial instruments, net are comprised of changes in the fair value of the following:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| amounts in millions | |||||||||||||||||||||||
| Equity securities | $ | (6) | (17) | (7) | (19) | ||||||||||||||||||
| Exchangeable senior debentures | (1) | (19) | (36) | (34) | |||||||||||||||||||
| $ | (7) | (36) | (43) | (53) | |||||||||||||||||||
The changes in these accounts are primarily due to changes in market factors largely driven by changes in the fair value of the underlying stocks or financial instruments to which these related (see note 7 to the accompanying condensed consolidated financial statements for additional discussion related to debt).
Other, net. Other, net increased $24 million and $13 million for the three and nine months ended September 30, 2025, respectively, compared to the corresponding periods in the prior year, primarily as a result of a reduction in interest and dividend income and foreign exchange losses, partially offset by tax sharing benefits in the current year compared to tax sharing expense in the prior year.
Income taxes. Earnings (loss) before income taxes, income tax (expense) benefit, and the effective tax rates for the three and nine months ended September 30, 2025 and 2024 are summarized below:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| amounts in millions | |||||||||||||||||||||||
| Earnings (loss) before income taxes | $ | (56) | - | (2,571) | 78 | ||||||||||||||||||
| Income tax (expense) benefit | $ | (17) | (15) | 198 | (53) | ||||||||||||||||||
| Effective tax rate | 30 | % | - | % | (8 | %) | 68 | % | |||||||||||||||
Income tax expense for the three months ended September 30, 2025 resulted in a negative effective tax rate due to the recording of a valuation allowance during the quarter and the tax impact of permanent adjustments on net pretax losses. Income tax expense differs from the U.S. statutory tax rate of 21% during the nine months ended September 30, 2025, primarily due to an impairment of goodwill that is not deductible for tax purposes (see note 6 to the accompanying condensed consolidated financial statements). The Company had zero earnings before income taxes for the three months
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ended September 30, 2024, but income tax expense of $15 million primarily related to foreign income tax expense and non-deductible interest expense related to the 8.0% Series A Cumulative Redeemable Preferred Stock ("Preferred Stock"). Income tax expense was higher than the U.S statutory tax rate of 21% during the nine months ended September 30, 2024, primarily due to foreign income tax expense and non-deductible interest expense related to Preferred Stock.
For the three and nine months ended September 30, 2025, the Company utilized the discrete effective tax rate method, treating the year-to-date period as if it was the annual period to calculate its interim income tax provision, as allowed by Financial Accounting Standards Board Accounting Standards Codification 740-270-30-18,Income Taxes - Interim Reporting, which management determined to be more appropriate than the annual effective rate method.
Net earnings (loss).We had net losses of $73 million and $15 million for the three months ended September 30, 2025 and 2024, respectively, and net losses of $2,373 million and net earnings $25 million for the nine months ended September 30, 2025 and 2024, respectively. The change in net earnings (loss) was the result of the above-described fluctuations in our revenue, expenses and other gains and losses.
Material Changes in Financial Condition
As of September 30, 2025, substantially all of our cash and cash equivalents are invested in U.S. Treasury securities, securities of other government agencies, AAA rated money market funds and other highly rated financial and corporate debt instruments.
The following are potential sources of liquidity: available cash balances, equity issuances, dividend and interest receipts, proceeds from asset sales, debt (including availability under QVC's bank credit facilities (the "Credit Facility"), as discussed in note 6 to the accompanying condensed consolidated financial statements), and cash generated by the operating activities of our wholly-owned subsidiaries. Cash generated by the operating activities of our subsidiaries is only a source of liquidity to the extent such cash exceeds the working capital needs of the subsidiaries and is not otherwise restricted. For example, under QVC's bond indentures, it is able to pay dividends or make other restricted payments if it is not in default on its senior secured notes and its consolidated leverage ratio is not greater than 3.5 to 1.0. In addition, under the Credit Facility QVC is able to pay dividends or make other restricted payments if it is not in default on the Credit Facility and the consolidated leverage ratio of QVC is not greater than 4.0 to 1.0. Further, under QVC's bond indentures and the Credit Facility, unlimited dividends are permitted to service the debt of parent entities of QVC so long as there is no default (i.e., no leverage test is needed).
As of September 30, 2025, QVC's consolidated leverage ratio (as calculated under QVC's senior secured notes) was greater than 3.5 to 1.0 and as a result QVC is restricted in its ability to make dividends or other restricted payments under the senior secured notes. Although QVC will not be able to make unlimited dividends or other restricted payments under the senior secured notes leverage basket, under the indentures, QVC will continue to be permitted to make unlimited dividends to parent entities of QVC to service the principal and interest when due in respect of indebtedness of such parent entities (so long as there is no default under the indentures governing QVC's senior secured notes) and permitted to make certain restricted payments to QVC Group under an intercompany tax sharing agreement in respect of certain tax obligations of QVC and its subsidiaries.
QVC Group and certain of its subsidiaries' debt credit ratings were downgraded by Fitch Ratings during the nine months ended September 30, 2025as follows: (i) downgraded QVC's long-term issuer default rating from "B" to "CCC+" and downgraded the senior secured rating from "BB-" to "B"; (ii) downgraded LI LLC's long-term issuer default rating from "B" to "CCC+", and downgraded the senior unsecured rating from "CCC+" to "CCC-"; (iii) downgraded QVC Group's long-term issuer default rating from "B" to "CCC+," and downgraded QVC Group's preferred rating from "CCC+" to "CCC-".
QVC Group and certain of its subsidiaries' debt credit ratings were downgraded by S&P Global Ratings during the nine months ended September 30, 2025 as follows: (i) downgraded the senior secured rating from "B-" to "CCC"; (ii) downgraded LI LLC's senior unsecured rating from "CCC-" to "CC"; and (iii) downgraded QVC Group's issuer credit rating from "CCC+" to "CCC".
QVC Group and certain of its subsidiaries' debt credit ratings were downgraded by Moody's Ratings during the nine months ended September 30, 2025as follows: (i) downgraded QVC's senior secured rating from "B2" to "Caa1"; and (ii) downgraded LI LLC's corporate family rating from "B3" to "Caa1" and downgraded the senior unsecured rating from "Caa2" to "Caa3". QVC Group's debt credit ratings were further downgraded by Moody's Ratings during October 2025 as
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follow: (i) downgraded QVC's senior secured rating from Caa1 to Caa3 and (ii) downgraded QVC's LI LLC's corporate family rating from "Caa1" to "Caa3" and its senior unsecured rating from "Caa3" to "C".
A downgrade of QVC's credit ratings or rating outlooks has and will likely continue to adversely affect the market prices of its debt securities and QVC Group's equity securities, its access to capital, or trigger additional collateral or funding requirements or the imposition of financial or other burdensome covenants. See Part II, Item 1A. "Risk Factors" in this Quarterly Report on Form 10-Q for additional information.
As of September 30, 2025, QVC Group's liquidity position included the following:
|
Cash and cash equivalents |
|||||
| amounts in millions | |||||
| QVC | $ | 1,328 | |||
| CBI | 79 | ||||
| Corporate | 410 | ||||
| Total QVC Group | $ | 1,817 | |||
As of September 30, 2025, the Company has $46 million of restricted cash that primarily includes cash deposits to cover potential disputes or other financial obligations with certain counterparties and a cash deposit with a third party trustee that provides financial assurance that the Company will fulfill its obligations in relation to claims under its workers' compensation policy.
| Borrowing capacity | |||||
| amount in millions | |||||
| Credit Facility | $ | 181 | |||
To the extent that the Company recognizes any taxable gains from the sale of assets we may incur tax expense and be required to make tax payments, thereby reducing any cash proceeds. As of September 30, 2025, the Company had approximately $254 million of cash, cash equivalents and restricted cash held in foreign subsidiaries that is available for domestic purposes with no significant tax consequences upon repatriation to the U.S. QVC accrues foreign taxes on the unremitted earnings of its international subsidiaries. Approximately 48% of QVC's foreign cash balance was that of QVC-Japan (as defined below). QVC owns 60% of QVC-Japan and shares all profits and losses with the 40% minority interest holder, Mitsui & Co., LTD ("Mitsui").
Additionally, we believe our businesses will generate positive cash flow from operations during 2025.
| Nine months ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| amounts in millions | |||||||||||
| Cash Flow Information | |||||||||||
| Net cash provided (used) by operating activities | $ | 30 | 313 | ||||||||
| Net cash provided (used) by investing activities | $ | (203) | (149) | ||||||||
| Net cash provided (used) by financing activities | $ | 1,092 | (412) | ||||||||
During the nine months ended September 30, 2025, QVC Group's primary uses of cash were expenditures for television distribution rights of $89 million, capital expenditures of $102 million, and dividends paid to noncontrolling interest of $22 million. QVC Group's primary source of cash was net debt borrowings of $1,986 million.
The projected uses of QVC Group cash for the remainder of 2025 are continued capital improvement spending between $50 million and $70 million, debt service payments (including approximately $84 million for interest payments on outstanding debt), repayment of debt, and payment of dividends to the holders of the Preferred Stock. We also may be required to make net payments of income tax liabilities to settle items under discussion with tax authorities. We expect that
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cash on hand and cash provided by operating activities and borrowing capacity in future periods will be sufficient to fund projected uses of cash.
The Company may from time to time repurchase any level of its outstanding debt through open market purchases, privately negotiated transactions, redemptions, tender offers or otherwise. Repurchases or retirement of debt, if any, will depend on prevailing market conditions, liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
Availability under the Fifth Amended and Restated Credit Agreement at September 30, 2025 was $181 million, reflecting outstanding borrowings net of letters of credit. QVC Group and its subsidiaries were in compliance with all debt covenants at September 30, 2025, however refer to note 1 of the accompanying notes to the condensed consolidated financial statements for discussion regarding substantial doubt about the Company's ability to continue as a going concern.
Results of Operations-Businesses
QVC. QVC is a retailer of a wide range of consumer products, which are marketed and sold primarily by merchandise-focused televised shopping programs, the Internet (including social media) and mobile applications. In the U.S., QVC's televised shopping programs, including live and recorded content, are distributed across multiple channels nationally on a full-time basis, including QVC, QVC 2, QVC 3, HSN and HSN2. QVC's U.S. programming is also available on QVC.com and HSN.com, which we refer to as "QVC's U.S. websites"; virtual multichannel video programming distributors (including Hulu + Live TV, DirecTV Stream, and YouTube TV); applications via streaming video; Facebook Live, Roku, Apple TV, Amazon Fire, Xfinity Flex and Samsung TV Plus; mobile applications; social media pages and over-the-air broadcasters (collectively, the "Digital Platforms").
QVC's Digital Platforms enable consumers to purchase goods offered on its televised programming, along with a wide assortment of products that are available only on QVC's U.S. websites. QVC.com and its other Digital Platforms (including its mobile applications, social media pages and others) are natural extensions of its business model, allowing customers to engage in its shopping experience wherever they are, with live or on-demand content customized to the device they are using. In addition to offering video content, QVC's U.S. websites allow shoppers to browse, research, compare and perform targeted searches for products, read customer reviews, control the order-entry process and conveniently access their account.
QVC's international televised shopping programs, including live and recorded content, are distributed to households primarily in Germany, Japan, the U.K. and Italy. In some of the countries where QVC operates, its televised shopping programs are distributed across multiple QVC channels: QVC Style and QVC2 in Germany and QVC Beauty, QVC Extra and QVC Style in the U.K. Similar to the U.S., QVC's international businesses also engage customers via websites, mobile applications, and social media pages. QVC's international business employs product sourcing teams who select products tailored to the interests of each local market.
QVC's Japanese operations ("QVC-Japan") are conducted through a joint venture with Mitsui. QVC-Japan is owned 60% by QVC and 40% by Mitsui. QVC and Mitsui share in all profits and losses based on their respective ownership interests. During the nine months ended September 30, 2025 and 2024, QVC-Japan paid dividends to Mitsui of $22 million and $51 million, respectively.
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QVC's operating results were as follows:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| amounts in millions | |||||||||||||||||||||||
| Net revenue | $ | 1,982 | 2,092 | 5,871 | 6,337 | ||||||||||||||||||
| Cost of goods sold (exclusive of depreciation and amortization) | (1,317) | (1,366) | (3,869) | (4,113) | |||||||||||||||||||
| Operating expenses | (152) | (165) | (460) | (502) | |||||||||||||||||||
| Advertising expenses | (87) | (115) | (228) | (339) | |||||||||||||||||||
| Selling, general and administrative expenses (exclusive of stock-based compensation and advertising) | (233) | (194) | (711) | (600) | |||||||||||||||||||
| Adjusted OIBDA | 193 | 252 | 603 | 783 | |||||||||||||||||||
| Impairment of goodwill and intangible assets | - | - | (2,395) | - | |||||||||||||||||||
| Restructuring (benefits) costs | 1 | - | (56) | (18) | |||||||||||||||||||
| Gain on sale leaseback transaction | - | - | - | 1 | |||||||||||||||||||
| Stock-based compensation | (6) | (1) | (14) | (15) | |||||||||||||||||||
| Depreciation and amortization | (97) | (87) | (290) | (267) | |||||||||||||||||||
| Operating income (loss) | $ | 91 | 164 | (2,152) | 484 | ||||||||||||||||||
Net revenue by segment was as follows:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| amounts in millions | |||||||||||||||||||||||
| QxH | $ | 1,416 | 1,521 | 4,175 | 4,618 | ||||||||||||||||||
| QVC International | 566 | 571 | 1,696 | 1,719 | |||||||||||||||||||
| Consolidated QVC | $ | 1,982 | 2,092 | 5,871 | 6,337 | ||||||||||||||||||
Revenue. QVC's consolidated net revenue decreased $110 million or 5.3% and $466 million or 7.4% for the three and nine months ended September 30, 2025, respectively, as compared to the corresponding periods in the prior year. The three month decrease in total revenue, net is primarily due to a 5.0% decrease in units shipped attributable to QxH and to a lesser extent QVC International. The decrease to total revenue, net was partially offset by a $20 million decrease in estimated product returns primarily at QxH and to a lesser extent QVC International. The nine month decrease in total revenue, net is primarily due to a 7.4% decrease in units shipped attributable to QxH and to a lesser extent QVC International. The decrease was also related to a 1.1% decrease in average selling price per unit ("ASP") primarily due to QVC International and to a lesser extent QxH. These decreases to total revenue, net were partially offset by a $136 million decrease in estimated product returns primarily at QxH and to a lesser extent QVC International.
During the three and nine months ended September 30, 2025 and 2024, the changes in revenue and expenses were affected by changes in the currency exchange rates for the Japanese Yen, the Euro and the U.K. Pound Sterling. In the event the U.S. Dollar strengthens against these foreign currencies in the future, QVC's revenue and operating cash flow will be negatively affected.
In discussing QVC's operating results, the term "currency exchange rates" refers to the foreign currency exchange rates QVC uses to convert the operating results for all countries where the functional currency is not the U.S. Dollar. QVC calculates the effect of changes in currency exchange rates as the difference between current period activity translated using the prior period's currency exchange rates. QVC refers to the results of this calculation as the impact of currency exchange rate fluctuations. Constant currency operating results refers to operating results without the impact of the currency exchange rate fluctuations. The disclosure of results in constant currency permits investors to better understand QVC's underlying performance without the effects of currency exchange rate fluctuations.
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The percentage change in net revenue for each of QVC's segments in U.S. Dollars and in constant currency was as follows:
| Three months ended September 30, 2025 | Nine months ended September 30, 2025 | ||||||||||||||||||||||||||||||||||
| U.S. Dollars | Foreign Currency Exchange Impact | Constant Currency | U.S. Dollars | Foreign Currency Exchange Impact | Constant currency | ||||||||||||||||||||||||||||||
| QxH | (6.9) | % | - | % | (6.9) | % | (9.6) | % | - | % | (9.6) | % | |||||||||||||||||||||||
| QVC International | (0.9) | % | 3.7 | % | (4.6) | % | (1.3) | % | 2.5 | % | (3.8) | % | |||||||||||||||||||||||
For the three months ended September 30, 2025, QxH's total revenue, net decline of $105 million or 6.9% was attributable to a 7.4% decrease in units shipped. This decline was partially offset by a $17 million decrease in estimated product returns and a 1.0% increase in ASP. For the nine months ended September 30, 2025, QxH's total revenue, net decline of $443 million or 9.6% was attributable to a 10.0% decrease in units shipped. These declines were partially offset by a $102 million decrease in estimated product returns. For the three and nine months ended September 30, 2025, QxH experienced shipped sales declines in all product categories.
For the three months ended September 30, 2025, QVC International's total revenue, net, in constant currency, decline of $26 million was due to a 4.0% decrease in ASP, attributable to Japan and UK. This was partially offset by a $3 million decrease in estimated product returns attributable to Germany. For the three months ended September 30, 2025, QVC International experienced shipped sales declines in constant currency across all other product categories except apparel. For the nine months ended September 30, 2025, QVC International's total revenue, net, in constant currency, decline of $66 million was driven by a 2.4% decrease in aggregate units shipped attributable to Germany and Japan, partially offset by an increase in the U.K. and a 2.3% decrease in ASP, attributable to the U.K. and Japan. These decreases were partially offset by a $33 million decrease in estimated product returns attributable to Germany. For the nine months ended September 30, 2025, QVC International experienced shipped sales declines in constant currency in all product categories.
Cost of goods sold (excluding depreciation and amortization). QVC's cost of goods sold as a percentage of net revenue was 66.4% and 65.9% for the three and nine months ended September 30, 2025 respectively, compared to 65.3% and 64.9% for the three and nine months ended September 30, 2024, respectively. The increase in cost of goods sold as a percentage of revenue for the three and nine months ended September 30, 2025 is due to higher warehouse and freight costs across both segments, and unfavorable product mix at QxH partially offset by favorable product mix at QVC International.
Operating expenses.QVC's operating expenses are principally comprised of commissions, order processing and customer service expenses, credit card processing fees and TV distribution expenses. Operating expenses were 7.7% and 7.8% of net revenue for the three and nine months ended September 30, 2025, respectively, compared to 7.9% for each of the three and nine months ended September 30, 2024.
Advertising expenses.QVC's advertising expenses increased $17 million or 24.3% for the three months ended September 30, 2025 as compared to the corresponding period in the prior year. QVC's advertising expenses increased $26 million or 12.9% for the nine months ended September 30, 2025 as compared to the corresponding period in the prior year. Both periods' increases were primarily driven by marketing investments on social and streaming platforms at QxH.
Selling, general and administrative expenses (excluding stock-based compensation and advertising). QVC's selling, general, and administrative expenses (excluding stock-based compensation and advertising) include personnel, information technology ("IT"), production costs and the provision for doubtful accounts. Such expenses decreased $6 million and increased 0.4% as a percentage of total revenue, net for the three months ended September 30, 2025, as compared to the corresponding period in the prior year. Selling, general, and administrative expenses decreased $26 million and increased 0.5% as a percentage of total revenue, net for the nine months ended September 30, 2025, as compared to the corresponding period in the prior year.
The decrease in expenses for the three and nine months ended September 30, 2025 was due to decreases in personnel costs. The decreases in personnel costs were driven by QxH as a result of lower wages due to a workforce reduction associated with the shift in the IT operating model that occurred in the second quarter of the prior year, as well as the reorganization of teams across the Company as part of the WIN strategy announced at the end of the first quarter of 2025, partially offset by an increase as a result of revisions made to compensation structure in August 2025.
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Impairment of goodwill and intangible assets. QVC recorded impairment of goodwill and intangible assets of $2,395 million for the nine months ended September 30, 2025, including $930 million related to the decrease in the fair value of the QVC and HSN tradenames and $1,465 million related to a decrease in the fair value of the QxH reporting unit goodwill as a result of quantitative assessments performed by the Company.
Restructuring (benefits) costs. For the nine months ended September 30, 2025 QVC recorded $36 million and $20 million of restructuring (benefits) costs at QxH and QVC International, respectively, resulting from the announced plan to reorganize its teams across the Company as part of the WIN strategy. For the nine months ended September 30, 2024 QVC recorded $18 million of restructuring (benefits) costs related to the shift in its IT operating model.
Stock-based compensation.Stock-based compensation includes compensation related to options and restricted stock units granted to certain employees, directors and officers. QVC recorded $6 million and $14 million of stock-based compensation expense for the three and nine months ended September 30, 2025, respectively, and recorded $1 million and $15 million of stock-based compensation expense for the three and nine months ended September 30, 2024, respectively. Stock-based compensation increased $5 million for the three months ended September 30, 2025 in comparison to the corresponding period in the prior year due to an increase in the market price of QVC Group's Series A common stock. Stock-based compensation decreased $1 million for the nine months ended September 30, 2025 in comparison to the corresponding period in the prior year due to the decline in the probability of satisfying performance objectives offset by changes in the market price of QVC Group's Series A common stock.
Depreciation and amortization.Depreciation and amortization increased $10 million and $23 million for the three and nine months ended September 30, 2025, compared to the same period in the prior year, and included acquisition related amortization of $12 million and $15 million for the three months ended September 30, 2025 and 2024, respectively, and $35 million and $46 million for the nine months ended September 30, 2025 and 2024, respectively. The increase for the three and nine months ended September 30, 2025 was primarily due to $16 million and $45 million of incremental depreciation, respectively, due to accelerated depreciation of the St. Petersburg, FL campus and associated assets as a result of the closure completed in the third quarter of 2025. The decrease in amortization for the three and nine months ended September 30, 2025 is primarily due to software assets that fully amortized during 2024.
CBI. CBI consists of a portfolio of aspirational home and apparel brands. The home brands are comprised of Ballard Designs, Frontgate, and Grandin Road, with Garnet Hill primarily categorized as an apparel brand. There are also 35 retail and outlet stores located throughout the U.S., primarily comprised of Ballard Designs and Frontgate stores.
CBI's stand-alone operating results for the three and nine months ended September 30, 2025 and 2024 were as follows:
| Three months ended September 30, | Nine months ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| amounts in millions | |||||||||||||||||||||||
| Net revenue | $ | 231 | 252 | 682 | 756 | ||||||||||||||||||
| Costs of goods sold (exclusive of depreciation and amortization) | (144) | (151) | (400) | (447) | |||||||||||||||||||
| Operating expenses | (10) | (10) | (29) | (31) | |||||||||||||||||||
| Selling, general and administrative expense (exclusive stock-based compensation) | (79) | (85) | (243) | (247) | |||||||||||||||||||
| Adjusted OIBDA | (2) | 6 | 10 | 31 | |||||||||||||||||||
| Stock-based compensation | (1) | - | (1) | (2) | |||||||||||||||||||
| Depreciation and amortization | (6) | (8) | (20) | (23) | |||||||||||||||||||
| Operating income (loss) | $ | (9) | (2) | (11) | 6 | ||||||||||||||||||
CBI's consolidated net revenue decreased 8.4% and 9.8% for the three and nine months ended September 30, 2025, respectively, as compared to the corresponding periods in the prior year. The decrease in net revenue for the three months ended September 30, 2025 was the result of a decrease in units shipped of 14.5%, partially offset by an increase in ASP of 7.2% compared to the same period in the prior year. The decrease in units shipped was due to softness in the key home and apparel category. The decrease for the nine months ended September 30, 2025 was the result of a decrease in units shipped
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of 12.7%, partially offset by an increase in ASP of 2.8% compared to the same period in the prior year. The decrease in units shipped was primarily related to softness in the home and apparel categories.
CBI's cost of goods sold as a percentage of net revenue was 62.5% and 59.9% for the three months ended September 30, 2025 and 2024, respectively, and 58.6% and 59.1% for the nine months ended September 30, 2025 and 2024, respectively. The increase in cost of goods sold as a percentage of net revenue for the three months ended September 30, 2025 was due to higher inbound logistics costs driven by higher tariffs. The decrease in cost of goods sold as a percentage of net revenue for the nine months ended September 30, 2025 was due to higher product margins.
Operating expenses are principally comprised of credit card processing fees and customer service expenses, which are variable expenses that support sales activity. For the three months ended September 30, 2025, operating expenses were flat compared to the corresponding period in the prior year. For the nine months ended September 30, 2025, operating expenses decreased $2 million compared to the corresponding period in the prior year, primarily due to lower revenue, as discussed above.
CBI's SG&A expenses (excluding stock-based compensation) include print, digital and retail marketing. For the three months ended September 30, 2025, as a percentage of net revenue, these expenses increased from 33.7% to 34.2%, and for the nine months ended September 30, 2025, as a percentage of net revenue, these expenses increased from 32.7% to 35.6%. For the three and nine months ended September 30, 2025, the decreases in SG&A expenses were primarily attributable to decreased marketing costs.
Critical Accounting Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires QVC Group to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results may differ from those estimates under different assumptions or conditions. Estimates include, but are not limited to, retail-related adjustments and allowances, depreciable lives of fixed assets and internally developed software, and valuation of acquired intangible assets and goodwill. QVC Group bases its estimates on historical experience and on various other assumptions that QVC Group believes to be reasonable under the circumstances. These estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from those estimates under different assumptions or conditions. In addition, as circumstances change, QVC Group may revise the basis of its estimates accordingly.
As a result of recent financial performance, macroeconomic conditions, declines in the Company's stock price and credit rating downgrades, it was determined during the second quarter of 2025 that an indication of impairment existed for the QxH reporting unit related to the QVC and HSN tradenames and goodwill. The fair value of the tradenames was determined using the relief from royalty method, primarily using a discounted cash flow model using projections of future operating performance (income approach) and applying a royalty rate (market approach) (Level 3), and an impairment in the amount of $930 million for the QVC and HSN tradenames was recorded during the second quarter of 2025, in impairment of goodwill and intangible assets in the consolidated statements of operations. With the assistance of a third party specialist, the fair value of the QxH reporting unit was determined using a discounted cash flow method (Level 3), and a goodwill impairment in the amount of $1,465 million was recorded, in impairment of goodwill and intangible assets in the consolidated statements of operations. The Company utilized the assistance of a third party specialist when determining the above noted fair values.
There have been no other significant changes to our critical accounting policies and estimates disclosed in our 2024 10-K.
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