QVC Group Inc.
04/15/2026 | Press release | Distributed by Public on 04/15/2026 15:23
Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
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 consolidated financial statements and the notes thereto. Additionally, see note 2 of the accompanying consolidated financial statements for an overview of new accounting standards that we have adopted or that we plan to adopt that have had or may have an impact on our financial statements.
Chapter 11 Proceedings
Voluntary Filing under Chapter 11
On the Petition Date, the Company Parties intend to commence the Chapter 11 Cases under the Bankruptcy Code in the Bankruptcy Court. As of the Petition Date, we intend to operate our businesses as a debtor-in-possession under the jurisdiction of the Bankruptcy Court in accordance with the applicable provisions of the Bankruptcy Code and orders of the
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Bankruptcy Court. QVC Group and QVC, Inc. intend to request approval from the Bankruptcy Court for a variety of "first day" motions to continue our ordinary course operations during the Chapter 11 Case.
Commencing the Chapter 11 Cases will constitute an event of default that accelerates the Company Parties' respective obligations under the Debt Instruments. The Credit Facility 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. The exchangeable senior debentures provide that the amount accelerated is the greater of (x) the current principal amount of the exchangeable senior debentures or (y) the market value of the reference shares, plus all accrued and unpaid interest and all pass-through distributions due with respect to the reference shares shall be immediately due and payable. Any efforts to enforce such payment obligations under the Debt Instruments will be automatically stayed as a result of the Chapter 11 Cases, and the stakeholders' rights of enforcement in respect of the Debt Instruments will be subject to the applicable provisions of the Bankruptcy Code, including the Automatic Stay. For additional information, including information on the Automatic Stay and Other Protections and the Nasdaq Delisting, Refer to Item 1.
Overview
We own controlling and non-controlling interests in a broad range of video and online commerce companies. Our largest businesses and reportable segments are QxH (QVC U.S. and HSN, Inc. ("HSN")) and QVC International. QVC, Inc. ("QVC"), which includes QxH and QVC International, 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 equity investments.
Zulily, LLC ("Zulily") was a wholly owned subsidiary of QVC Group until its divestiture on May 24, 2023. QVC Group recognized a loss on the divestiture of $64 million in the second quarter of 2023. Zulily is included in Corporate and other through May 23, 2023 and is not presented as a discontinued operation as the disposition did not represent a strategic shift that had a major effect on QVC Group's operations and financial results.
Included in revenue in the accompanying consolidated statements of operations is $301 million for the year ended December 31, 2023, related to Zulily. Included in net earnings (loss) in the accompanying consolidated statement of operations are losses of $44 million for the year ended December 31, 2023, related to Zulily.
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, the number of shares subject to the then-outstanding awards, and the purchase or exercise price or payout value based on a number of shares of the then-outstanding awards were proportionately adjusted. The Company did not issue fractional shares of Common Stock in connection with the 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 consolidated
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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 Annual Report on Form 10-K.
Strategies and Challenges
As of December 31, 2025, QVC's net leverage ratio, as calculated under the Credit Facility, was greater than 4.5 to 1.0. Under the terms of the Fifth Amended and Restated Credit Agreement, this constitutes a breach of the financial covenant. Without a waiver under the Fifth Amended and Restated Credit Agreement, the lenders have the right, but not the obligation, to accelerate the loans and demand repayment from QVC for noncompliance with the net leverage ratio debt covenant; however such acceleration cannot occur until certain conditions are satisfied, including the expiration of a cure period during which QVC may take remedial action to cure the breach.
Under the indentures governing the senior secured notes, a default under the Credit Facility will only constitute an event of default under the indentures, and thus trigger the right, but not the obligation, of the noteholders to accelerate the senior secured notes and demand repayment if (i) the Credit Facility has been accelerated, (ii) there is a payment default under the Credit Facility or (iii) there is a foreclosure on collateral securing the Credit Facility. Accordingly, acceleration of the senior secured notes is not automatic upon a breach of the Credit Facility covenant; it is contingent upon the occurrence of one of these specified events under the Credit Facility.
The outstanding principal associated with the Credit Facility and senior secured notes is $5,046 million. As a result of the above-noted net leverage ratio and the maturity date of the Credit Facility, outstanding balances have been classified as a current liability in the consolidated balance sheet, as of December 31, 2025.
Additionally, as noted above in Item 1, on the Petition Date, commencing the Chapter 11 Cases will constitute an event of default that accelerates the Company Parties' respective obligations under the Debt Instruments. The Credit Facility 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. The exchangeable senior debentures provide that the amount accelerated is the greater of (x) the current principal amount of the exchangeable senior debentures or (y) the market value of the reference shares, plus all accrued and unpaid interest and all pass-through distributions due with respect to the reference shares shall be immediately due and payable. Any efforts to enforce such payment obligations under the Debt Instruments will be automatically stayed as a result of the Chapter 11 Cases, and the stakeholders' rights of enforcement in respect of the Debt Instruments will be subject to the applicable provisions of the Bankruptcy Code, including the Automatic Stay.
As a result of the risks and uncertainties associated with our Chapter 11 Cases, we cannot accurately predict or quantify the ultimate impact or timing of events that occur during our Chapter 11 Cases and the impact that those events will have on our business, financial condition and results of operations. Therefore, there remains substantial doubt about the Company's ability to continue as a going concern.
QVC
On June 27, 2022, QVC Group announced a turnaround plan designed to stabilize and differentiate its core QVC-U.S and HSN. businesses and expand the Company's leadership in video streaming commerce ("Project Athens"). During 2022, QVC commenced the first phase of Project Athens, including actions to reduce inventory and a planned workforce reduction that was completed in February 2023. QVC recorded restructuring charges of $13 million during the year ended December 31, 2023 in restructuring, penalties and fire related costs, net of (recoveries) in the consolidated statement of operations. These initiatives were consistent with QVC's strategy to operate more efficiently as it implements its turnaround plan.
During the second quarter of 2024, QVC entered into an agreement and announced a plan to shift its global operating model for IT services to a managed services model. As a result, during the year ended December 31, 2024 QVC recorded restructuring charges of $18 million in restructuring, penalties and fire related costs, net of (recoveries) in the consolidated statement of operations. The cash payments associated with this restructuring were substantially complete as of December 31, 2025.
On November 14, 2024, QVC announced a transition to 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
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streaming channels. By optimizing its production studios and fostering continuous improvement, QVC envisage 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 (the "Completion Date"), and recorded $45 million of incremental depreciation in 2025 through the Completion date. 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 $34 million and $19 million of restructuring charges at QxH and QVC International, respectively, during the year ended December 31, 2025 in restructuring, penalties and fire related costs, net of (recoveries) in the consolidated statement of operations. During the year ended December 31, 2025, the Company paid $37 million related to these charges.
In September 2025, QVC entered into agreements to sell the St. Petersburg properties to independent third parties. Two of the St. Petersburg property sales closed in December 2025. The sale of the remaining property is expected to be completed within the next twelve months. As of December 31, 2025, the remaining long-lived assets of $17 million, all within QxH, were included in assets held for sale noncurrent in the consolidated balance sheet.
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 determined to guarantee to each Eligible Employee who remains employed through the end of 2026 cash payments generally equal to the following: (i) for certain 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 earned and paid as of September 30, 2025, with the remainder earned and paid as of 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 the 2025 restricted stock grants and a portion of a 2025 performance award grant were canceled. 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, beginning in the fourth quarter of 2025.
CBI
CBI's goal is to continue to provide customers with home furnishings and apparel products that delight and inspire. As customers shop CBI's breadth of products through its websites, retail stores or through its catalog mailings, they will find products that allow them to outfit their lives and homes to their unique style. CBI's brands, including Ballard Designs, Frontgate, Grandin Road and Garnet Hill, provide a selection of fresh, unique and aspirational merchandise curated every season. CBI intends to employ the following strategies to achieve these goals and objectives: (i) acquire new customers through effective direct-to-consumer marketing; (ii) expand brick-and-mortar retail in attractive markets; (iii) further develop proprietary product that is unique to its brand positioning; (iv) invest in cross brand loyalty programs and a
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redesigned mobile platform; and (v) build out a successful low cost supply chain network to support the growth of the business. CBI is nearing completing of its business transformation initiative, which is focused on delivering a customer experience that meets or exceeds expectations for premium home furnishings, textiles and apparel. Core elements of the transformation include building incremental capabilities across digital performance marketing, pricing optimization, sourcing and retail store operations.
As part of this strategy, CBI aims to further leverage its global sourcing network by deepening collaboration with its merchandising team to drive proprietary product development. As the business scales, maintaining a stable and reliable supplier base capable of partnering with brand merchants on future collections will be critical to sustaining long-term growth and brand health. Failure to identify manufacturing markets that support the desired logistics cost structure for proprietary products could result in customer attrition to lower-cost competitors that rely more heavily on trading houses.
Additionally, even if CBI successfully onboards new vendors, there can be no assurance that it will be able to secure sufficient product quantities or acceptable commercial terms. Merchandise sourced from alternative suppliers may be of lower quality or higher cost than products from existing vendors. Any inability to source suitable merchandise on favorable terms or to establish new vendor relationships could materially and adversely impact CBI's business, financial condition, and operating results.
As a direct-to-consumer company, CBI seeks to efficiently target consumers to drive customer acquisition, repeat purchases, and reactivation of lapsed buyers. CBI employs a balanced approach across physical retail stores and digital marketing channels to attract customers to its product assortment.
CBI incurs ongoing marketing related expenses, including, but not limited to, photography, digital analytics, paper procurement, catalog printing partnerships, and retail real estate development. As the business scales, CBI may face challenges in executing marketing strategies that support continued customer growth while maintaining an efficient cost structure and delivering attractive returns on investment.
Trends
QVC's future net revenue will depend on its ability to grow through Digital Platforms (defined in the "Results of Operation - Businesses" section below), 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. Tariffs and international trade arrangements will continue to change, potentially without warning and to an extent or duration that is difficult to predict. 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.
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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.
Fire at Rocky Mount Distribution Center
In December 2021, QVC experienced a fire at its Rocky Mount fulfillment center in North Carolina. Rocky Mount was QVC's second-largest fulfillment center, processing approximately 25% to 30% of volume for QVC U.S., and also served as QVC U.S.'s primary returns center for hard goods. The building was significantly damaged as a result of the fire and related smoke and did not reopen. QVC took steps to mitigate disruption to operations including diverting inbound orders, leveraging its existing fulfillment centers and supplementing these facilities with short-term leased space as needed. QVC sold the property in February 2023 and received net cash proceeds of $19 million. QVC assessed its network footprint and is making investments to increase throughput as a result of the loss of the Rocky Mount fulfillment center.
Based on the provisions of QVC's insurance policies certain fire related costs were recoverable. In June 2023, QVC agreed to a final insurance settlement with its insurance company and received all remaining proceeds related to the Rocky Mount claim. During the year ended December 31, 2023, QVC received $280 million of insurance proceeds, of which $210 million represented recoveries for business interruption losses. During the year ended December 31, 2023, the Company recorded $32 million of fire related costs and recognized net gains of $208 million representing proceeds received in excess of recoverable losses in restructuring, penalties and fire related costs, net of (recoveries) in the consolidated statements of operations.
Sale-leaseback Transactions
In November 2022, QVC entered into agreements to sell two properties located in Germany and the U.K. to an independent third party. Under the terms of the agreements, QVC received net cash proceeds of $182 million related to its German and U.K. facilities when the sales closed in January 2023. Concurrent with the sale, QVC entered into agreements to lease each of the properties back from the purchaser over an initial term of 20 years with the option to extend the terms of the property leases for up to four consecutive terms of five years. QVC recognized a $113 million gain related to the successful sale leaseback of the German and U.K. properties during the first quarter of 2023 calculated as the difference between the aggregate consideration received and the carrying value of the properties.
Impairment Risk
As a result of recent financial performance, macroeconomic conditions, declines in 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 Company recorded an impairment related to the QxH reporting unit, in which the goodwill was determined to be fully impaired. Additionally, an impairment was recorded related to the QVC and HSN tradenames and the carrying value was written down to fair value. As a result, the fair values of intangible assets within the QxH reporting unit do not significantly exceed their carrying values (refer to note 5 of the accompanying consolidated financial statements). The Company will continue to monitor 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 intangible assets) at each reporting unit is appropriate. Future outlook declines in revenue, cash flows, macroeconomic factors, business conditions, or other factors could result in a sustained decrease in fair value that may result in a determination that carrying value adjustments are required, which could be material.
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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 reportable segments. The "Corporate and other" category consists of corporate activity and various cost method investments. For a more detailed discussion and analysis of the financial results of the principal reporting segments, see "Results of Operations-Businesses" below.
A discussion regarding our financial condition and results of operations for fiscal year 2025 compared to fiscal year 2024 is presented below. A discussion regarding our financial condition and results of operations for fiscal year 2024 compared to fiscal year 2023 can be found in Part II, Item 7. "Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on February 27, 2025 (the "2024 Form 10-K").
Operating Results
| Years ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| amounts in millions | |||||||||||
| Total revenue, net | |||||||||||
| QxH | $ | 5,936 | $ | 6,598 | |||||||
| QVC International | 2,357 | 2,399 | |||||||||
| CBI | 937 | 1,040 | |||||||||
| Corporate and other | - | - | |||||||||
| Consolidated QVC Group | $ | 9,230 | $ | 10,037 | |||||||
| Operating Income (Loss) | |||||||||||
| QxH | $ | (2,235) | $ | (1,045) | |||||||
| QVC International | 218 | 275 | |||||||||
| CBI | (26) | 2 | |||||||||
| Corporate and other | (55) | (41) | |||||||||
| Consolidated QVC Group | $ | (2,098) | $ | (809) | |||||||
| Adjusted OIBDA | |||||||||||
| QxH | $ | 517 | $ | 765 | |||||||
| QVC International | 293 | 333 | |||||||||
| CBI | 16 | 36 | |||||||||
| Corporate and other | (55) | (31) | |||||||||
| Consolidated QVC Group | $ | 771 | $ | 1,103 | |||||||
Total revenue, net. Consolidated QVC Group revenue decreased 8.0% or $807 million for the year ended December 31, 2025, declining in all segments, as compared to the corresponding prior year period. See "Results of Operations-Businesses" below for a more complete discussion of the results of operations of QVC and CBI.
Operating income (loss). Our consolidated operating loss increased $1,289 million for the year ended December 31, 2025 as compared to the corresponding prior year period, primarily due to greater impairments of goodwill and intangible assets. Operating loss increased $1,190 million at QxH, and operating income decreased $57 million at QVC International, and decreased $28 million to a loss of $26 million at CBI. Additionally, operating loss within Corporate and other increased $14 million, primarily due to higher professional services (including consulting and legal expense). See "Results of Operations-Businesses" below for a more complete discussion of the results of operations of QVC and CBI.
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Adjusted Operating Income Before Depreciation and Amortization ("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) excluding depreciation and amortization, stock-based compensation, and where applicable, separately identified impairments, litigation settlements, restructuring, penalties, fire related costs and (recoveries), and (gains) losses on sales of assets and 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 (loss), 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 ("GAAP").
The following table provides a reconciliation of Operating income (loss) to Adjusted OIBDA.
| Years ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| amounts in millions | |||||||||||
| Operating income (loss) - GAAP | $ | (2,098) | (809) | ||||||||
| Depreciation and amortization | 398 | 383 | |||||||||
| Impairment of intangible assets | 930 | 578 | |||||||||
| Impairment of goodwill | 1,477 | 902 | |||||||||
| Gains on sales of assets and sale leaseback transactions | (5) | (1) | |||||||||
| Restructuring, penalties and fire related costs, net of (recoveries) (note 14) | 53 | 18 | |||||||||
| Stock-based compensation | 16 | 32 | |||||||||
| Adjusted OIBDA - non-GAAP | $ | 771 | 1,103 | ||||||||
Consolidated Adjusted OIBDA decreased $332 million for the year ended December 31, 2025, as compared to the corresponding prior year period, with decreases in Adjusted OIBDA across all segments. The increase in Adjusted OIBDA losses of $24 million at Corporate and other is primarily due to higher professional services (including consulting and legal expense). See "Results of Operations-Businesses" below for a more complete discussion of the results of operations of QVC and CBI.
Other income and expense
Components of Other income (expense) are presented in the table below.
| Years ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| amounts in millions | |||||||||||
| Interest expense | $ | (496) | (468) | ||||||||
| Interest and dividend income | 50 | 50 | |||||||||
| Realized and unrealized gains (losses) on financial instruments, net | (40) | (60) | |||||||||
| Tax sharing income (expense) with Liberty Broadband | 10 | (4) | |||||||||
| Other, net | (9) | - | |||||||||
| Other income (expense) | $ | (485) | (482) | ||||||||
Interest expense. Interest expense increased $28 million for the year ended December 31, 2025, as compared to the corresponding prior year period, primarily due to higher outstanding debt during 2025 and additional interest expense related to the non-payment of the Series A Cumulative Redeemable Preferred Stock ("Preferred Stock") dividend (see note 9 to the accompanying consolidated financial statements).
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Interest and dividend income. Interest and dividend income was $50 million for each of the years ended December 31, 2025 and 2024.
Realized and unrealized gains (losses) on financial instruments. Realized and unrealized gains (losses) on financial instruments are comprised of changes in the fair value of the following:
| Years ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| amounts in millions | |||||||||||
| Equity securities | $ | (5) | (22) | ||||||||
| Exchangeable senior debentures | (35) | (38) | |||||||||
| $ | (40) | (60) | |||||||||
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 6 to the accompanying consolidated financial statements for additional discussion related to debt). These unrealized losses during the year ended December 31, 2025 were partially offset by a gain on extinguishment of debt of $10 million related to redemptions of the 4% Exchangeable Senior Debentures (see note 4 to the accompanying consolidated financial statements).
Tax sharing income (expense) with Liberty Broadband. The Company has a tax sharing agreement with Liberty Broadband. As a result, the Company recognized tax sharing gains of $10 million and tax sharing losses of $4 million for the years ended December 31, 2025 and 2024, respectively.
Other, net. Other, net decreased $9 million for the year ended December 31, 2025, compared to the corresponding prior year period, primarily due to foreign exchange losses of $11 million in the current year.
Income taxes. Earnings (loss) before income taxes, income tax (expense) benefit, and the effective tax rates for the years ended December 31, 2025 and 2024 are summarized below.
| Years ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Earnings (loss) before income taxes | $ | (2,583) | (1,291) | ||||||||
| Income tax (expense) benefit | 185 | 41 | |||||||||
| Effective income tax rate | 7 | % | 3 | % | |||||||
For the years ended December 31, 2025 and 2024 income tax benefit differs from the U.S. statutory rate of 21% due to impairments of goodwill and intangible assets that are not deductible for tax purposes (see note 5 of the accompanying consolidated financial statements).
Net earnings (loss). We had net losses of $2,398 million and $1,250 million for the years ended December 31, 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.
Liquidity and Capital Resources
As of December 31, 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, 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.
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Under both the Fifth Amended and Restated Credit Agreement and the indentures governing the senior secured 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 QVG Group under an intercompany tax sharing agreement in respect of certain tax obligations of QVC and its subsidiaries. As a result of the breach of financial covenant under the Fifth Amended and Restated Credit Agreement, 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 an intercompany tax sharing agreement in respect of certain tax obligations of QVC and its subsidiaries.
During the year ended December 31, 2025, QVC Group and certain of its subsidiaries experienced multiple credit rating downgrades by Fitch Ratings, Moody's Ratings and S&P Global Ratings. These downgrades included reductions in QVC's long-term issuer and senior secured ratings, as well as similar downgrades for LI LLC and QVC Group. A downgrade of QVC's credit ratings and rating outlooks has adversely affected, and will likely continue to adversely affect, the market prices of its debt securities and QVC Group's equity securities and its access to capital, and may trigger additional collateral or funding requirements or the imposition of financial or other burdensome covenants. See Part I, Item 1A. "Risk Factors" in this Annual Report on Form 10-K for additional information.
As of December 31, 2025, QVC Group's liquidity position consisted of the following:
|
Cash and cash equivalents |
|||||
| amounts in millions | |||||
| QVC | $ | 1,496 | |||
| CBI | 101 | ||||
| Corporate and other | 375 | ||||
| Total QVC Group | $ | 1,972 | |||
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 a result of noncompliance with the net leverage ratio, no additional borrowings are available under the Fifth Amended and Restated Credit Agreement.
As of December 31, 2025, QVC had approximately $329 million of cash and 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 35% 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 & Co, LTD.
| Years ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Cash Flow Information | amounts in millions | ||||||||||
| Net cash provided (used) by operating activities | $ | 274 | $ | 525 | |||||||
| Net cash provided (used) by investing activities | (245) | (225) | |||||||||
| Net cash provided (used) by financing activities | 1,064 | (498) | |||||||||
During the year ended December 31, 2025, QVC Group's primary sources of cash were $1,986 million debt borrowings and $274 million net cash provided by operating activities. During the year ended December 31, 2025, QVC Group's primary uses of cash were debt repayments of $870 million, capital expenditures of $156 million, expenditures for television distribution rights of $93 million, and dividends paid to noncontrolling interest of $44 million.
Pursuant to the Plan, and following the approval of the Plan and the occurrence of the Effective Date, the projected uses of QVC's cash in the next year, outside of normal operating expenses (inclusive of tax payments), are the costs to service outstanding debt, payments to taxing authorities, potential capital improvement spending, payments related to television distribution rights, and potentially additional investments in existing or new businesses. The Company expects
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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 that may become due and payable as a result of noncompliance with the net leverage ratio and the Chapter 11 Cases, as described above.
On May 23, 2025, the Board of Directors announced its decision to suspend payment of the quarterly cash dividend on the Preferred Stock, beginning with the quarterly cash dividend payable on June 16, 2025. As a result of the non-payment of the quarterly cash dividend, the dividend rate increased from 8.0% to 9.5%.
Subject to Bankruptcy Court approval 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.
Off-Balance Sheet Arrangements and Aggregate Material Cash Requirements
In connection with agreements for the sale of assets by our Company, we may retain liabilities that relate to events occurring prior to the sale, such as tax, environmental, litigation and employment matters. We generally indemnify the purchaser in the event that a third party asserts a claim against the purchaser that relates to a liability retained by us. These types of indemnification obligations may extend for a number of years. We are unable to estimate the maximum potential liability for these types of indemnification obligations as the sale agreements may not specify a maximum amount and the amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be determined at this time. Historically, we have not made any significant indemnification payments under such agreements and no amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification obligations.
We have contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business. Although it is reasonably possible we may incur losses upon 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 amounts, if any, which may be required to satisfy such contingencies will not be material in relation to the accompanying consolidated financial statements.
The Company has outstanding multiple tranches of exchangeable debentures as of December 31, 2025. Under the terms of these exchangeable debentures, prior to the Chapter 11 Cases, the holders had the option to elect to require the Company to exchange the debentures for the value of a specified number of the underlying reference shares, which we had the ability to honor through delivery of reference shares, cash or a combination thereof. As a result of the Chapter 11 Cases and the Automatic Stay, such holders will no longer have the option to require the Company to exchange such debentures, and such debentures are to be treated as set forth in the Plan.
Information concerning the amount and timing of required payments, both accrued and off-balance sheet, under our material cash requirements, excluding uncertain tax positions as it is undeterminable when payments will be made, is summarized below.
| Payments due by period | |||||||||||||||||||||||
| 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | |||||||||||||||||
| amounts in millions | |||||||||||||||||||||||
| Consolidated material cash requirements | |||||||||||||||||||||||
| Debt (1) (2) | $ | 2,900 | 44 | 72 | 1,231 | 932 | 1,425 | $ | 6,604 | ||||||||||||||
| Interest payments (3) | 331 | 197 | 196 | 172 | 106 | 2,024 | 3,027 | ||||||||||||||||
| Operating lease obligations | 119 | 116 | 114 | 111 | 113 | 759 | 1,332 | ||||||||||||||||
| Preferred Stock (4) | - | - | - | - | - | 2,227 | 2,227 | ||||||||||||||||
| Purchase orders and other obligations (5) | 2,136 | 124 | 124 | 101 | - | - | 2,485 | ||||||||||||||||
_________________________________
(1)As discussed above, the senior secured notes have been classified as a current liability in the consolidated balance sheet, as of December 31, 2025. The table above reflects the contractual maturities of the senior secured notes.
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(2)Amounts are reflected in the table at the outstanding principal amount, assuming the debt instruments will remain outstanding until the stated maturity date, and may differ from the amounts stated in our consolidated balance sheet to the extent debt instruments (i) were issued at a discount or premium or (ii) have elements which are reported at fair value in our consolidated balance sheets. Amounts do not assume additional borrowings or refinancings of existing debt.
(3)Amounts (i) are based on our outstanding debt at December 31, 2025, (ii) assume the interest rates on our variable rate debt remain constant at the December 31, 2025 rates and (iii) assume that our existing debt is repaid at maturity.
(4)This amount reflects the current 9.5% dividend on shares of Preferred Stock outstanding as of December 31, 2025 and redemption of the Preferred Stock plus all unpaid dividends on the mandatory redemption date, March 15, 2031.
(5)Amounts include open purchase orders for inventory and non-inventory purchases along with other material cash requirements.
Critical Accounting Estimates
The preparation of our financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Listed below are the accounting estimates that we believe are critical to our financial statements due to the degree of uncertainty regarding the estimates or assumptions involved and the magnitude of the asset, liability, revenue or expense being reported. All of these accounting estimates and assumptions, as well as the resulting impact to our financial statements, have been discussed with the Audit Committee of the Board of Directors.
Fair Value Measurements of Non-Financial Instruments. Our non-financial instrument valuations are primarily comprised of our annual assessment of the recoverability of our goodwill and other nonamortizable intangible assets, such as tradenames, our evaluation of the recoverability of our other long-lived assets upon certain triggering events, and our determination of the estimated fair value allocation of net tangible and identifiable intangible assets acquired in business combinations. If the carrying value of our long-lived assets exceeds their undiscounted cash flows, we are required to write the carrying value down to fair value. Any such write down is included in impairment loss in our consolidated statements of operations. A high degree of judgment is required to estimate the fair value of our long-lived assets. We may use quoted market prices, prices for similar assets, present value techniques and other valuation techniques to prepare these estimates. We may need to make estimates of future cash flows and discount rates as well as other assumptions in order to implement these valuation techniques. Due to the high degree of judgment involved in our estimation techniques, any value ultimately derived from our long-lived assets may differ from our estimate of fair value. As each of our operating segments has long-lived assets, this critical accounting policy affects the financial position and results of operations of each segment.
As of December 31, 2025, the intangible assets not subject to amortization for each of our significant reportable segments were as follows:
| Goodwill | Tradenames | Total | |||||||||||||||
| amounts in millions | |||||||||||||||||
| QxH | $ | - | 1,190 | 1,190 | |||||||||||||
| QVC International | 800 | - | 800 | ||||||||||||||
| $ | 800 | 1,190 | 1,990 | ||||||||||||||
We perform our annual assessment of the recoverability of our goodwill and other non-amortizable intangible assets during the fourth quarter of each year, or more frequently, if events or circumstances indicate impairment may have occurred. We perform goodwill impairment testing at the reporting unit level, which is defined in accounting guidance in accordance with GAAP as an operating segment or one level below an operating segment (also known as a component). A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. The Company considers its reporting units to align with its operating segments.
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We may utilize a qualitative assessment for determining whether a quantitative goodwill and other non-amortizable intangible asset impairment analysis is necessary. The accounting guidance permits entities to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative goodwill impairment test. In evaluating goodwill on a qualitative basis the Company reviews the business performance of each reporting unit and evaluates other relevant factors as identified in the relevant accounting guidance to determine whether it is more likely than not that an indicated impairment exists for any of our reporting units. The Company considers whether there are any negative macroeconomic conditions, industry specific conditions, market changes, increased competition, increased costs in doing business, management challenges, the legal environments and how these factors might impact company specific performance in future periods. As part of the analysis the Company also considers fair value determinations for certain reporting units that have been made at various points throughout the current and prior years for other purposes. For the years ended December 31, 2025, 2024, and 2023, impairments of $1,465 million, $902 million, and $326 million, respectively, were recorded to QxH's goodwill. For the year ended December 31, 2025, an impairment charge of $12 million was recorded to CBI's goodwill.
The Company recorded impairments of $930 million and $578 million for the years ended December 31, 2025 and 2024 related to the tradenames associated with QVC and HSN in the QxH reporting unit.
The quantitative goodwill impairment test compares the estimated fair value of a reporting unit to its carrying value. The Company determines fair values for each of the reporting units using a discounted cash flow model (a form of the income approach). Developing estimates of fair value requires significant judgments, including making assumptions about appropriate discount rates, perpetual growth rates, relevant comparable market multiples, public trading prices and the amount and timing of expected future cash flows. The cash flows employed in QVC Group's valuation analyses are based on management's best estimates considering current marketplace factors and risks as well as assumptions of growth rates in future years. There is no assurance that actual results in the future will approximate these forecasts.
Following our annual impairment assessment performed during the fourth quarter of 2025, it was determined that the fair values of non-amortizable intangible assets at the QxH reporting unit do not significantly exceed their carrying values. The Company will continue to monitor 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 intangible assets) at each reporting unit is appropriate. Future outlook declines in revenue, cash flows, macroeconomic factors, business conditions, or other factors could result in a sustained decrease in fair value that may result in a determination that carrying value adjustments are required, which could be material.
Retail Related Adjustments and Allowances. The Company records adjustments and allowances for sales returns, inventory net realizable value and uncollectible receivables. Each of these adjustments is estimated based on historical experience. Sales returns are calculated as a percent of sales and are netted against revenue in the consolidated statements of operations. Sales returns represented 15.0%, 15.6% and 16.0% of gross product revenue for the years ended December 31, 2025, 2024 and 2023, respectively. Inventory is stated at the lower of cost or market. Assessments about the realizability of inventory require the Company to make judgments based on the aging of its inventory balance, the likely method of disposition, and the estimated recoverable values based on historical experience of inventory markdowns and liquidation. Any change in estimate of net realizable value is included in cost of goods sold in the consolidated statements of operations. Inventories were $972 million and $1,061 million as of December 31, 2025 and 2024, respectively. Allowance for credit losses is calculated as a percent of accounts receivable at the end of a reporting period, and is based on historical experience, with the change in such allowance recorded as a provision for credit losses in selling, general and administrative expenses in the consolidated statements of operations. Trade accounts receivable (including installment payment, credit card and customer receivables) were $995 million and $1,151 million, as of December 31, 2025 and 2024, respectively. Allowance for credit losses related to uncollectible trade accounts receivable was $67 million and $77 million as of December 31, 2025 and 2024, respectively. Each of these estimates requires management judgment and may not reflect actual results.
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 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, QVC2, QVC3, HSN, and HSN2. The Company's U.S. programming is also available on QVC.com and HSN.com, which we refer to as QVC's "U.S. Websites"; its social
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platforms (including TikTok, Instagram and others), virtual multichannel video programming distributors (including Hulu + Live TV, DirectTV Stream and YouTube TV); applications via streaming video (including Facebook Live, Roku, Apple TV, Amazon Fire, Xfinity Flex, Alphabet and Samsung TV Plus); and mobile applications (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 its U.S. Websites. QVC U.S. Websites and its other Digital Platforms (including its mobile applications, social platforms 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.
Internationally, QVC's televised shopping programs, including live and recorded content, are distributed to households outside the U.S., primarily in Japan, Germany, the United Kingdom ("U.K."), and Italy. In some of the countries where QVC operates, QVC's 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 platforms. QVC's international business employs product sourcing teams who select products tailored to the interests of each local market.
QVC's operating results were as follows:
| Years ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| amounts in millions | |||||||||||
| Total revenue, net - GAAP | $ | 8,293 | 8,997 | ||||||||
| Cost of goods sold (exclusive of depreciation and amortization shown separately below) | (5,505) | (5,905) | |||||||||
| Operating expenses | (637) | (693) | |||||||||
| Advertising expenses | (369) | (312) | |||||||||
| Selling, general and administrative expenses (excluding stock-based compensation and advertising) | (972) | (989) | |||||||||
| Adjusted OIBDA - non-GAAP | 810 | 1,098 | |||||||||
| Depreciation and amortization | (369) | (351) | |||||||||
| Impairment of intangible assets | (930) | (578) | |||||||||
| Impairment of goodwill | (1,465) | (902) | |||||||||
| Gains on sales of assets and sale leaseback transactions | 5 | 1 | |||||||||
| Restructuring, penalties and fire related costs, net of (recoveries) (note 14) | (53) | (18) | |||||||||
| Stock-based compensation | (15) | (20) | |||||||||
| Operating income (loss) - GAAP | $ | (2,017) | (770) | ||||||||
Total revenue, net was generated from the following geographical areas:
| Years ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| amounts in millions | |||||||||||
| QxH | $ | 5,936 | 6,598 | ||||||||
| QVC International | 2,357 | 2,399 | |||||||||
| $ | 8,293 | 8,997 | |||||||||
Total revenue, net. QVC's consolidated net revenue decreased $704 million or 7.8% for the year ended December 31, 2025, as compared to the corresponding prior year. The $704 million decrease in 2025 net revenue was primarily due to an 8% decrease in units shipped primarily attributable to QxH. The decrease was also driven by a 1.2% decrease in average selling price per unit ("ASP") primarily driven by QVC-International and to a lesser extent QxH and a
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$57 million decrease in shipping and handling revenue attributable to QxH. These decreases to net revenue were partially offset by a $198 million decrease in estimated product returns primarily attributable to QxH and $66 million in favorable foreign exchange rates.
During the year ended December 31, 2025, the change in revenue and expenses was affected by the change in the exchange rates for the Euro, the U.K. Pound Sterling and the Japanese Yen. In the event the U.S. Dollar strengthens against these foreign currencies in the future, QVC's revenue and operating cash flow is likely to be negatively affected.
In discussing QVC's operating results, the term "currency exchange rates" refers to the 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. We refer 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 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 net revenue for QVC in U.S. Dollars and in constant currency was as follows:
| Year ended December 31, 2025 | |||||||||||||||||
| U.S. dollars | Foreign Currency Exchange Impact | Constant currency | |||||||||||||||
| QxH | (10.0) | % | - | % | (10.0) | % | |||||||||||
| QVC International | (1.7) | % | 2.8 | % | (4.5) | % | |||||||||||
In 2025, QxH's net revenue decline of $662 million, or 10.0% was attributable to a 10.6% decrease in units shipped and a $53 million decrease in shipping and handling revenue. These declines were partially offset by a $156 million decrease in estimated product returns. For the year ended December 31, 2025, QxH experienced shipped sales declines across all product categories. QVC-International's net revenue declined $108 million, or 4.5% in constant currency primarily due to a 2.7% decrease in units shipped across all markets except the U.K. and a 2.5% decrease in ASP across all markets except Italy. These declines were primarily offset by a $42 million decrease in estimated product returns. For the year ended December 31, 2025, QVC-International experienced shipped sales declines in constant currency across all product categories.
Cost of goods sold (exclusive of depreciation and amortization). QVC's cost of goods sold as a percentage of net revenue was 66.4%, and 65.6% for the years ended December 31, 2025 and 2024, respectively. The increase in cost of goods sold as a percentage of revenue in 2025 was primarily due to higher fulfillment costs across both segments driven by increased freight rates and warehousing costs, and higher product costs driven by tariffs at QxH. These increases were partially offset by improved margins on returns at QxH.
Operating expenses. QVC's operating expenses are principally comprised of commissions, order processing and customer service expenses, credit card processing fees, and telecommunications expenses. Operating expenses were 7.7% of net revenue for each of the years ended December 31, 2025 and 2024.
Advertising expenses. QVC recorded advertising expenses of $369 million and $312 million for the years ended December 31, 2025 and 2024, respectively. QVC's advertising expenses increased $57 million, or 18.3% for the year ended December 31, 2025 compared to the corresponding prior year period, primarily due to a $53 million increase in advertising investments at QxH driven by increased focus on social and streaming platforms in the current year.
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, credit losses and production costs. Such expenses decreased $17 million and 1.7% for the year ended December 31, 2025 as compared to the prior year and increased as a percentage of net revenue to 11.7% from 11.0%.
The decrease in expense in 2025 resulted from a $54 million decrease in personnel costs attributable to QxH resulting from lower wages due to the reorganization of teams across the Company as part of the WIN strategy announced at the end of the first quarter of 2025 as well as a workforce reduction associated with the shift in the IT operating model that occurred in the second quarter of the prior year. The decrease was partially offset by a $25 million increase in
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management bonus expense primarily attributable to the cancellation of all QVCGA stock-settled and cash-settled RSU awards granted during 2025 and replacing with a cash award (see note 11 of the accompanying consolidated financial statements) and a $16 million increase in professional services expense.
Depreciation and amortization. Depreciation and amortization increased $18 million for the year ended December 31, 2025, as compared to the corresponding prior year. The increase in depreciation expense for the twelve months ended December 31, 2025 was primarily due to $45 million of accelerated depreciation of the St. Petersburg, FL campus and associated assets as a result of the closure completed in the third quarter of 2025. This increase was partially offset by a $23 million decrease in amortization expense driven by lower software amortization as a result of assets that fully amortized during 2024 and a decrease in television distribution right amortization and related expenses due to lower subscriber counts.
Impairment of intangible assets. QVC recorded intangible asset impairment losses of $930 million and $578 million for the years ended December 31, 2025 and 2024, respectively, related to decreases in the fair value of the QVC and HSN tradenames as a result of quantitative assessments performed by the Company (refer to note 5 to the accompanying consolidated financial statements).
Impairment of goodwill. QVC recorded goodwill impairment losses of $1,465 million and $902 million for the years ended December 31, 2025 and 2024, respectively, related to decreases in the fair value of the QxH reporting unit as a result of quantitative assessments performed by the Company (refer to note 5 to the accompanying consolidated financial statements).
Gains on sales of assets and sale-leaseback transactions. QVC recorded $5 million gains on sales of assets and sale-leaseback transactions for the year ended December 31, 2025 primarily related to the closing of two of the St. Petersburg property sales. QVC recorded $1 million of gain on sale of assets and sale leaseback transactions for the year ended December 31, 2024 related to the sale-leaseback of a property in Germany.
Restructuring, penalties and fire related costs, net of (recoveries). QVC recorded costs of $53 million and $18 million for the years ended December 31, 2025 and 2024, respectively, in restructuring, penalties and fire related costs, net of recoveries. For the year ended December 31, 2025, QVC recorded restructuring charges of $34 million and $19 million at QxH and QVC International, respectively, to reorganize teams across the Company as part of the WIN strategy (refer to note 14 to the accompanying consolidated financial statements). For the year ended December 31, 2024, QVC recorded restructuring charges of $18 million related to the shift in QVC's IT operating model with a resulting workforce reduction.
Stock-based compensation. Stock-based compensation includes compensation related to options and restricted stock granted to certain officers and employees. QVC recorded $15 million and $20 million of stock-based compensation expense for the years ended December 31, 2025 and 2024, respectively. The decrease in 2025 was primarily related to the cancellation of all QVCGA stock-settled and cash-settled RSU awards granted during 2025 (refer to note 11 to the accompany consolidated financial statements).
CBI
CBI consists of a portfolio of aspirational home and apparel brands. The home brands are comprised of Ballard Designs, Frontgate, and Grandin Road, while Garnet Hill focuses primarily on apparel and accessories and is 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 in the U.S. that sell merchandise through brick-and-mortar retail locations as well as via the internet through their websites.
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CBI's operating results for the last two years were as follows:
| Years ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| amounts in millions | |||||||||||
| Total revenue, net - GAAP | $ | 937 | 1,040 | ||||||||
| Cost of goods sold (exclusive of depreciation and amortization shown separately below) | (559) | (619) | |||||||||
| Operating expenses | (38) | (41) | |||||||||
| Advertising expenses | (163) | (172) | |||||||||
| Selling, general and administrative expenses (excluding stock-based compensation and advertising) | (161) | (172) | |||||||||
| Adjusted OIBDA - Non-GAAP | 16 | 36 | |||||||||
| Depreciation and amortization | (29) | (32) | |||||||||
| Impairment of goodwill | (12) | - | |||||||||
| Stock-based compensation | (1) | (2) | |||||||||
| Operating income (loss) - GAAP | $ | (26) | 2 | ||||||||
Total revenue, net. CBI's consolidated net revenue decreased 9.9% for the year ended December 31, 2025, as compared to the corresponding prior year, primarily attributable to a decrease in units shipped of 14.0%, partially offset by a 4.0% increase in ASP compared to the prior year. The increase in ASP was primarily the result of price increases to mitigate the impact of tariffs. The decrease in units shipped was due to lower demand across all categories.
Cost of goods sold (exclusive of depreciation and amortization). CBI's cost of goods sold as a percentage of net revenue was 59.7% and 59.5% for the years ended December 31, 2025 and 2024, respectively. The increase in cost of goods sold as a percentage of revenue was primarily due to higher supply chain costs partially offset by higher product margins.
Operating expenses. Operating expenses are principally comprised of credit card processing fees and customer service expenses which are variable expenses that support sales activity. CBI's operating expenses as a percentage of net revenue were 4.1% and 3.9% for the years ended December 31, 2025 and 2024, respectively. Operating expenses decreased $3 million for the year ended December 31, 2025, compared to the prior year, driven by decreased credit card fees and customer service charges due to lower sales volume.
Advertising expenses. CBI's recorded advertising expenses of $163 million and $172 million for the years ended December 31, 2025 and 2024, respectively. CBI's advertising expenses decreased $9 million primarily due to strategic reductions in catalog circulation and lower digital marketing spend.
Selling, general and administrative expenses (excluding stock-based compensation and advertising). CBI's selling, general and administrative expenses include personnel costs, retail store operating expenses and miscellaneous operating expenses. Such expenses decreased $11 million and 6.4% for the year ended December 31, 2025 as compared to the prior year and increased as a percentage of net revenue to 17.2% from 16.5%. The decrease in selling, general and administrative expenses is primarily due to lower network infrastructure costs and lower legal costs.
Depreciation and amortization. CBI's depreciation and amortization expense decreased $3 million for the year ended December 31, 2025, as compared to the corresponding period in the prior year, primarily due to fully amortizing technology investments during 2024.
Impairment of goodwill. CBI recorded goodwill impairment expense of $12 million during the year ended December 31, 2025 related to decreases in the fair value of the CBI reporting unit as a result of quantitative assessments performed by the Company (refer to note 5 to the accompanying consolidated financial statements).
Stock-based compensation. CBI's stock-based compensation expense decreased $1 million for the year ended December 31, 2025, compared to the corresponding period in the prior year.
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QVC Group Inc. published this content on April 15, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on April 15, 2026 at 21:23 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]