QVC Inc.
08/04/2026 | Press release | Distributed by Public on 08/04/2026 12:26
Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)
Management's Discussion and Analysis of Financial Condition and Results of Operations
Overview
QVC, Inc. and its consolidated subsidiaries (unless otherwise indicated or required by the context, the terms "we," "our," "us," the "Company" and "QVC" refer to QVC, Inc. and its consolidated subsidiaries) are 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. QVC is comprised of the reportable segments of QxH, which includes QVC-U.S. and HSN, Inc. ("HSN"), and QVC International. These segments reflect the way the Company evaluates its business performance and manages its operations.
Chapter 11 Proceedings
Voluntary Petition for Reorganization
On April 16, 2026 (the "Petition Date"), QVC Group, Inc. ("QVC Group") and together with certain of its affiliates, the "Company Parties") commenced voluntary cases (the "Chapter 11 Cases") under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the Southern District of Texas (the "Bankruptcy Court"). On April 17, 2026, the Bankruptcy Court entered an order authorizing the joint administration of the Chapter 11 Cases under the caption QVC Group, Inc., et al, Case No. 26-90447. Certain foreign subsidiaries were not part of the Chapter 11 petition filing and continue to operate in the normal course of business. As of the Petition Date, we are operating our businesses as "debtor-in-possession" ("DIP") under the jurisdiction of the Bankruptcy Court in accordance with the applicable provisions of the Bankruptcy Code and the orders of the Bankruptcy Court. QVC Group and QVC received approval from the Bankruptcy Court for a variety of "first day" motions to continue their ordinary course operations during the Chapter 11 Cases, which were designed primarily to mitigate the impact of the Chapter 11 Cases on our operations, vendors, suppliers, customers and employees. As a result, we were able to conduct normal business activities and satisfy all associated obligations for the period following the Petition Date and were also authorized to pay employee wages and benefits, and certain vendors and suppliers in the ordinary course for goods and services provided prior to the Petition Date.
Commencing the Chapter 11 Cases constituted an event of default that accelerates the Company Parties' respective obligations under (i) the 4.750% Senior Secured Notes due 2027, 4.375% Senior Secured Notes due 2028, 6.875% Senior Secured Notes due 2029, 5.450% Senior Secured Notes due 2034, 5.950% Senior Secured Notes due 2043, 6.375% Senior Secured Notes due 2067 (the "2067 Notes"), and 6.250% Senior Secured Notes due 2068 (the "2068 Notes") (collectively, the "QVC Notes"), issued by QVC and (ii) the Credit Agreement. The Credit Agreement, together with the QVC Notes, are herein referred to as the "Debt Instruments".
Restructuring Support Agreement
On the Petition Date, prior to the commencement of the Chapter 11 cases, the Company Parties entered into a Restructuring Support Agreement (the "Restructuring Support Agreement" and the holders party thereto, the "Supporting Stakeholders"), with certain holders of our Debt Instruments. The Restructuring Support Agreement contemplates agreed-upon terms for a comprehensive restructuring with respect to the Company Parties' capital structure (the "Financial Restructuring") to be implemented through a proposed prepackaged plan of reorganization (the "Plan").
The Restructuring Support Agreement provides certain milestones for the Financial Restructuring. Failure of the Company to satisfy these milestones without a waiver or consensual amendment would provide the Supporting Stakeholders a termination right under the Restructuring Support Agreement. These milestones include (i) the Company Parties shall have caused solicitation of votes on the Plan to begin no later than April 16, 2026, but prior to the commencement of the Chapter 11 Cases, (ii) the Petition Date shall have occurred no later than April 16, 2026, (iii) the Plan and Disclosure Statement (excluding any exhibits and appendices thereto) shall have been filed no later than the Petition Date, (iv) the debtor-in-possession letter of credit ("DIP LC") Interim Order shall have been entered no later than 3 days after the Petition Date, (v) the DIP LC Final Order shall have been entered no later than 30 days after the Petition Date, (vi) the Plan shall have been confirmed no later than 75 days after the Petition Date and (vii) the Plan Effective Date shall have occurred no later than 90 days after the Petition Date. The Debtors (as defined in the Plan) satisfied the milestones (i) through (v), and the Supporting Stakeholders have extended the time to comply with milestones (vi) and (vii).
Plan of Reorganization
On July 20, 2026, the Bankruptcy Court entered an order confirming the Plan. The Plan remains subject to the satisfaction or waiver of the remaining conditions to effectiveness and any applicable stay, appeal or other challenge. Accordingly, there can
Plan of Reorganization
On July 20, 2026, the Bankruptcy Court entered an order confirming the Plan. The Plan remains subject to the satisfaction or waiver of the remaining conditions to effectiveness and any applicable stay, appeal or other challenge. Accordingly, there can
I-26
be no assurance as to when, or ultimately whether, the Plan will become effective or the Company will emerge from Chapter 11.
Automatic Stay and Other Protections
Subject to certain exceptions under the Bankruptcy Code, pursuant to Section 362 of the Bankruptcy Code, the filing of QVC Group's Chapter 11 Cases automatically stayed the continuation of most legal proceedings or the filing of other actions against or on behalf of QVC Group or our property to recover on, collect or secure a claim arising prior to the filing of our Chapter 11 Cases or to exercise control over property of QVC Group's bankruptcy estate, unless and until the Bankruptcy Court modifies or lifts the automatic stay as to any such claim (the "Automatic Stay"). Notwithstanding the general application of the Automatic Stay described above and other protections afforded by the Bankruptcy Code, governmental authorities may determine to continue actions brought under their police and regulatory powers.
New York Stock Exchange Delisting
On April 17, 2026, we received a delisting notice from the New York Stock Exchange ("NYSE") notifying us, as a result of the Chapter 11 Cases and in accordance with the NYSE Listed Company Manual Section 802.01D, of its determination to delist our 2067 Notes and 2068 Notes from NYSE and suspend trading of our 2067 Notes and 2068 Notes on the NYSE. Following the suspension of trading on NYSE, the 2067 Notes and 2068 Notes were quoted on the Pink Limited Market. The over-the-counter markets are significantly more limited than NYSE.
NYSE filed a Form 25 for us on May 4, 2026 in connection with the delisting of our 2067 Notes and 2068 Notes from NYSE and the delisting became effective April 24, 2026. In accordance with Rule 12d2-2 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), the deregistration of our 2067 Notes and 2068 Notes under Section 12(b) of the Exchange Act will become effective 90 days after the date the Form 25-NSE is filed.
Strategies and Challenges
The goal of QVC is to extend its leadership in video commerce, e-commerce, streaming commerce and social commerce by continuing to create some of the world's most engaging shopping experiences, combining the best of retail, media, and social media, which we believe is highly differentiated from traditional brick-and-mortar stores or transactional e-commerce. QVC provides customers with curated collections of unique products made personal and relevant by the power of storytelling. We curate experiences, conversations and communities for millions of highly discerning shoppers, and we also reach large audiences, across our many platforms, for our thousands of brand partners.
As noted above in Part I, Item 2 under "Overview", on the Petition Date, commencing the Chapter 11 Cases constituted an event of default that accelerated the Company Parties' respective obligations under the Debt Instruments. The Credit Agreement and the QVC Notes provide that, as a result of the Chapter 11 Cases, the principal and interest due thereunder shall be immediately due and payable. Any efforts to enforce such payment obligations under the Debt Instruments are automatically stayed as a result of the Chapter 11 Cases, and the stakeholders' rights of enforcement in respect of the Debt Instruments are subject to the applicable provisions of the Bankruptcy Code, including the Automatic Stay.
Although the Bankruptcy Court entered an order confirming the Financial Restructuring in accordance with the terms set forth in the Plan, there can be no assurance that the Company will satisfy the remaining conditions to emergence under the Plan or complete the Financial Restructuring on the terms set forth in the Plan, on different terms, or at all. Therefore, there remains substantial doubt about the Company's ability to continue as a going concern.
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 our production studios and fostering continuous improvement, we envisage content creation as an integrated, efficient process that adapts to various platforms without losing the essence of our brand. We aim to grow audiences and redefine shopping experiences, ensuring that we meet our customers wherever they are while building on our heritage for sustained success.
On January 29, 2025, the Company announced the consolidation of its QVC and HSN operations at the Company's Studio Park location in West Chester, PA and the closing of the St. Petersburg, FL campus. The consolidation is part of QVC's
I-27
organizational and strategic changes intended to support the Company's WIN strategy. As a result, the Company accelerated depreciation related to the closure of the St. Petersburg, FL campus, which was completed as of September 30, 2025. The Company recorded $15 million and $29 million of incremental depreciation for the three and six months ended June 30, 2025, respectively, related to the St. Petersburg closure. On March 27, 2025 the Company 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 $21 million of restructuring costs at QxH and QVC International, respectively, during the six months ended June 30, 2025 in the condensed consolidated statement of operations.
In September 2025, QVC entered into agreements to sell the St. Petersburg properties to independent third parties, and two of these property sales closed in December 2025. As of June 30, 2026, the remaining long-lived assets of $17 million, all within QxH, were included in assets held for sale noncurrent in the condensed consolidated balance sheet. The sale of the remaining property is expected to be completed by the end of 2026.
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. In February 2026, the U.S. Supreme Court struck down the sweeping tariffs that the U.S. government had imposed through the executive orders issued pursuant to the International Emergency Economic Powers Act. Shortly thereafter, the U.S. government issued a series of orders to comply with the ruling, while also announcing new temporary tariffs for a 150 day period beginning February 24, 2026. On July 23, 2026, the U.S. government announced new tariffs replacing the temporary tariffs upon expiration. Tariffs and international trade arrangements may continue to change, potentially without warning and to an extent or duration that is difficult to predict. The ultimate availability, timing, and amount of any potential refunds remain uncertain and are subject to further legal and regulatory developments. 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.
The Company has continued to see inflationary pressures during the period including higher wages and merchandise costs consistent with inflation experienced by the global economy. 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 possible eligibility for refunds of previously paid tariffs, extent and duration of tariffs, 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, 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.
I-28
Results of Operations
QVC's operating results were as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||
| Total revenue, net | $ | 1,765 | 1,984 | 3,534 | 3,889 | |||||||||
| Operating costs and expenses: | ||||||||||||||
| Cost of goods sold (excluding depreciation and amortization shown separately below) | 1,164 | 1,281 | 2,344 | 2,552 | ||||||||||
| Operating expense | 135 | 154 | 272 | 308 | ||||||||||
| Advertising | 86 | 78 | 164 | 141 | ||||||||||
| Selling, general and administrative (excluding stock-based compensation, advertising, and pre-petition charges) | 228 | 246 | 461 | 478 | ||||||||||
| Adjusted OIBDA (defined below) | 152 | 225 | 293 | 410 | ||||||||||
| Depreciation and amortization | 71 | 98 | 145 | 193 | ||||||||||
| (Gain) loss on sale of assets | - | - | (10) | - | ||||||||||
| Pre-petition charges | 19 | - | 40 | - | ||||||||||
| Stock-based compensation | - | 4 | - | 8 | ||||||||||
| Impairment of intangible assets | - | 930 | - | 930 | ||||||||||
| Impairment of goodwill | - | 1,465 | - | 1,465 | ||||||||||
|
Restructuring benefits (costs)
|
- | - | - | 57 | ||||||||||
| Operating income (loss) | 62 | (2,272) | 118 | (2,243) | ||||||||||
| Other (expense) income: | ||||||||||||||
| Reorganization items, net | (59) | - | (59) | - | ||||||||||
| Interest expense | (15) | (66) | (91) | (130) | ||||||||||
| Interest income | 9 | 3 | 20 | 7 | ||||||||||
| Other (expense) income | - | (9) | 1 | (13) | ||||||||||
| (65) | (72) | (129) | (136) | |||||||||||
| Earnings (loss) before income taxes | (3) | (2,344) | (11) | (2,379) | ||||||||||
| Income tax (expense) benefit | (18) | 190 | (26) | 192 | ||||||||||
| Net earnings (loss) | (21) | (2,154) | (37) | (2,187) | ||||||||||
| Less net earnings (loss) attributable to the noncontrolling interest | 10 | 11 | 19 | 20 | ||||||||||
| Net earnings (loss) attributable to QVC, Inc. shareholder | $ | (31) | (2,165) | $ | (56) | (2,207) | ||||||||
I-29
Total revenue, net
Total revenue, net by segment was as follows:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||
| QxH | $ | 1,216 | 1,391 | 2,447 | 2,759 | |||||||||
| QVC International | 549 | 593 | 1,087 | 1,130 | ||||||||||
| Consolidated QVC | $ | 1,765 | 1,984 | 3,534 | 3,889 | |||||||||
QVC's consolidated total revenue, net decreased $219 million or 11.0% and $355 million or 9.1% for the three and six months ended June 30, 2026, respectively, as compared to the corresponding periods in the prior year. In constant currency, QVC's consolidated total revenue, net decreased $204 million or 10.3% and $366 million or 9.4% for the three and six months ended June 30, 2026 as compared to the corresponding periods in the prior year.
For the three months ended June 30, 2026, QVC's consolidated total revenue, net, in constant currency, decreased 7.8% as a result of lower units shipped attributable to QxH and 3.5% driven by a decrease in average selling price per unit ("ASP"). These decreases to total revenue, net were partially offset by a $41 million decrease in estimated product returns primarily at QxH and, to a lesser extent, QVC International. QVC's consolidated total revenue, net, in constant currency, for the six months ended June 30, 2026 decreased 9.0% as a result of lower units shipped attributable to QxH and 1.7% driven by a decrease in ASP attributable to QVC International, partially offset by an $87 million decrease in estimated product returns primarily at QxH and, to a lesser extent, QVC International.
During the three and six months ended June 30, 2026 and 2025, the changes in revenue and expenses were affected by changes in the exchange rates for the Euro, the Japanese Yen, 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 our operating results, the term "currency exchange rates" refers to the currency exchange rates we use to convert the operating results for all countries where the functional currency is not the U.S. Dollar. We calculate the effect of changes in currency exchange rates as the difference between current period activity translated using the prior period's currency exchange rates. We refer to the results of this calculation as the impact of currency exchange rate fluctuations. Constant currency operating results refer to operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to better understand QVC's underlying performance without the effects of currency exchange rate fluctuations.
The percentage change in total revenue, net for each of QVC's segments in U.S. Dollars and in constant currency was as follows:
| Three months ended June 30, 2026 | Six months ended June 30, 2026 | |||||||||||||||||||
| U.S. Dollars | Foreign Currency Exchange Impact | Constant Currency | U.S. Dollars | Foreign Currency Exchange Impact | Constant Currency | |||||||||||||||
| QxH | (12.5) | % | - | % | (12.5) | % | (11.3) | % | - | % | (11.3) | % | ||||||||
| QVC International | (7.4) | % | (2.5) | % | (4.9) | % | (3.8) | % | 1.0 | % | (4.8) | % | ||||||||
For the three months ended June 30, 2026, QxH's total revenue, net declined $175 million or 12.5%. Total revenue, net decreased 11.6% as a result of lower units shipped and 2.3% driven by a decrease in ASP. This decline was partially offset by a $35 million decrease in estimated product returns. For the six months ended June 30, 2026, QxH's total revenue, net declined $312 million or 11.3%. Total revenue, net decreased 12.4% as a result of lower units shipped. This decline was partially offset by a $76 million decrease in estimated product returns. ASP for the six months ended June 30, 2026 remained relatively flat with prior year.
I-30
For the three months ended June 30, 2026, QVC International's total revenue, net declined $29 million, or 4.9% in constant currency. Total revenue, net, in constant currency, decreased 6.3% driven by a decrease in ASP attributable to all markets. This decline was partially offset by an increase in units shipped and a $6 million decrease in estimated product returns attributable to all markets. The increase in units shipped was attributable to an increase in Japan, which was partially offset by declines in all other markets. For the six months ended June 30, 2026, QVC International's total revenue declined $54 million, or 4.8% in constant currency. Total revenue, net, in constant currency, decreased 4.8% driven by a decrease in ASP attributable to all markets. This decline was partially offset by an $11 million decrease in estimated product returns attributable to all markets and $11 million in favorable exchange rates.
Cost of goods sold (excluding depreciation and amortization)
QVC's cost of goods sold (excluding depreciation and amortization) as a percentage of total revenue, net was 65.9% and 66.3% for the three and six months ended June 30, 2026, respectively, compared to 64.6% and 65.6% for the three and six months ended June 30, 2025. The increase in cost of goods sold as a percentage of revenue for the three and six months ended June 30, 2026 was due to higher inventory obsolescence expense at QxH and unfavorable product margin at QxH due to the mix of products sold.
Operating expenses
QVC's operating expenses are principally comprised of commissions, order processing and customer service expenses, and credit card processing fees. Operating expenses were 7.6% and 7.7% of total revenue, net for the three and six months ended June 30, 2026, respectively, compared to 7.8% and 7.9% for the three and six months ended June 30, 2025. The decrease as a percentage of total revenue, net for the three and six months ended June 30, 2026 were driven by lower commissions, credit card processing fees, and personnel costs.
Advertising
QVC's advertising expenses increased $8 million or 10.3% for the three months ended June 30, 2026 as compared to the corresponding period in the prior year. QVC's advertising expenses increased $23 million or 16.3% for the six months ended June 30, 2026, as compared to the corresponding period in the prior year. The increase was primarily driven by marketing investments on social and streaming platforms at QxH.
Selling, general and administrative expenses (excluding stock-based compensation, advertising, and pre-petition charges)
QVC's selling, general, and administrative expenses (excluding stock-based compensation, advertising, and pre-petition charges) include personnel, information technology, production costs and the provision for doubtful accounts. QVC's selling, general, and administrative expenses (excluding stock-based compensation, advertising, and pre-petition charges) decreased $18 million and increased 0.5% as a percentage of total revenue, net for the three months ended June 30, 2026, as compared to the corresponding period in the prior year. The decrease in expense for the three months ended June 30, 2026 was primarily driven by a decrease in personnel costs due to the reorganization of teams across the Company as part of the WIN strategy and lower production costs.
QVC's selling, general, and administrative expenses (excluding stock-based compensation, advertising, and pre-petition charges) decreased $17 million and increased 0.7% as a percentage of total revenue, net for the six months ended June 30, 2026, as compared to the corresponding period in the prior year. The decrease in expense for the six months ended June 30, 2026, was primarily driven by a decrease in personnel costs due to the reorganization of teams across the Company as part of the WIN strategy and lower production costs, partially offset by an increase in consulting costs.
I-31
Depreciation and amortization
Depreciation and amortization consisted of the following:
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||
| Property and equipment depreciation | $ | 16 | 33 | $ | 31 | 67 | ||||||||
| Total depreciation | 16 | 33 | 31 | 67 | ||||||||||
| Customer relationships amortization | 11 | 11 | 23 | 23 | ||||||||||
| Television distribution right amortization | 16 | 20 | 33 | 37 | ||||||||||
| Software amortization | 28 | 34 | 58 | 66 | ||||||||||
| Total amortization | 55 | 65 | 114 | 126 | ||||||||||
| Total depreciation and amortization | $ | 71 | 98 | $ | 145 | 193 | ||||||||
The decrease in depreciation for the three and six months ended June 30, 2026, was primarily due to the St. Petersburg, FL campus and associated assets that are held for sale including $15 million and $29 million of accelerated depreciation recorded during the three and six months ended June 30, 2025, respectively. The decrease in software amortization for the three and six months ended June 30, 2026, was primarily due to software assets that fully amortized during 2025.
I-32
(Gain) loss on sale of assets
QVC recorded a $10 million gain on sale of assets for the six months ended June 30, 2026, primarily related to the sale of a property in Germany.
Pre-petition charges
Pre-petition charges consist primarily of professional fees related to, and incurred prior to, the filing of Chapter 11 Cases. QVC recorded $19 million and $40 million of pre-petition charges for the three and six months ended June 30, 2026, respectively. These charges relate to legal, financial advisors, and other professional fees incurred in connection with the Chapter 11 Cases.
Stock-based compensation
Stock-based compensation
Stock-based compensation includes compensation related to options and restricted stock granted to certain employees, directors and officers. QVC recorded $4 million and $8 million of stock-based compensation expense for the three and six months ended June 30, 2025. As previously disclosed in the 2025 10-K, during the prior year the company canceled primarily all of the stock-settled and cash-settled RSU awards granted during 2025, resulting in no stock based compensation expense in 2026.
Impairment of intangible assets
Impairment of intangible assets
QVC recorded intangible assets impairments losses of $930 million for the three and six months ended June 30, 2025, related to the decrease in the fair value of the QVC and HSN tradenames as a result of quantitative assessments performed by the Company (refer to Part I, Note 4 "Intangible Assets").
Impairment of goodwill
QVC recorded goodwill impairment losses of $1,465 million for the three and six months ended June 30, 2025, related to a decrease in the fair value of the QxH reporting unit as a result of quantitative assessments performed by the Company (refer to Part I, Note 4 "Intangible Assets").
Restructuring (benefits) costs
Restructuring (benefits) costs
For the six months ended June 30, 2025, QVC recorded $36 million and $21 million of restructuring 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.
Reorganization items, net
Reorganization items, net
QVC incurred net charges of $59 million for reorganization items during the three and six months ended June 30, 2026 in connection with the Chapter 11 Cases, as of or subsequent to the Petition Date. These costs primarily relate to professional fees incurred in connection with the Chapter 11 Cases and write off of deferred financing costs.
Interest expense
Interest expense
For the three and six months ended June 30, 2026, interest expense decreased $51 million and $39 million, respectively, as compared to the corresponding period in the prior year, primarily due to ceasing the recognition of interest expense beginning on the Petition Date as a result of the Chapter 11 Cases. See Item 1, Note 2 "Chapter 11 Proceedings" to the accompanying condensed consolidated financial statements.
Interest income
For the three and six months ended June 30, 2026, interest income increased $6 million and $13 million, respectively, as compared to the corresponding period in the prior year. The increase in interest income is primarily due to increases in invested cash balances during the year, although at lower interest rates on invested cash balances compared to the prior year.
I-33
Other (expense) income
Other (expense) income is primarily related to foreign exchange gains and losses. Certain loans between QVC and its subsidiaries are deemed to be short-term in nature, and accordingly, the translation of these loans is recorded in the condensed consolidated statements of operations. The change in foreign currency gain (loss) was due to variances in short-term loans, interest and operating payables balances between QVC and its international subsidiaries denominated in the currency of the subsidiary and the effects of currency exchange rate changes on those balances.
Income taxes
| Three months ended June 30, | Six months ended June 30, | |||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||
| Earnings (loss) before income taxes | $ | (3) | (2,344) | $ | (11) | (2,379) | ||||||||
| Income tax (expense) benefit | $ | (18) | 190 | $ | (26) | 192 | ||||||||
|
Effective income tax rate1
|
N/M | 8.1 | % | N/M | 8.1 | % | ||||||||
(1) Not meaningful
The income tax expense for the three months and six months ended June 30, 2026 rate differs from the U.S. statutory tax rate of 21% primarily due to permanent differences and foreign taxes. The income tax benefit for the three months and six months ended June 30, 2025 differs from the U.S. statutory tax rate of 21% primarily due to permanent differences, foreign taxes and an impairment of goodwill that is not deductible for tax purposes.
For the three and six months ended June 30, 2026, 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.
Adjusted Operating Income before Depreciation and Amortization (Adjusted OIBDA)
To provide investors with additional information regarding our financial statements, we disclose Adjusted OIBDA (defined below), which is not a U.S. Generally Accepted Accounting Principles ("U.S. GAAP") measure. QVC defines Adjusted OIBDA as operating income plus depreciation and amortization, stock-based compensation, and where applicable, separately identified impairments, litigation settlements, restructuring (benefits) costs, pre-petition charges (primarily professional fees directly related to, and incurred prior to, the filing of the Chapter 11 Cases), and (gain) loss on sale of assets. QVC's chief operating decision maker and management team use this measure of performance in conjunction with other measures to evaluate the businesses and make decisions about allocating resources among the businesses. QVC believes that this is an important indicator of the operational strength and performance of the segments by identifying those items that are not directly a reflection of each segment's performance or indicative of ongoing business trends. In addition, this measure allows QVC to view operating results, perform analytical comparisons and perform benchmarking among its 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 income, cash flow provided by operating activities and other measures of financial performance prepared in accordance with U.S. GAAP.
I-34
The primary material limitations associated with the use of Adjusted OIBDA as compared to U.S. GAAP results are (i) it may not be comparable to similarly titled measures used by other companies in the industry, and (ii) it excludes financial information that some may consider important in evaluating QVC's performance. QVC compensates for these limitations by providing disclosure of the difference between Adjusted OIBDA and U.S. GAAP results, including providing a reconciliation of Adjusted OIBDA to U.S. GAAP results, to enable investors to perform their own analysis of QVC's operating results. The following table provides a reconciliation of operating income to Adjusted OIBDA.
| Three months ended June 30, |
Six months ended June 30,
|
|||||||||||||
| (in millions) | 2026 | 2025 | 2026 | 2025 | ||||||||||
| Operating income - U.S. GAAP | $ | 62 | (2,272) | $ | 118 | (2,243) | ||||||||
| Depreciation and amortization | 71 | 98 | 145 | 193 | ||||||||||
| (Gain) loss on sale of assets | - | - | (10) | - | ||||||||||
| Pre-petition charges | 19 | - | 40 | - | ||||||||||
| Stock-based compensation | - | 4 | - | 8 | ||||||||||
| Impairment of intangible assets | - | 930 | - | 930 | ||||||||||
| Impairment of goodwill | - | 1,465 | - | 1,465 | ||||||||||
|
Restructuring (benefits) costs (note 5)
|
- | - | - | 57 | ||||||||||
| Adjusted OIBDA - Non-U.S. GAAP | $ | 152 | 225 | $ | 293 | 410 | ||||||||
QVC Adjusted OIBDA decreased by $73 million for the three months ended June 30, 2026, as compared to the corresponding period in the prior year. The decrease is due to a $51 million decrease at QxH and a $22 million decrease at QVC International.
QVC Adjusted OIBDA decreased by $117 million for the six months ended June 30, 2026, as compared to the corresponding period in the prior year. The decrease is due to an $81 million decrease at QxH and a $36 million decrease at QVC International.
Seasonality
QVC's business is seasonal due to a higher volume of sales in the fourth calendar quarter related to year-end holiday shopping. In recent years, QVC has earned, on average, between 23% and 24% of its revenue in each of the first three quarters of the year and between 29% and 30% of its revenue in the fourth quarter of the year.
Financial Position, Liquidity and Capital Resources
General
The following are potential sources of liquidity: available cash balances, dividend and interest receipts, proceeds from asset sales, 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. In general, QVC uses this cash to fund its operations, make capital purchases, expenditures for affiliation agreements with television providers, make dividend payments to QVC Group, make interest payments and minimize the outstanding balance of the Credit Facility. The Company expects that cash on hand and cash provided by operating activities in future periods will be sufficient to fund projected uses of cash, except for any principal amounts of the Debt Instruments, that become accelerated as a result of the Chapter 11 cases, as described above. Additionally, as a result, there remains substantial doubt about the Company's ability to continue as a going concern.
Although the Bankruptcy Court confirmed the Plan on July 20, 2026, the Plan remains subject to the satisfaction or waiver of certain conditions precedent to the Effective Date, and there can be no assurance as to the timing of emergence or that such conditions will be satisfied; the Company's liquidity, capital structure, and financial reporting (including the potential application of fresh-start accounting) may be materially affected by the timing and manner of the Company's emergence from Chapter 11.
As of June 30, 2026, substantially all of QVC's cash and cash equivalents were invested in AAA rated money market funds and time deposits with banks rated equal to or above A.
I-35
DIP LC Facility
QVC entered into a $300 million DIP LC facility with JPMorgan Chase Bank, N.A., as agent, to issue new letters of credit and roll existing letters of credit to support operations during the pendency of the Chapter 11 Cases, cash collateralized by $315 million deposited in a cash collateral account recorded as restricted cash within other current assets in our condensed consolidated balance sheets; commitments under the DIP LC facility would expire upon the earliest of (i) six months from the Petition Date, (ii) the Effective Date and (iii) the occurrence of an event of default, all as more fully set forth in such DIP LC facility Term Sheet attached as Exhibit D to the Restructuring Support Agreement, and subject to Bankruptcy Court approval pursuant to interim and final DIP orders. Letters of credit availability under the DIP LC at June 30, 2026, was approximately $33 million. See Item 1, Note 2 "Chapter 11 Proceedings" for additional discussion on the DIP LC.
Senior Secured Notes
On February 18, 2025, QVC repaid the remaining 4.45% Senior Secured Notes due 2025, at maturity, using availability under the Credit Facility and cash on hand.
The QVC Notes contain certain covenants, including certain restrictions on QVC and its restricted subsidiaries (subject to certain exceptions), with respect to, among other things: incurring additional indebtedness; creating liens on property or assets; making certain loans or investments; selling or disposing of assets; paying certain dividends and other restricted payments; consolidating or merging; entering into certain transactions with affiliates; entering into sale or leaseback transactions; and restricting subsidiary distributions.
Under both the Credit Agreement and the indentures governing the QVC Notes, QVC is permitted to make unlimited dividends to service the debt of its parent entities so long as it is not in default under those agreements and to make certain restricted payments to QVC Group under an intercompany tax sharing agreement (the "Tax Agreement") in respect of certain tax obligations of QVC and its subsidiaries. As a result of the breach of financial covenant under the Credit Agreement and the Chapter 11 Cases, QVC is no longer permitted to make unlimited dividends to service the debt of its parent entities to QVC Group. QVC can continue to make certain restricted payments to QVC Group under the Tax Agreement in respect of certain tax obligations of QVC and its subsidiaries.
Following the commencement of the Chapter 11 Cases, rating agencies have downgraded QVC's credit ratings. These downgrades have adversely affected, and are expected to continue to adversely affect, the market prices of its debt securities, its access to capital, or trigger additional collateral or funding requirements or the imposition of financial or other burdensome covenants.
I-36
Senior Secured Credit Facility
On October 27, 2021, QVC entered into the Credit Agreement with CBI and QVC Global Corporate Holdings, LLC ("QVC Global"), each a direct or indirect wholly owned subsidiary of QVC Group, as borrowers (collectively, the "Borrowers"), and the other parties thereto. The Credit Facility is a multi-currency facility providing for a $3.25 billion revolving credit facility, with a $450 million sub-limit for letters of credit and an alternative currency revolving sub-limit equal to 50% of the revolving commitments thereunder. The Credit Facility may be borrowed by any Borrower, with each Borrower jointly and severally liable for the outstanding borrowings. Borrowings under the Credit Facility bear interest at either the alternate base rate ("ABR Rate") or a London Inter-bank Offered Rate ("LIBOR")-based rate (or the applicable non-U.S. Dollar equivalent rate) ("Term Benchmark/RFR Rate") at the applicable Borrower's election in each case plus a margin. Borrowings that are ABR Rate loans will bear interest at a per annum rate equal to the base rate plus a margin that varies between 0.25% and 0.625% depending on the Borrowers' combined ratio of consolidated total debt (less cash and cash equivalents) to consolidated EBITDA (the "consolidated net leverage ratio"). Borrowings that are Term Benchmark/RFR Rate loans will bear interest at a per annum rate equal to the applicable rate plus a margin that varies between 1.25% and 1.625% depending on the Borrowers' consolidated net leverage ratio. Each loan may be prepaid at any time and from time to time without penalty other than customary breakage costs. No mandatory prepayments will be required other than when borrowings and letter of credit usage exceed availability; provided that, if QVC Global or any other borrower under the Credit Agreement (other than QVC) is removed, at the election of QVC, as a borrower thereunder, all of its loans must be repaid and its letters of credit are terminated or cash collateralized. Any amounts prepaid on the Credit Agreement may be reborrowed.
On June 20, 2023, QVC and QVC Global, as borrowers, JPMorgan Chase Bank, N.A., as administrative agent, and the other parties thereto entered into an agreement whereby, in accordance with the Credit Agreement, LIBOR-based rate loans denominated in U.S. dollars made on or after June 30, 2023 would be replaced with Secured Overnight Financing Rate ("SOFR")-based rate loans. Borrowings that are SOFR-based loans will bear interest at a per annum rate equal to the applicable SOFR rate, plus a credit spread adjustment, plus a margin that varies between 1.25% and 1.625% depending on the Borrowers' consolidated net leverage ratio.
On April 1, 2025, CBI was removed as a borrower under the Credit Agreement. CBI had no outstanding borrowings under the Credit Facility at the time of its removal from the Credit Agreement.
See Part I, Item 2, Strategies and Challenges for additional discussion regarding the Company's Chapter 11 Cases, noncompliance with the net leverage ratio, as of June 30, 2026 and December 31, 2025 and a discussion regarding the Company's substantial doubt about its ability to continue as a going concern.
As a result of events of default under the Credit Agreement, including noncompliance with the net leverage ratio and the commencement of the Chapter 11 Cases, no additional borrowings are available under the Credit Facility. The interest rate on the Credit Facility was 5.4% and 6.1% at June 30, 2026 and 2025, respectively.
The payment and performance of the Borrowers' obligations under the Credit Agreement are guaranteed by each of QVC's and QVC Global's Material Domestic Subsidiaries (as defined in the Credit Agreement), if any, and certain other subsidiaries of any Borrower that such Borrower has chosen to provide guarantees. Further, the borrowings under the Credit Facility are secured, pari passu with QVC's existing notes, by a pledge of all of QVC's equity interests.
The Credit Agreement contains certain affirmative and negative covenants, including certain restrictions on the Borrowers and each of their respective restricted subsidiaries (subject to certain exceptions) with respect to, among other things: incurring additional indebtedness; creating liens on property or assets; making certain loans or investments; selling or disposing of assets; paying certain dividends and other restricted payments; dissolving, consolidating or merging; entering into certain transactions with affiliates; entering into sale or leaseback transactions; restricting subsidiary distributions; and limiting the Borrowers' consolidated net leverage ratio.
Parent Issuer and Subsidiary Guarantor Summarized Financial Information
The following information contains the summarized financial information for the combined parent (QVC, Inc.) and subsidiary guarantors (Affiliate Relations Holdings, Inc.; Affiliate Investment, Inc.; AMI 2, Inc.; ER Marks, Inc.; QVC Global Corporate Holdings, LLC; QVC GCH Company, LLC; QVC Rocky Mount, Inc.; QVC San Antonio, LLC; QVC Global Holdings I, Inc.; HSN, Inc; HSNi, LLC; HSN Holding LLC; Home Shopping Network En Espanol, L.P.; Home Shopping Network En Espanol, L.L.C; Ingenious Designs LLC; NLG Merger Corp.; Ventana Television, Inc.; and Ventana Television Holdings, Inc.) pursuant to Rules 3-10, 13-01 and 13-02 of Regulation S-X.
I-37
This consolidated summarized financial information has been prepared from the Company's financial information on the same basis of accounting as the Company's consolidated financial statements. Transactions between the parent and subsidiary guarantors presented on a combined basis have been eliminated. The principal elimination entries relate to investments in subsidiaries and intercompany balances and transactions, such as management fees, royalty revenue and expense, interest income and expense and gains on intercompany asset transfers. Goodwill and other intangible assets have been allocated to the subsidiaries based on management's estimates. Certain costs have been partially allocated to all of the subsidiaries of the Company.
The subsidiary guarantors are 100% owned by the Company. All guarantees are full and unconditional and are joint and several. There are no significant restrictions on the ability of the Company to obtain funds from its U.S. subsidiaries, including the guarantors, by dividend or loan.
Summarized financial information for the year-to-date interim period and the most recent annual period was as follows:
| Combined Parent-QVC, Inc. and Subsidiary Guarantors | ||||||||
| June 30, 2026 | December 31, 2025 | |||||||
| Current assets | $ | 2,241 | 2,693 | |||||
| Intercompany payable to non-guarantor subsidiaries | (2,137) | (2,274) | ||||||
|
Note receivable - related party1
|
- | 1,740 | ||||||
| Noncurrent assets | 1,739 | 1,784 | ||||||
| Current liabilities | 597 | 5,906 | ||||||
| Noncurrent liabilities | 382 | 405 | ||||||
| Liabilities subject to compromise | 5,093 | - | ||||||
(1) As the Plan does not allow for any payments to settle the LIC Note included in the QVC-LINTA Claim, the Company concluded LIC no longer has the ability to repay, and was reclassified to Additional paid-in capital in the condensed consolidated balance sheet as of June 30, 2026. Refer to Item 1, Note 1 "Basis of Presentation" to the accompanying condensed consolidated financial statements for additional discussion.
| Combined Parent-QVC, Inc. and Subsidiary Guarantors | ||||||||
| June 30, 2026 | December 31, 2025 | |||||||
| Total revenue, net | $ | 2,670 | 6,481 | |||||
| Total revenue, net less cost of goods sold | 1,111 | 2,684 | ||||||
| Income before taxes | (57) | (2,389) | ||||||
| Net loss | (37) | (2,127) | ||||||
| Net loss attributable to QVC, Inc. Stockholder | (56) | (2,168) | ||||||
Additional Cash Flow Information
During the six months ended June 30, 2026, QVC's primary uses of cash were $80 million of capital and television distribution rights expenditures and $16 million in dividend payments from the Company's Japanese operations ("QVC-Japan") to Mitsui & Co. LTD ("Mitsui"). These uses of cash were funded primarily with $56 million of cash provided by operating activities and cash on hand as of December 31, 2025. As of June 30, 2026, QVC's cash, cash equivalents and restricted cash balance was $1,512 million.
The change in cash provided by operating activities for the six months ended June 30, 2026 compared to the previous year was primarily due to changes in working capital and lower net income. Working capital at any specific point in time is subject to many variables, including seasonality, inventory management, the timing of cash receipts and payments, vendor payment terms, and fluctuations in foreign exchange rates.
I-38
As of June 30, 2026, $393 million of the $1,512 million in cash, cash equivalents and restricted cash was held by foreign subsidiaries. Cash in foreign subsidiaries is available for domestic purposes with no significant tax consequences upon repatriation to the U.S. QVC accrues taxes on the unremitted earnings of its international subsidiaries. Approximately 29% of this foreign cash balance was that of QVC-Japan. QVC owns 60% of QVC-Japan and shares all profits and losses with the 40% minority interest holder, Mitsui. We believe that we currently have appropriate legal structures in place to repatriate foreign cash as tax efficiently as possible and meet the business needs of QVC.
Other
Subject to Bankruptcy Court approval and the terms of the Restructuring Support Agreement and the Plan, 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.
QVC has contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business. Although it is reasonably possible QVC may incur losses upon the conclusion of such matters, an estimate of any loss or range of loss cannot be made. In the opinion of management, it is expected that the amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying condensed consolidated financial statements.
Critical Accounting Estimates
The preparation of consolidated financial statements in conformity with U.S. GAAP requires QVC 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 bases its estimates on historical experience and on various other assumptions that QVC 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 may revise the basis of its estimates accordingly.
There have been no significant changes to our critical accounting policies and estimates disclosed in our 2025 10-K.
I-39
QVC Inc. published this content on August 04, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on August 04, 2026 at 18:26 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]