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What changed in QVC INC's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of QVC INC's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+413 added−462 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-28)

Top changes in QVC INC's 2024 10-K

413 paragraphs added · 462 removed · 352 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

81 edited+12 added−12 removed84 unchanged
Biggest changeSome examples of regulatory agencies and regulations that affect the manner in which we sell and promote merchandise include the following: • The Federal Trade Commission ("FTC") and the state attorneys general regulate the advertising of retail products and services offered for sale in the U.S., including, for example, the FTC's Guides Concerning the Use of Endorsements and Testimonials in Advertising and Guides for the Use of Environmental Marketing Claims. • The Food and Drug Administration has specific regulations regarding claims that can be made about food products and regulates marketing claims that can be made for cosmetic beauty products, medical devices and over-the-counter drugs. • The Environmental Protection Agency ("EPA") requires products that make certain types of claims, such as "anti-bacterial," to be registered with the EPA prior to making such claims. • Each of the FTC's Telemarketing Sales Rules, the Federal Communication Commission's ("FCC") rules implementing the Telephone Consumer Protection Act and similar state laws, establish procedures that must be followed when telemarketing or placing particular types of calls to consumers. • The Consumer Product Safety Commission (“CPSC”) has specific regulations regarding products that present unreasonable risks of injuries to consumers. • Import and export laws, including U.S. economic sanction and embargo regulations, U.S. homeland security laws and regulations and other laws such as the U.S. anti-boycott law and U.S. export controls regulations may limit foreign sales. • Comparable regulatory agencies and regulations in countries in which we have our non-U.S. operations may be applicable.
Biggest changeI-8 Table of Contents • The Environmental Protection Agency ("EPA") requires products that make certain types of claims, such as "anti-bacterial," to be registered with the EPA prior to making such claims. • Each of the FTC's Telemarketing Sales Rules, the Federal Communication Commission's ("FCC") rules implementing the Telephone Consumer Protection Act and similar state laws, establish procedures that must be followed when telemarketing or placing particular types of calls to consumers. • The Consumer Product Safety Commission (“CPSC”) has specific regulations regarding products that present unreasonable risks of injuries to consumers. • Import and export laws, including U.S. economic sanction and embargo regulations, U.S. homeland security laws and regulations and other laws such as the U.S. anti-boycott law and U.S. export controls regulations may limit foreign sales. • Comparable regulatory agencies and regulations in countries in which we have our non-U.S. operations may be applicable.
For information regarding regulations related to U.S. trade policy with China, see the risk factor "Significant developments stemming from U.S. and international trade policy with China, including in response to forced labor and human rights abuses in China may adversely impact our business and operating results" in Item 1A., "Risk Factors." I-11 Table of Contents Intellectual property We regard our trademarks, service marks, patents, copyrights, domain names, trade dress, trade secrets, proprietary technologies and similar intellectual property as critical to our success.
I-11 Table of Contents For information regarding regulations related to U.S. trade policy with China, see the risk factor "Significant developments stemming from U.S. and international trade policy with China, including in response to forced labor and human rights abuses in China may adversely impact our business and operating results" in Item 1A., "Risk Factors." Intellectual property We regard our trademarks, service marks, patents, copyrights, domain names, trade dress, trade secrets, proprietary technologies and similar intellectual property as critical to our success.
We offer many exclusive and proprietary products, leading national brands and limited distribution brands offering unique items. Many of our products are endorsed by celebrities, designers and other well-known personalities who often join our presenters on our live programming and provide lead-in publicity on their own social media pages, websites and other customer touchpoints.
We offer many exclusive and proprietary products, leading national and international brands and limited distribution brands offering unique items. Many of our products are endorsed by celebrities, designers and other well-known personalities who often join our presenters on our live programming and provide lead-in publicity on their own social media pages, websites and other customer touchpoints.
With a mandate to deliver hard-to-find value, our merchants find and curate collections of high quality goods from manufacturers with the scale to offer sufficient supply to our existing and future customers. We maintain strong relationships with our vendors, which are attracted by the showcasing and story-telling elements of our programming, and the volume of sales during featured presentations.
With a mandate to deliver hard-to-find value, our merchants find and curate collections of high quality goods from vendors with the scale to offer sufficient supply to our existing and future customers. We maintain strong relationships with our vendors, which are attracted by the showcasing and story-telling elements of our programming, and the volume of sales during featured presentations.
We also reach audiences through our websites (including QVC.com, HSN.com and others); virtual multichannel video programming distributors (including Hulu + Live TV, DirecTV Stream and YouTube TV); applications via streaming video; Facebook Live, Roku, Apple TV, Amazon Fire, Xfinity Flex and Samsung TV Plus; mobile applications; our social media pages and over-the-air broadcasters.
We also reach audiences through our websites (including QVC.com, HSN.com and others); virtual multichannel video programming distributors (including Hulu + Live TV, DirecTV Stream and YouTube TV); applications via streaming video; Facebook Live, Roku, Apple TV, Amazon Fire, Xfinity Flex, Alphabet and Samsung TV Plus; mobile applications; our social media pages and over-the-air broadcasters.
We are currently providing programming without affiliation agreements to distributors representing approximately 6% of our QVC channel distribution and 1% of our HSN channel distribution. Some of our international programming may continue to be carried by distributors after the expiration dates on our affiliation agreements with them have passed.
We are currently providing programming without affiliation agreements to distributors representing approximately 6% of our QVC channel distribution and 1% of our HSN channel distribution. Some of our programming may continue to be carried by distributors after the expiration dates on our affiliation agreements with them have passed.
These segments reflect the way the Company evaluates its business performance and manages its operations. For financial information about our operating segments, please refer to note 15 of our accompanying consolidated financial statements, as well as to Part II, Item 7.
These segments reflect the way the Company evaluates its business performance and manages its operations. For financial information about our operating segments, please refer to note 15 to our accompanying consolidated financial statements, as well as to Part II, Item 7.
Health and Safety . We are committed to maintaining a safe and secure work environment and have specific safety programs and protocols in place to protect our team members. This includes administering a comprehensive occupational injury- and illness-prevention program and training for team members.
We are committed to maintaining a safe and secure work environment and have specific safety programs and protocols in place to protect our team members. This includes administering a comprehensive occupational injury- and illness-prevention program and training for team members.
In the U.S., Congress may consider a range of legislation that would impose federal privacy obligations on organizations including obligations that could require organizations that suffer a breach of security related to personal information to notify owners of such information.
In the U.S., the new Congress may consider a range of legislation that would impose federal privacy obligations on organizations including obligations that could require organizations that suffer a breach of security related to personal information to notify owners of such information.
An additional 5% of shipped sales in that period came from new customers and the remaining 5% of shipped sales came from reactivated customers (i.e., customers who previously made a purchase from us, but not during the prior twelve months).
An additional 4% of shipped sales in that period came from new customers and the remaining 5% of shipped sales came from reactivated customers (i.e., customers who previously made a purchase from us, but not during the prior twelve months).
In the U.S., we have registered trademarks and service marks including, but not limited to our brand names and logo, "QVC," "Quality Value Convenience," the "Q Logo," and "Q" and trademarks for our proprietary products sold such as "Arte D’Oro," "Cook’s Essentials," "Denim & Co.," "Diamonique," "Nature's Code," "Northern Nights" and "Zuda." Similarly, foreign registrations have been obtained for many trademarks and service marks for our brand names, logo and propriety products including, but not limited to, "QVC," the "Q Logo," "Q," "Cook’s Essentials," "Denim & Co.," "Diamonique" and "Northern Nights." HSN has numerous trademark registrations or pending applications in the U.S. which help to expand HSN’s brand awareness.
In the U.S., we have registered trademarks and service marks including, but not limited to our brand names and logo, "QVC," "Quality Value Convenience," the "Q Logo," and "Q" and trademarks for our proprietary products sold such as "Arte D’Oro," "Cook’s Essentials," "Denim & Co.," "Diamonique," "Northern Nights" and "Zuda." Similarly, foreign registrations have been obtained for many trademarks and service marks for our brand names, logo and propriety products including, but not limited to, "QVC," the "Q Logo," "Cook’s Essentials," "Denim & Co.," "Diamonique" and "Northern Nights." HSN has numerous trademark registrations or pending applications in the U.S. which help to expand HSN’s brand awareness.
We believe we are a global leader in video retailing, e-commerce, mobile commerce and social commerce, with operations based in the United States ("U.S."), Germany, Japan, the United Kingdom ("U.K."), and Italy.
We believe we are a global leader in video retailing, e-commerce, mobile commerce and social commerce, with operations based in the United States ("U.S."), Japan, Germany, the U.K., and Italy.
We primarily utilize home based customer service agents to handle calls, e-mail contacts and social contacts, allowing staffing flexibility for peak volume hours. In addition, we utilize computerized interactive voice response order systems for telephonic orders, which handle approximately 25% of all orders taken on a worldwide basis. QxH has seven distribution centers and QVC-International has four distribution centers.
We primarily utilize home based customer service agents to handle calls, e-mail contacts and social contacts, allowing staffing flexibility for peak volume hours. In addition, we utilize computerized interactive voice response order systems for telephonic orders, which handle approximately 23% of all orders taken on a worldwide basis. QxH has seven distribution centers and QVC-International has four distribution centers.
I-2 Table of Contents We offer a wide assortment of high-quality merchandise and classify our products into six groups: home, beauty, apparel, jewelry, accessories and electronics. It is our product sourcing team's mission to research and curate compelling and differentiated products from manufacturers who have sufficient scale to meet anticipated demand.
I-2 Table of Contents We offer a wide assortment of high-quality merchandise and classify our products into six groups: home, apparel, beauty, accessories, electronics and jewelry. It is our product sourcing team's mission to research and curate compelling and differentiated products from vendors who have sufficient scale to meet anticipated demand.
"Management's Discussion and Analysis of Financial Condition and Results of Operations." I-3 Table of Contents QxH QxH's programming is distributed in the U.S., 20 hours per day of live programming, 364 days per year, to approximately 92 million television households and is distributed to approximately 99% of households subscribing to services offered by television distributors.
"Management's Discussion and Analysis of Financial Condition and Results of Operations." I-3 Table of Contents QxH QxH's programming is distributed in the U.S., 20 hours per day of live programming, 364 days per year, to approximately 87 million television households and is distributed to approximately 99% of households subscribing to services offered by television distributors.
These registrations and applications include the “HSN” brand name and the “HSN logo” as well as registrations for HSN’s propriety products and services, including, but not limited to, “HSN Shop By Remote,” “Technibond,” and “Concierge Collection.” We consider the "QVC" and "HSN" brands the most significant trademarks and service marks held by us because of their impact on market awareness across all of our geographic markets and on customers’ identification with us.
These registrations and applications include the “HSN” brand name and the “HSN logo” as well as registrations for HSN’s propriety products and services, including, but not limited to, “HSN Shop By Remote,” “Tech Impressions,” and “Concierge Collection.” We consider the "QVC" and "HSN" brands the most significant trademarks and service marks held by us because of their impact on market awareness across all of our geographic markets and on customers’ identification with us.
For the year ended December 31, 2023, approximately 96% of QVC's worldwide shipped sales were from repeat and reactivated customers (i.e., customers who made a purchase from us during the prior twelve months and customers who previously made a purchase from us but not during the prior twelve months).
For the year ended December 31, 2024, approximately 96% of QVC's worldwide shipped sales were from repeat and reactivated customers (i.e., customers who made a purchase from us during the prior twelve months and customers who previously made a purchase from us but not during the prior twelve months).
During the year ended December 31, 2023, QVC and CBI engaged in multiple transactions relating to sourcing of merchandise, personnel and business advisory services. Refer to note 13 to the accompanying consolidated financial statements for further details.
During the year ended December 31, 2024, QVC and CBI engaged in multiple transactions relating to sourcing of merchandise, personnel and business advisory services. Refer to note 13 to the accompanying consolidated financial statements for further details.
I-9 Table of Contents In October 2023, HSN entered into a settlement agreement with the CPSC in which HSN agreed to pay a civil penalty of $16 million to settle the CPSC’s claim that HSN allegedly failed to timely submit a report under the Consumer Product Safety Act (“CPSA”) in relation to handheld clothing steamers sold by HSN under the Joy Mangano brand names My Little Steamer® and My Little Steamer® Go Mini that were subject to a voluntary recall previously announced on May 26, 2021.
In October 2023, HSN entered into a settlement agreement with the CPSC in which HSN agreed to pay a civil penalty of $16 million to settle the CPSC’s claim that HSN allegedly failed to timely submit a report under the Consumer Product Safety Act (“CPSA”) in relation to handheld clothing steamers sold by HSN under the Joy Mangano brand names My Little Steamer® and My Little Steamer® Go Mini that were subject to a voluntary recall previously announced on May 26, 2021.
Our global sales mix is provided in the table below: Years ended December 31, Product category 2023 2022 2021 Home 41 % 40 % 40 % Apparel 18 % 18 % 16 % Beauty 18 % 17 % 18 % Accessories 11 % 11 % 11 % Electronics 7 % 9 % 10 % Jewelry 5 % 5 % 5 % Total 100 % 100 % 100 % Unlike traditional brick-and-mortar retailers with inventories across a network of stores, we are able to quickly adapt our offerings in direct response to changes in our customer's purchasing patterns.
Our global sales mix is provided in the table below: Years ended December 31, Product category 2024 2023 2022 Home 41 % 41 % 40 % Apparel 18 % 18 % 18 % Beauty 18 % 18 % 17 % Accessories 11 % 11 % 11 % Electronics 7 % 7 % 9 % Jewelry 5 % 5 % 5 % Total 100 % 100 % 100 % Unlike traditional brick-and-mortar retailers with inventories across a network of stores, we are able to quickly adapt our offerings in direct response to changes in our customer's purchasing patterns.
On December 29, 2017, Qurate Retail completed the acquisition of the remaining 62% ownership interest of HSN it did not previously own in an all-stock transaction. On December 31, 2018, Qurate Retail transferred its 100% ownership interest in HSN to QVC through a transaction among entities under common control. Reportable segments QVC has two reportable segments: QxH and QVC-International.
On December 29, 2017, QVC Group completed the acquisition of the remaining 62% ownership interest of HSN it did not previously own in an all-stock transaction. On December 31, 2018, QVC Group transferred its 100% ownership interest in HSN to QVC through a transaction among entities under common control. Reportable segments QVC has two reportable segments: QxH and QVC-International.
QVC's transponder service agreements for the Company's U.S. transponders expire at the earlier of the end of the lives of the satellites or the service agreements. The service agreements for QxH expire between 2024 and 2025. The service agreements for QVC-International transponders and terrestrial transmitters expire between 2024 and 2029.
QVC's transponder service agreements for the Company's U.S. transponders expire at the earlier of the end of the lives of the satellites or the service agreements. The service agreements for QxH expire between 2025 and 2030. The service agreements for QVC-International transponders and terrestrial transmitters expire between 2025 and 2029.
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) curates and sells a wide variety of consumer products via highly engaging, video-rich, interactive shopping experiences, distributed to approximately 216 million worldwide households each day through our broadcast networks.
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) curates and sells a wide variety of consumer products via highly engaging, video-rich, interactive shopping experiences, distributed to over 200 million worldwide households each day through our broadcast networks.
QVC engages with CBI, which is a wholly owned subsidiary of Qurate Retail and prior to the common control transaction between QVC and Qurate Retail, was included as part of HSN. CBI is not part of the results of operations or financial position of QVC presented in the accompanying consolidated financial statements.
QVC engages with CBI, which is a wholly owned subsidiary of QVC Group and prior to the common control transaction between QVC and QVC Group, was included as part of HSN. CBI is not part of the results of operations or financial position of QVC presented in the accompanying consolidated financial statements.
Initially broadcast live from 7:30 PM ET until midnight each weekday and all day Saturdays and Sundays, the channel extended its live U.S. programming to 24 hours per day in January 1987. QVC began its International operations in 1993. In 1995, Comcast purchased a majority shareholding in QVC. In 2003, Comcast sold its majority share to Qurate Retail, Inc.
Initially broadcast live from 7:30 PM ET until midnight each weekday and all day Saturdays and Sundays, the channel extended its live U.S. programming to 24 hours per day in January 1987. QVC began its International operations in 1993. In 1995, Comcast purchased a majority shareholding in QVC. In 2003, Comcast sold its majority share to QVC Group. HSN, Inc.
In addition, our Websites and mobile applications 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. For the year ended December 31, 2023, approximately 88% of our new QxH customers made their first purchase through our digital platforms.
In addition, our Websites and mobile applications 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. For the year ended December 31, 2024, approximately 89% of our new QxH customers made their first purchase through our Digital Platforms.
The FCC program access and program carriage rules also make provision for enforcement of alleged violations through complaint proceedings initiated by aggrieved entities. The Company also may be subject to program access rules as a result of an FCC condition adopted in connection with its 2008 approval of a transaction involving a predecessor of Qurate Retail and News Corp.
The FCC program access and program carriage rules also make provision for enforcement of alleged violations through complaint proceedings initiated by aggrieved entities. The Company also may be subject to program access rules as a result of an FCC condition adopted in connection with its 2008 approval of a transaction involving a predecessor of QVC Group and News Corp.
As a result of the foregoing changes and rules involving captioning of IP-delivered programming and captioning quality standards, QVC may incur additional costs and compliance obligations related to closed captioning of its programming. We market and provide a broad range of merchandise through our broadcast networks, websites, mobile applications and social media pages.
The FCC proposal remains pending. As a result of the foregoing changes and rules involving captioning of IP-delivered programming and captioning quality standards, QVC may incur additional costs and compliance obligations related to closed captioning of its programming. We market and provide a broad range of merchandise through our broadcast networks, websites, mobile applications and social media pages.
Prior to Qurate Retail’s divestiture of Zulily, QVC and Zulily engaged in multiple transactions relating to sales, sourcing of merchandise, marketing initiatives, and business advisory services. Refer to note 13 to the consolidated financial statements for further details.
Prior to QVC Group’s divestiture of Zulily, QVC and Zulily engaged in multiple transactions relating to sales, sourcing of merchandise, marketing initiatives, and business advisory services. Refer to note 13 to the consolidated financial statements for further details.
Since our stockholder is an indirect wholly owned subsidiary of Qurate Retail, certain aspects of our management, including the approval of significant corporate transactions such as a change of control, are controlled by Qurate Retail, rather than an independent governing body. Our Chief Executive Officer and President, David L.
Since our stockholder is an indirect wholly owned subsidiary of QVC Group, certain aspects of our management, including the approval of significant corporate transactions such as a change of control, are controlled by QVC Group, rather than an independent governing body. Our Chief Executive Officer and President, David L.
For example, the Children's Online Privacy Protection Act (“COPPA”) prohibits web sites from collecting personally identifiable information online from children under age 13 without parental consent and imposes a number of operational requirements.
For example, the Children's Online Privacy Protection Act (“COPPA”) prohibits web sites from collecting personal information online from children under age 13 without parental consent and imposes a number of operational requirements.
The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated: • customer demand for our products and services and our ability to attract new customers and retain existing customers by anticipating customer demand and adapting to changes in demand; • competitor responses to our products and services; • increased digital TV penetration and the impact on channel positioning of our programs; • the levels of online traffic on our websites and our ability to convert visitors into consumers or contributors; • uncertainties inherent in the development and integration of new business lines and business strategies; • our future financial performance, including availability, terms and deployment of capital; • our ability to effectively manage our installment sales plans and revolving credit card programs; • the cost and ability of shipping companies, manufacturers, suppliers, digital marketing channels and vendors to deliver products, equipment, software and services; • the outcome of any pending or threatened litigation; • availability of qualified personnel; • the impact of the seasonality of our business; • changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission and Environmental, Social, and Governance (“ESG”) commitments and adverse outcomes from regulatory proceedings; • changes in the nature of key strategic relationships with partners, distributors, suppliers and vendors, including our increased reliance on social media platforms as a marketing tool; • domestic and international economic and business conditions and industry trends, including the impact of inflation and increased labor costs; • increases in market interest rates; • changes in tariffs, trade policy and trade relations and the U.K.'s exit from the European Union; • changes in trade policy and trade relations with China; • consumer spending levels, including the availability and amount of individual consumer debt; I-1 Table of Contents • the effects of our debt obligations; • advertising spending levels; • system interruption and the lack of integration and redundancy in the systems and infrastructures of our business; • changes in distribution and viewing of television programming, including the expanded deployment of video on demand technologies and Internet Protocol television and their impact on home shopping programming; • failure to protect the security of personal information, including as a result of cybersecurity threats and cybersecurity incidents, subjecting us to potentially costly government enforcement actions and/or private litigation and reputational damage; • the regulatory and competitive environment of the industries in which we operate; • threatened terrorist attacks, political unrest in international markets and ongoing military action around the world; • fluctuations in foreign currency exchange rates; • natural disasters, public health crises (including resurgences of COVID-19 and its variants or future pandemics or epidemics), political crises, and other catastrophic events or other events outside of our control, including climate change; • failure to successfully implement Project Athens (defined below); and • Qurate Retail's dependence on our cash flow for servicing its debt.
The following include some but not all of the factors that could cause actual results or events to differ materially from those anticipated: • customer demand for our products and services and our ability to attract new customers and retain existing customers by anticipating customer demand and adapting to changes in demand; • competitor responses to our products and services; • increased digital TV penetration and the impact on channel positioning of our programs; • the levels of online traffic on our websites and our ability to convert visitors into consumers or contributors; • uncertainties inherent in the development and integration of new business lines and business strategies; • our future financial performance, including availability, terms and deployment of capital; • our ability to effectively manage our installment sales plans and revolving credit card programs; • the cost and ability of shipping companies, manufacturers, suppliers, digital marketing channels and vendors to deliver products, equipment, software and services; • the outcome of any pending or threatened litigation; • availability of qualified personnel; • the impact of the seasonality of our business; • changes in, or failure or inability to comply with, government regulations, including, without limitation, regulations of the Federal Communications Commission and Environmental, Social, and Governance (“ESG”) commitments and adverse outcomes from regulatory proceedings; • changes in the nature of key strategic relationships with partners, distributors, suppliers and vendors, including our increased reliance on social media platforms as a marketing tool; • domestic and international economic and business conditions and industry trends, including the impact of inflation and increased labor costs; • increases in market interest rates; • changes in tariffs, trade policy and trade relations with the United Kingdom (“U.K.”) and China; • consumer spending levels, including the availability and amount of individual consumer debt; • the effects of our debt obligations; I-1 Table of Contents • advertising spending levels; • system interruption and the lack of integration and redundancy in the systems and infrastructures of our business; • changes in distribution and viewing of television programming, including the expanded deployment of video on demand technologies and Internet Protocol television and their impact on home shopping programming; • failure to protect the security of personal information, including as a result of cybersecurity threats and cybersecurity incidents, subjecting us to potentially costly government enforcement actions and/or private litigation and reputational damage; • the regulatory and competitive environment of the industries in which we operate; • threatened terrorist attacks, political unrest in international markets and ongoing military action around the world; • fluctuations in foreign currency exchange rates; • natural disasters, public health crises (such as COVID-19 and its variants or future pandemics or epidemics), political crises, and other catastrophic events or other events outside of our control, including climate change; • failure to successfully implement business improvement initiatives and growth strategies; and • dependence of QVC Group Inc., formerly known as Qurate Retail, Inc.
As a result of an interest in various cable operators attributed to Qurate Retail, the Company may be deemed to be a satellite cable programming vendor in which a cable operator has an attributable interest for purposes of various FCC rules regarding the distribution of video programming to MVPDs.
As a result of an interest in various cable operators attributed to QVC Group, the Company may be deemed to be a satellite cable programming vendor in which a cable operator has an attributable interest for purposes of various FCC rules regarding the distribution of video programming to MVPDs.
Zulily, LLC (“Zulily”) was a wholly owned subsidiary of Qurate Retail until its divestiture on May 24, 2023. QVC engaged with Zulily, which had been a wholly-owned subsidiary of Qurate Retail since October 2015. Zulily is not part of the results of operations or financial position of QVC presented in this Form 10-K.
Zulily, LLC (“Zulily”) was a wholly owned subsidiary of QVC Group until its divestiture on May 24, 2023. QVC engaged with Zulily, which had been a wholly-owned subsidiary of QVC Group since October 2015. Zulily is not part of the results of operations or financial position of QVC presented in this Annual Report on Form 10-K.
Demographics of customers We enjoy a very loyal customer base, as demonstrated by the fact that for the twelve months ended December 31, 2023, approximately 90% of our shipped sales came from repeat customers (i.e., customers who made a purchase from us during the prior twelve months), who spent an average of $1,442 each during this period.
Demographics of customers We enjoy a very loyal customer base, as demonstrated by the fact that for the twelve months ended December 31, 2024, approximately 91% of our shipped sales came from repeat customers (i.e., customers who made a purchase from us during the prior twelve months), who spent an average of $1,460 each during this period.
Our distribution centers and drop ship partners have shipped on average 388,000 units per day at QxH and 172,000 units per day for QVC-International during 2023. QVC has built a scalable operating infrastructure focused on sustaining efficient, flexible and cost-effective sale and distribution of our products.
Our distribution centers and drop ship partners have shipped on average 367,000 units per day at QxH and 176,000 units per day for QVC-International during 2024. QVC has built a scalable operating infrastructure focused on sustaining efficient, flexible and cost-effective sale and distribution of our products.
QVC employed approximately 18,400 full-time and part-time employees as of December 31, 2023, which includes 11,600 employees at QxH and 6,800 employees at QVC-International. Employment levels fluctuate due to seasonal factors affecting our business. Additionally, we utilize independent contractors and temporary staffing personnel to supplement our workforce, particularly on a seasonal basis.
QVC employed approximately 17,000 full-time and part-time employees as of December 31, 2024, which includes 10,600 employees at QxH and 6,400 employees at QVC-International. Employment levels fluctuate due to seasonal factors affecting our business. Additionally, we utilize independent contractors and temporary staffing personnel to supplement our workforce, particularly on a seasonal basis.
In the same period, QVC attracted approximately 2.7 million new customers and the global e-commerce operation comprised $5.5 billion, or 58.6%, of QVC's consolidated net revenue for the year ended December 31, 2023. We operate eleven distribution centers and four contact centers worldwide.
In the same period, QVC attracted approximately 2.5 million new customers and the global e-commerce operation comprised $5.5 billion, or 60.9%, of QVC's consolidated net revenue for the year ended December 31, 2024. We operate eleven distribution centers and four contact centers worldwide.
On a trailing twelve month basis, total consolidated customers were approximately 12.1 million which includes 8.1 million QxH customers and 4.0 million QVC-International customers. We believe our core customer base represents an attractive demographic target market.
On a trailing twelve month basis, total consolidated customers were approximately 11.6 million which includes 7.6 million QxH customers and 4.0 million QVC-International customers. We believe our core customer base represents an attractive demographic target market.
The settlement agreement also requires HSN to implement and maintain a compliance program to ensure compliance with the CPSA. Congress enacted the Commercial Advertisement Loudness Mitigation ("CALM") Act in 2010.
The settlement agreement also requires HSN to implement and maintain a compliance program to ensure compliance with the CPSA. I-9 Table of Contents Congress enacted the Commercial Advertisement Loudness Mitigation ("CALM") Act in 2010.
We seek to offer our customers an assortment of compelling, high-quality products. In the U.S., the QVC and HSN brands present on average 696 products and 533 products, respectively, every week on our live programming, approximately 42.0% and 28.3%, respectively, of which have not been presented previously to our television audience.
We seek to offer our customers an assortment of compelling, high-quality products. In the U.S., the QVC and HSN brands present on average 704 products and 544 products, respectively, every week on our live programming, approximately 44.5% and 28.0%, respectively, of which have not been presented previously to our television audience.
Federal legislation enacted in 2016 permanently extended the moratorium on state and local taxes on Internet access. I-10 Table of Contents Our e-commerce businesses are subject to domestic and foreign laws governing the collection, use, retention, security and transfer of personally-identifiable information about their users.
Various states also have adopted laws regulating certain aspects of internet communications. Federal legislation enacted in 2016 permanently extended the moratorium on state and local taxes on internet access. I-10 Table of Contents Our e-commerce businesses are subject to domestic and foreign laws governing the collection, use, retention, security and transfer of personally-identifiable information about their users.
Business * * * * * Cautionary Note Regarding Forward-Looking Statements Certain statements in this Annual Report on Form 10-K constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business, product and marketing strategies; the impact of the fire at the Rocky Mount fulfillment center; insurance recoveries; capital expenditures; revenue growth; the recoverability of our goodwill and other long-lived assets; our projected sources and uses of cash; repayment of debt; and the anticipated impact of certain contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business.
Business * * * * * Cautionary Note Regarding Forward-Looking Statements Certain statements in this Annual Report on Form 10-K constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our business, product and marketing strategies, including our WIN strategy; capital expenditures; revenue growth; the recoverability of our goodwill and other long-lived assets; our projected sources and uses of cash; repayment of debt; economic and macroeconomic trends; and the anticipated impact of certain contingent liabilities related to legal and tax proceedings and other matters arising in the ordinary course of business.
For example, Qurate Retail's dependence on our cash flow for servicing its debt and for other purposes is likely to result in our payment of large dividends to Qurate Retail, which may increase our leverage and decrease our liquidity.
For example, QVC Group's dependence on our cash flow for servicing its debt and for other purposes is likely to result in our payment of large dividends to QVC Group, which may increase our leverage and decrease our liquidity.
Order taking and fulfillment We take a majority of our orders via our websites and via mobile applications on iPhone, iPad, Apple Watch, Android and other devices. QxH and QVC-International customers placed appr oximately 43% and 36%, respectively, of all orders directly through their mobile devices in 2023.
Order taking and fulfillment We take a majority of our orders via our websites and via mobile applications on iPhone, iPad, Apple Watch, Android and other devices. QxH and QVC-International customers placed appr oximately 45.7% and 41.1%, respectively, of all orders directly through their mobile devices in 2024.
The table below illustrates QVC-International's digital sales since 2021: Years ended December 31, (in millions) 2023 2022 2021 QVC - International digital platform revenue $ 1,218 1,202 1,458 Total QVC - International net revenue 2,454 2,528 3,077 QVC - International digital platform % of total QVC - International net revenue 49.6 % 47.5 % 47.4 % QVC-Japan.
The table below illustrates QVC-International's digital sales since 2022: Years ended December 31, (in millions) 2024 2023 2022 QVC - International Digital Platform revenue $ 1,257 1,218 1,202 Total QVC - International net revenue 2,399 2,454 2,528 QVC - International Digital Platform % of total QVC - International net revenue 52.4 % 49.6 % 47.5 % QVC-Japan.
For the year ended December 31, 2023, our international operations, including our Digital platforms, generated $2.5 billion, or 26%, of consolidated net revenue and $325 million of Adjusted OIBDA (defined in note 15 to the accompanying notes to our consolidated financial statements).
For the year ended December 31, 2024, our international operations, including our Digital Platforms, generated $2.4 billion, or 27%, of consolidated net revenue and $333 million of Adjusted OIBDA (defined in note 15 to the accompanying notes to our consolidated financial statements).
The table below illustrates QxH's digital sales since 2021: Years ended December 31, (in millions) 2023 2022 2021 QxH digital platform revenue $ 4,321 4,450 5,003 Total QxH net revenue 6,995 7,359 8,277 QxH digital platform % of total QxH net revenue 61.8 % 60.5 % 60.4 % QVC-International Our international business brings the QVC shopping experience to approximately 124 million households outside the U.S., primarily in Germany, Austria, Japan, the U.K., the Republic of Ireland, and Italy.
The table below illustrates QxH's digital sales since 2022: Years ended December 31, (in millions) 2024 2023 2022 QxH Digital Platform revenue $ 4,219 4,321 4,450 Total QxH net revenue 6,598 6,995 7,359 QxH Digital Platform % of total QxH net revenue 63.9 % 61.8 % 60.5 % QVC-International Our international business brings the QVC shopping experience to approximately 124 million households, primarily in Germany, Japan, the U.K., and Italy.
Our global merchandise mix features: (i) home, (ii) apparel, (iii) beauty, (iv) accessories, (v) electronics and (vi) jewelry. Many of our brands are exclusive, while others are created by well-known designers.
Our global merchandise mix features: home, apparel, beauty, accessories, electronics and jewelry. Many of our brands are exclusive, while others are created by well-known designers.
Rawlinson II, also became president and chief executive officer of Qurate Retail during 2021. Qurate Retail's interests may not coincide with our interests or yours and Qurate Retail may cause us to enter into transactions or agreements with related parties or approve corporate actions that could involve conflicts of interest.
Rawlinson II, also became President and Chief Executive Officer of QVC Group during 2021. I-13 Table of Contents QVC Group's interests may not coincide with our interests or yours and QVC Group may cause us to enter into transactions or agreements with related parties or approve corporate actions that could involve conflicts of interest.
Qurate Retail relationship and related party transactions The Company is an indirect wholly-owned subsidiary of Qurate Retail (Nasdaq: QRTEA, QRTEB and QRTEP), which owns Cornerstone Brands, Inc. ("CBI"), as well as other minority investments. QVC is part of Qurate Retail Group ("QRG"), a portfolio of brands including QVC and CBI.
QVC Group relationship and related party transactions The Company is an indirect wholly-owned subsidiary of QVC Group (Nasdaq: QVCGA, QVCGB and QVCGP), which owns Cornerstone Brands, Inc. ("CBI"), as well as other minority investments. QVC is part of QVC Group, a portfolio of brands including QVC and CBI.
On December 30, 2020, the Company and Liberty Interactive LLC ("LIC") completed an internal realignment of the Company's global finance structure that resulted in a common control transaction with Qurate Retail.
I-12 Table of Contents On December 30, 2020, the Company and Liberty Interactive LLC ("LIC") completed an internal realignment of the Company's global finance structure that resulted in a common control transaction with QVC Group.
QxH, including our Digital Platforms, contributed $7.0 billion, or 74%, of consolidated net revenue and $746 million of Adjusted OIBDA (defined in note 15 to the accompanying notes to our consolidated financial statements) for the year ended December 31, 2023.
QxH, including our Digital Platforms, contributed $6.6 billion, or 73%, of consolidated net revenue and $765 million of Adjusted OIBDA (defined in note 15 to the accompanying notes to our consolidated financial statements) for the year ended December 31, 2024.
QxH's closest video shopping competitor is ShopHQ and our international operations face similar competition in their respective markets, such as Jupiter Shop Channel in Japan, HSE in Germany and Austria, GM24 in Italy, and The Jewellery Channel, Gems TV, and JML Direct in the U.K.
QxH's closest video shopping competitor is ShopHQ and our international operations face similar competition in their respective markets, such as Jupiter Shop Channel in Japan, HSE in Germany, and TJC, Ideal World, Gems TV, Must Have Ideas TV, and JML Direct in the U.K.
We consider our employee relations to be good and a key factor in our workforce strategy. Diversity, Equity, & Inclusion ("DE&I") .
We consider our employee relations to be good and a key factor in our workforce strategy. Inclusion and Belonging.
In addition to offering a variety of comprehensive health benefits plans, we also offer our team members a variety of mental, emotional, and physical wellness resources, among a number of other initiatives, such as greater access to telemedicine and home care help.
In addition to offering a variety of comprehensive health benefits plans, we also offer our team members a variety of mental, emotional, and physical wellness resources, among a number of other initiatives, such as greater access to telemedicine and home care help. Where applicable, we comply with country, state and local restrictions related to addressing specific health risks.
The Digital Millennium Copyright Act limits, but does not eliminate, liability for listing or linking to third party websites that may include content that infringes on copyrights or other rights so long as our Internet businesses comply with the statutory requirements. Various states also have adopted laws regulating certain aspects of Internet communications.
Both of these laws include statutory penalties for non-compliance. The Digital Millennium Copyright Act limits, but does not eliminate, liability for listing or linking to third party websites that may include content that infringes on copyrights or other rights so long as our internet businesses comply with the statutory requirements.
We paid $437 million, $1,270 million, and $963 million of dividends to Qurate Retail during the years ended December 31, 2023, 2022, and 2021, respectively. See also Item 1A. "Risk Factors." I-13 Table of Contents
We paid $108 million, $437 million, and $1,270 million of dividends to QVC Group during the years ended December 31, 2024, 2023, and 2022, respectively. See also Item 1A. "Risk Factors." I-14 Table of Contents
Privacy Shield. On December 13, 2022, the European Commission issued an adequacy decision initiating the formal adoption process for the DPF, and the E.U. formally adopted the adequacy decision on July 10, 2023. The U.S. and the E.U. implemented the DPF in July 2023.
In March 2022, the U.S. and the European Commission announced a new Transatlantic Data Privacy Framework (“DPF”) to replace the E.U.-U.S. Privacy Shield. On December 13, 2022, the European Commission issued an adequacy decision initiating the formal adoption process for the DPF, and the E.U. formally adopted the adequacy decision on July 10, 2023.
("Qurate Retail") (formerly known as Liberty Interactive Corporation). HSN, Inc. ("HSN"), now a subsidiary of QVC, began broadcasting television home shopping programming from its studios in St. Petersburg, Florida in 1981 and, by 1985, was broadcasting its programming through a national network of cable and local television stations 24 hours a day, seven days a week.
("HSN"), now a subsidiary of QVC, began broadcasting television home shopping programming in 1981 and, by 1985, was broadcasting its programming through a national network of cable and local television stations 24 hours a day, seven days a week.
Privacy Shield, and imposed new obligations on the use of Standard Contractual Clauses ("SCCs") - another key mechanism to allow data transfers between the U.S. and the E.U. The European Commission adopted revised SCCs on June 4, 2021. In March 2022, the U.S. and the European Commission announced a new Transatlantic Data Privacy Framework (“DPF”) to replace the E.U.-U.S.
Privacy Shield, and imposed new obligations on the use of Standard Contractual Clauses ("SCCs") - another key mechanism to allow data transfers between the U.S. and the E.U. The European Commission adopted revised SCCs on June 4, 2021. In October 2024, the European Commission announced a consultation regarding new SCCs, which may be adopted in final form in 2025.
In 2022 we launched on The Roku Channel, a leader in free, ad-supported streaming TV. Affiliation agreements We enter into long-term affiliation agreements with certain of our television distributors who downlink our programming and distribute the programming to their customers. The majority of our affiliation agreements with distributors have termination dates ranging from 2024 to 2029.
Affiliation agreements We enter into long-term affiliation agreements with certain of our television distributors who downlink our programming and distribute the programming to their customers. The majority of our affiliation agreements with distributors have termination dates ranging from 2025 to 2029.
Based on internal customer data for QxH, approximately 36% of our 8.1 million customers for the twelve months ended December 31, 2023 were women between the ages of 35 and 64. We do not depend on any single customer for a significant portion of our revenue.
Based on internal customer data for QxH, approximately 74% of our 7.6 million customers for the twelve months ended December 31, 2024 were women over the age of 50. We do not depend on any single customer for a significant portion of our revenue.
We remain committed to fostering an inclusive culture that ensures fairness and a sense of belonging for every team member, business partner and customer experience we offer by leveraging diversity in all its forms to deliver on our promise to continuously exceed expectations.
We remain committed to fostering an inclusive culture that ensures a sense of belonging for every team member, business partner and customer experience we offer by leveraging the backgrounds, perspectives and experiences of our team members to continuously exceed expectations and innovate for growth.
The CCPA took effect on January 1, 2020. The California Attorney General has issued implementation regulations and guidance regarding the law. In November 2020, California voters approved the California Privacy Rights Act of 2020 (“CPRA”), which amends and extends the CCPA and establishes the California Privacy Protection Agency to implement and enforce consumer privacy laws.
In November 2020, California voters approved the California Privacy Rights Act of 2020 (“CPRA”), which amends and extends the CCPA and establishes the California Privacy Protection Agency to implement and enforce consumer privacy laws.
The CAN-SPAM Act regulates the sending of unsolicited commercial email by requiring the email sender, among other things, to comply with specific disclosure requirements and to provide an "opt-out" mechanism for recipients. Both of these laws include statutory penalties for non-compliance.
Certain email activities are subject to the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, commonly known as the CAN-SPAM Act. The CAN-SPAM Act regulates the sending of unsolicited commercial email by requiring the email sender, among other things, to comply with specific disclosure requirements and to provide an "opt-out" mechanism for recipients.
On December 20, 2023, the FTC released a notice of proposed rulemaking seeking comment on revisions to the FTC’s COPPA regulations that would, among other things, further restrict the use and disclosure of children’s personal information. Certain email activities are subject to the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003, commonly known as the CAN-SPAM Act.
On December 20, 2023, the FTC released a notice of proposed rulemaking seeking comment on revisions to the FTC’s COPPA regulations that would, among other things, further restrict the use and disclosure of children’s personal information. The FTC rulemaking proceeding remains pending.
We believe that our significant market share, brand awareness, outstanding customer service, repeat customer base, flexible payments options, international reach and scalable infrastructure distinguish us from our competitors. History QVC was founded on June 13, 1986 by Joseph Segel. Our first U.S. live broadcast took place at 7:30 PM ET on November 24 of that year, reaching 7.6 million homes.
History QVC was founded on June 13, 1986 by Joseph Segel. Our first U.S. live broadcast took place at 7:30 PM ET on November 24 of that year, reaching 7.6 million homes.
Project Athens main initiatives include: (i) improve customer experience and grow relationships; (ii) rigorously execute core processes; (iii) lower cost to serve; (iv) optimize the brand portfolio; and (v) build new high growth businesses anchored in strength.
Project Athens main initiatives included: (i) improve customer experience and grow relationships; (ii) rigorously execute core processes; (iii) lower cost to serve; (iv) optimize the brand portfolio; and (v) build new high growth businesses. 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.
Where applicable, we continue to comply with country, state and local restrictions related to addressing COVID-19 and similar health risks. I-8 Table of Contents Government regulation The manner in which we sell and promote merchandise and related claims and representations made in connection with these efforts is regulated by federal and state law.
Government regulation The manner in which we sell and promote merchandise and related claims and representations made in connection with these efforts is regulated by federal and state law.
On June 27, 2022, Qurate Retail announced a five-point turnaround plan designed to stabilize and differentiate its core HSN and QVC-US businesses and expand the Company's leadership in video streaming commerce (“Project Athens”).
There were no borrowings by CBI outstanding on the Fifth Amended and Restated Credit Agreement as of December 31, 2024 and December 31, 2023. On June 27, 2022, QVC Group announced a five-point turnaround plan designed to stabilize and differentiate its core HSN and QVC-U.S. businesses and expand the Company's leadership in video streaming commerce (“Project Athens”).
Our DE&I commitments focus on the following areas: leadership representation, leadership accountability, education and awareness, culture, consumers & marketplace, community impact and transparency. We serve a broad and diverse range of customers around the world and we strive to understand the lives they lead in order to deliver authentic customer experiences with meaningful curated products.
We serve a broad range of customers around the world and we strive to understand the lives they lead in order to deliver authentic customer experiences with meaningful curated products and broad representation in our marketing, digital and on-air activities. Team Member Engagement and Enablement.
The results of these surveys are used by management to improve the overall team member experience and retention, as well as help to inform our approach to company programs and practices.
The results of these surveys are used by management to improve the overall team member experience and retention, as well as help to inform our approach to company programs and practices. For example, based in part on feedback from team members we have established workstreams focused on career development, leadership competencies, and meeting free days. Health and Safety.
QVC-Italy broadcasts live for 17 hours each day on satellite and digital terrestrial television. QVC-Italy also operates digital platforms including a website, a mobile application and social media pages. China Joint Venture .
QVC-Italy broadcasts live for 17 hours each day on satellite and digital terrestrial television. QVC-Italy also operates digital platforms including a website, a mobile application and social media pages. Merchandise We believe that our ability to combine product and programming helps us create competitive advantages over traditional brick-and-mortar and internet retailers.
QVC recorded $9 million of related party interest income for each of the years ended December 31, 2023 and 2022, included in interest expense, net in the consolidated statement of operations. On October 27, 2021, a notice was issued to all holders to redeem any and all outstanding MSI Exchangeables (as defined below) on December 13, 2021.
QVC recorded $8 million and $9 million of related party interest income for each of the years ended December 31, 2024 and 2023, respectively, included in interest expense, net in the consolidated statement of operations.
QVC implemented a workforce reduction and recorded restructuring charges of $13 million and $24 million in restructuring, penalties and fire related costs, net of (recoveries) in the consolidated statement of operations during the years ended December 31, 2023 and 2022, respectively.
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 implemented its turnaround plan.
We are a "close corporation" under Delaware law and, as such, our stockholder, rather than a board of directors, manages our business.
The consolidation is part of QVC’s organizational and strategic changes intended to support the Company’s growth strategy. We are currently evaluating the financial impact of the consolidation and anticipate recording severance and accelerated depreciation. We are a "close corporation" under Delaware law and, as such, our stockholder, rather than a board of directors, manages our business.
E.U. government entities and regulatory authorities continue to pursue additional regulation of “cookies” and other Internet tracking tools but the timing of enactment of the final regulations is uncertain.
The U.S. and the E.U. implemented the DPF in July 2023. The timing of enactment of the E.U.’s proposed ePrivacy Regulation, which, among other things, would adopt additional regulation of “cookies” and other internet tracking tools is uncertain.
We believe our long-term relationships with major U.S. television distributors, including cable operators (e.g., Comcast, Charter Communications and Cox), satellite television providers (e.g., DISH and DIRECTV) and telecommunications companies (e.g., Verizon and AT&T), provide us with broad distribution, favorable channel positioning and significant competitive advantages.
DIRECTV and DISH) and telecommunications companies (e.g., Verizon and AT&T), provide us with broad distribution, favorable channel positioning and significant competitive advantages. We believe that our significant market share, brand awareness, outstanding customer service, repeat customer base, flexible payments options, international reach and scalable infrastructure distinguish us from our competitors.
Most of the CPRA’s provisions became effective on January 1, 2023. A growing number of states have enacted privacy laws in recent years. In 2023, Delaware, Florida, Indiana, Iowa, Montana, Oregon, Tennessee and Texas enacted such laws. In addition to California, Colorado, Virginia, Utah and Connecticut previously had enacted comprehensive privacy legislation.
Since the enactment of the CCPA, the following 19 additional states have enacted comprehensive privacy legislation: Colorado, Connecticut, Delaware, Florida, Indiana, Iowa, Kentucky, Maryland, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, Oregon, Rhode Island, Tennessee, Texas, Utah and Virginia.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeRisk Factor Summary The following is a summary of the material risk factors that could adversely affect our business, financial condition, and results of operations: Risks Related to Our Financial Condition and Business • Improvements in operating results from expected savings in operating costs from Project Athens and other cost saving and business improvement initiatives may not be realized in the anticipated amounts, may take longer to be realized, or could be realized only for a limited period. • The retail business environment is subject to intense competition, and we may not be able to effectively compete for customers. • Our net revenue and operating results depend on our ability to predict or respond to consumer preferences. • Our long-term success depends in large part on our continued ability to attract new customers and retain existing customers and we may not be able to do that in a cost-effective manner. • We depend on the television distributors that carry our programming and no assurance can be given that we will be able to maintain and renew our affiliation agreements on favorable terms or at all. • The failure to maintain suitable placement for our programming or to adapt to changes in consumer behavior driven by online video distribution platforms for viewing content could adversely affect our ability to attract and retain television viewers and could result in a decrease in revenue. • We may be subject to claims for representations made in connection with the sale and promotion of merchandise or for harm experienced by customers who purchase merchandise from us. • Failure to comply with existing laws, rules and regulations, including any new legislation or regulations related to climate change, or to obtain and maintain required licenses and rights, could subject us to additional liabilities. • Use of social media and influencers may materially and adversely affect our reputation or subject us to fines or other penalties. • Environmental, Social, and Governance (“ESG”) risks could threaten our businesses’ financial outcomes, partnerships, and reputation. • We may fail to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties. • We offer our installment payment option on most of our merchandise and, in certain circumstances, offer it as the default payment option.
Biggest changeRisk Factor Summary The following is a summary of the material risk factors that could adversely affect our business, financial condition, and results of operations: Risks Related to Our Financial Condition and Business • Business improvement initiatives focused on promoting business growth strategies and generating cost savings may not be successful in generating operating results in the anticipated amounts, it may take longer than expected to realize, or they could produce such results for only for a limited period. • The retail business environment is subject to intense competition, and we may not be able to effectively compete for customers. • Our net revenue and operating results depend on our ability to predict or respond to consumer preferences. • Our long-term success depends in large part on our continued ability to attract new customers and retain existing customers and we may not be able to do that in a cost-effective manner. • We depend on the television distributors that carry our programming and no assurance can be given that we will be able to maintain and renew our affiliation agreements on favorable terms or at all. • The failure to maintain suitable placement for our programming or to adapt to changes in consumer behavior driven by online video distribution platforms for viewing content could adversely affect our ability to attract and retain television viewers and could result in a decrease in revenue. • We may be subject to claims for representations made in connection with the sale and promotion of merchandise or for harm experienced by customers who purchase merchandise from us. • Failure to comply with existing laws, rules and regulations, including any new legislation or regulations related to climate change, or to obtain and maintain required licenses and rights, could subject us to additional liabilities. • Use of social media and influencers may materially and adversely affect our reputation or subject us to fines or other penalties. • Legislation or regulations related to climate change and focus by governmental and non-governmental organizations, stockholders and customers on sustainability issues may have a material adverse effect on our business and results of operations. • We may fail to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties. • We offer our installment payment option on most of our merchandise and, in certain circumstances, offer it as the default payment option.
Failure to effectively manage our installment sales plans and revolving credit card programs could negatively impact our results of operations We offer an installment payment option in all of our markets other than Japan, which is available on certain merchandise we sell.
Failure to effectively manage our installment sales plans and revolving credit card programs could negatively impact our results of operations We offer an installment payment option in all our markets other than Japan, which is available on certain merchandise we sell.
Risks Related to Economic Conditions • We have operations outside of the U.S. that are subject to numerous operational and financial risks. • Fluctuations in currency exchange rates may lead to lower revenues and earnings. • Weak and uncertain economic conditions worldwide may reduce consumer demand for our products and services. • Increases in market interest rates could increase our operating costs and decrease consumer demand, which may adversely affect our business. • Significant developments stemming from U.S. and international trade policy with China, including in response to forced labor and human rights abuses in China, may adversely impact our business and operating results.
Risks Related to Economic Conditions • We have operations outside of the U.S. that are subject to numerous operational and financial risks. • Fluctuations in currency exchange rates may lead to lower revenues and earnings. • Weak and uncertain economic conditions worldwide may reduce consumer demand for our products and services. • Uncertainty and increases in market interest rates could increase our operating costs and decrease consumer demand, which may adversely affect our business. • Significant developments stemming from U.S. and international trade policy with China, including in response to forced labor and human rights abuses in China, may adversely impact our business and operating results.
Significant developments stemming from U.S. and international trade policy with China, including in response to forced labor and human rights abuses in China, may adversely impact our business and operating results The imposition of any new U.S. tariffs on Chinese imports or the taking of other actions against China in the future, and any responses by China, could impair our ability to meet customer demand and could result in lost sales or an increase in our cost of merchandise, which would have a material adverse impact on our business and results of operations.
Significant developments stemming from U.S. and international trade policy with China, including in response to forced labor and human rights abuses in China, may adversely impact our business and operating results The imposition of any new or additional U.S. tariffs on Chinese imports or the taking of other actions against China in the future, and any responses by China, could impair our ability to meet customer demand and could result in lost sales or an increase in our cost of merchandise, which would have a material adverse impact on our business and results of operations.
Finally, certain of these regulations impact the marketing efforts of our brands and business. Use of social media and influencers may materially and adversely affect our reputation or subject us to fines or other penalties We use third-party social media platforms as, among other things, marketing tools.
Finally, certain of these regulations impact the marketing efforts of our brands and business. Use of social media and influencers may materially and adversely affect our reputation or subject us to fines or other penalties We use third-party social media platforms as, among other things, selling and marketing tools.
Many of our products are endorsed by celebrities, designers and other well-known personalities who often join our presenters on our live programming and provide lead-in publicity on their own social media pages, websites and other customer touchpoints.
Many of our products are endorsed by celebrities, designers and other well-known personalities and influencers who often join our presenters on our live programming and provide lead-in publicity on their own social media pages, websites and other customer touchpoints.
Specifically, personally identifiable information is increasingly subject to changing legislation and regulations, in numerous jurisdictions around the world, which are intended to protect the privacy of personal information that is collected, processed and transmitted in or from the governing jurisdiction.
Specifically, personal identifiable information is increasingly subject to changing legislation and regulations, in numerous jurisdictions around the world, which are intended to protect the privacy of personal information that is collected, processed and transmitted in or from the governing jurisdiction.
As a result, we are subject to a wide variety of laws, rules, regulations, policies and procedures in various jurisdictions, including foreign jurisdictions, which are subject to change at any time, including laws regarding consumer protection, privacy, the regulation of retailers generally, the license requirements for television retailers in foreign jurisdictions, the importation, sale and promotion of merchandise and the operation of retail stores and warehouse facilities, as well as laws and regulations applicable to the Internet and businesses engaged in online and mobile commerce, such as those regulating the sending of unsolicited, commercial electronic mail and texts.
As a result, we are subject to a wide variety of laws, rules, regulations, policies and procedures in various jurisdictions, including foreign jurisdictions, which are subject to change at any time, including laws regarding consumer protection, privacy, the regulation of retailers generally, the license requirements for television retailers in foreign jurisdictions, the importation, sale and promotion of merchandise and the operation of warehouse facilities, as well as laws and regulations applicable to the internet and businesses engaged in online and mobile commerce, such as those regulating the sending of unsolicited, commercial electronic mail and texts.
Future outlook declines in revenue, cash flows, or other factors could result in a further decrease in fair value that may result in a determination that carrying value adjustments are required, which could be material, and we could be required to record additional impairment charges on our goodwill or other identifiable intangible assets in the future, which could result in reductions to stockholders’ equity and material non-cash charges to our earnings and may negatively impact our stock price and financial condition.
Future outlook declines in revenue, cash flows, or other factors could result in a sustained decrease in fair value that may result in a determination that carrying value adjustments are required, which could be material, and we could be required to record additional impairment charges on our goodwill or other identifiable intangible assets in the future, which could result in reductions to stockholders’ equity and material non-cash charges to our earnings and may negatively impact our stock price and financial condition.
Additional disruptions or delays as a result of shifting capacity or failing to maintain arrangements with our third party logistic service providers could cause disruptions to our order fulfillment process, causing delays in delivering product to customers which would result in lost sales, strain our relationships with customers, and cause harm to our reputation, any of which could have a material adverse impact on our business, financial condition and operating results.
Future disruptions or delays as a result of shifting capacity or failing to maintain arrangements with our third party logistic service providers could cause disruptions to our order fulfillment process, causing delays in delivering product to customers which would result in lost sales, strain our relationships with customers, and cause harm to our reputation, any of which could have a material adverse impact on our business, financial condition and operating results.
The processing, storage, sharing, use, disclosure and protection of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements or differing views of personal privacy rights In the processing of consumer transactions and managing our employees, our business receives, transmits and stores a large volume of personally identifiable information and other user data.
The processing, storage, sharing, use, disclosure and protection of personal data could give rise to liabilities as a result of governmental regulation, conflicting legal requirements and policies or differing views of personal privacy rights In the processing of consumer transactions and managing our employees, our business receives, transmits and stores a large volume of personal identifiable information and other user data.
An increasing number of companies offering streaming services, including some with exclusive high-quality original video programming, as well as programming networks offering content directly to consumers over the internet, have increased the number of entertainment choices available to consumers, which has intensified audience fragmentation. The increase in entertainment choices adversely affects the viewership of our programming.
The increasing number of companies offering streaming services, including some with exclusive high-quality original video programming, as well as programming networks offering content directly to consumers over the internet, has increased the number of entertainment choices available to consumers, which has intensified audience fragmentation. The increase in entertainment choices adversely affects the viewership of our programming.
In addition, as a result of COVID-19 we experienced material negative impacts to our financial results, including our capital and liquidity, decreases in the disposable income of existing and potential new customers, heightened inflation, increased currency volatility resulting in adverse currency rate fluctuations and higher interest rates.
In addition, we experienced material negative impacts to our financial results as a result of COVID-19 and the resulting economic disruption, including to our capital and liquidity, decreases in the disposable income of existing and potential new customers, heightened inflation, increased currency volatility resulting in adverse currency rate fluctuations and higher interest rates.
Our insurance coverage may not be applicable to, or sufficient to cover, all claims, costs, and damages we may incur as a result of COVID-19, or future pandemic or epidemic, which would result in our bearing such costs and could have a material adverse effect on our business, financial condition and results of operations.
Our insurance coverage may not be applicable to, or sufficient to cover, all claims, costs, and damages we may incur as a result of a future pandemic or epidemic, which would result in our bearing such costs and could have a material adverse effect on our business, financial condition and results of operations.
If any of these relationships were to terminate or if a shipping company was unable to fulfill its obligations under its contract for any reason, we would have to work with other shipping companies to deliver merchandise to customers, which would most likely be at less favorable rates.
If any of these relationships were to terminate or if a shipping company is unable to fulfill its obligations under its contract for any reason, we would have to work with other shipping companies to deliver merchandise to customers, which would most likely be at less favorable rates.
Limitations imposed as a part of the debt, such as the availability of credit and the existence of restrictive covenants may, among other things: • make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on the notes and our other indebtedness; • restrict us from making strategic acquisitions or cause us to make non-strategic divestitures; • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes on satisfactory terms or at all; • limit our flexibility to plan for, or react to, changes in our business and industry; • place us at a competitive disadvantage compared to our less leveraged competitors; and • limit our ability to respond to business opportunities.
I-35 Table of Contents Limitations imposed as a part of the debt, such as the availability of credit and the existence of restrictive covenants may, among other things: • make it difficult for us to satisfy our financial obligations, including making scheduled principal and interest payments on the notes and our other indebtedness; • restrict us from making strategic acquisitions or cause us to make non-strategic divestitures; • limit our ability to borrow additional funds for working capital, capital expenditures, acquisitions or other general business purposes on satisfactory terms or at all; • limit our flexibility to plan for, or react to, changes in our business and industry; • place us at a competitive disadvantage compared to our less leveraged competitors; and • limit our ability to respond to business opportunities.
Our Ecommerce business could be negatively affected by changes in third-party digital platform algorithms and dynamics as well as our inability to monetize the resulting web traffic The success of our Ecommerce business and our online marketing efforts depends on a high degree of website traffic, which is dependent on many factors, including the availability of appealing website content, user loyalty and new user generation from various digital marketing channels that charge a fee.
Our e-commerce business could be negatively affected by changes in third-party digital platform algorithms and dynamics as well as our inability to monetize the resulting web traffic The success of our e-commerce business and our online marketing efforts depends on a high degree of website traffic, which is dependent on many factors, including the availability of appealing website content, user loyalty and new user generation from various digital marketing channels that charge a fee.
Covenants in our debt agreements restrict our business in many ways Our senior secured credit facility and the indentures governing the notes contain various covenants that limit our ability and/or our restricted subsidiaries’ ability to, among other things: • incur or assume liens or additional debt or provide guarantees in respect of obligations of other persons; • pay dividends or make distributions or redeem or repurchase capital stock; • prepay, redeem or repurchase debt; • make loans, investments and capital expenditures; • enter into agreements that restrict distributions from our subsidiaries; • sell assets and capital stock of our subsidiaries; • enter into sale and leaseback transactions; • enter into certain transactions with affiliates; • consolidate or merge with or into, or sell substantially all of our assets to, another person; and • designate our subsidiaries as unrestricted subsidiaries.
I-36 Table of Contents Covenants in our debt agreements restrict our business in many ways Our senior secured credit facility and the indentures governing the notes contain various covenants that limit our ability and/or our restricted subsidiaries’ ability to, among other things: • incur or assume liens or additional debt or provide guarantees in respect of obligations of other persons; • pay dividends or make distributions or redeem or repurchase capital stock; • prepay, redeem or repurchase debt; • make loans, investments and capital expenditures; • enter into agreements that restrict distributions from our subsidiaries; • sell assets and capital stock of our subsidiaries; • enter into sale and leaseback transactions; • enter into certain transactions with affiliates; • consolidate or merge with or into, or sell substantially all of our assets to, another person; and • designate our subsidiaries as unrestricted subsidiaries.
In February 2023, we sold the Rocky Mount facility to a third party. Inbound deliveries and customer returns that were previously sent to the Rocky Mount facility are now routed through other distribution facilities within the Company’s distribution network and to third party logistic service providers.
In February 2023, we sold the Rocky Mount facility to a third party. Inbound deliveries and customer returns that were previously sent to the Rocky Mount facility are now routed through other distribution facilities within the Company’s distribution network and, to a lesser extent, third party logistic service providers.
Our future success will depend, in part, on our ability to anticipate and adapt to technological changes and to offer elements of our programming via new technologies in a cost-effective manner that meets customer demands and evolving industry standards.
Our future success will depend, in part, on our ability to anticipate and adapt to technological changes and to offer elements of our programming via new technologies in a cost-effective manner that meet customer demands and evolving industry standards.
Our Ecommerce business may experience difficulty in the ongoing development, implementation and customer acceptance of applications for personal electronic devices, which could harm our business Although our Ecommerce business has developed services and applications to address user and consumer interaction with website content on personal electronic devices, such as smartphones and tablets, the ways in which consumers use or rely on these personal electronic devices is continually changing.
Our e-commerce business may experience difficulty in the ongoing development, implementation and customer acceptance of applications for personal electronic devices, which could harm our business Although our e-commerce business has developed services and applications to address user and consumer interaction with website content on personal electronic devices, such as smartphones and tablets, the ways in which consumers use or rely on these personal electronic devices is continually changing.
Global financial markets may 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 China, Japan and Europe deteriorate our customers may respond by suspending, delaying, or reducing their discretionary spending. A suspension, delay or reduction in discretionary spending could adversely affect revenue.
Global financial markets may 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 China, Japan and Europe deteriorate our customers may respond by suspending, delaying, or reducing their discretionary spending. Any further suspension, delay or reduction in discretionary spending could adversely affect revenue.
Although we are the U.S.’s largest television shopping retailer, we have numerous and varied competitors at the national and local levels, ranging from large department stores to specialty shops, electronic retailers, direct marketing retailers, wholesale clubs, discount retailers, other televised shopping retailers such as ShopHQ and Jewelry TV in the U.S., Jupiter Shop Channel in Japan, HSE in Germany and Austria, GM24 in Italy, and Ideal World in the U.K., infomercial retailers, Internet retailers, including livestream shopping retailers, and mail-order and catalog companies.
Although we are the U.S.’s largest television shopping retailer, we have numerous and varied competitors at the national and local levels, ranging from large department stores to specialty shops, electronic retailers, direct marketing retailers, wholesale clubs, discount retailers, other televised shopping retailers such as ShopHQ and JTV (Jewelry Television) in the U.S., Jupiter Shop Channel in Japan, HSE in Germany, GM24 in Italy, and Ideal World in the U.K., infomercial retailers, internet retailers, including livestream shopping retailers and platforms, and mail-order and catalog companies.
Additionally, Mobile application distribution platforms, such as Apple’s App Store and the Amazon Appstore for Android, may require that third party digital platforms and ecommerce companies present users with an option where the user chooses to opt-in or opt-out of tracking technology used by these third party digital platforms or included in mobile applications.
Additionally, mobile application distribution platforms, such as Apple’s App Store and the Amazon Appstore for Android, may require that third party digital platforms and e-commerce companies present users with an option where the user chooses to opt-in or opt-out of tracking technology used by these third party digital platforms or included in mobile applications.
For example, as a result of COVID-19 many consumers significantly increased their use of ecommerce which resulted in a significant increase in the volume of packages handled by third-party carriers, including those we rely on, which resulted in delayed merchandise deliveries and caused our customers to experience delays in their order delivery.
For example, as a result of COVID-19 many consumers significantly increased their use of e-commerce which resulted in a significant increase in the volume of packages handled by third-party carriers, including those we rely on, which resulted in delayed merchandise deliveries and caused our customers to experience delays in their order delivery.
The processing, storage, sharing, use, disclosure and protection of this information are governed by the privacy and data security policies maintained by us. Moreover, there are federal, state and international laws regarding privacy and the processing, storage, sharing, use, disclosure and protection of personally identifiable information and user data.
The processing, storage, sharing, use, disclosure and protection of this information are governed by the privacy and data security policies maintained by us. Moreover, there are federal, state and international laws regarding privacy and the processing, storage, sharing, use, disclosure and protection of personal identifiable information and user data.
Similarly, new disclosure and reporting requirements, established under existing or new state or federal laws, such as regulatory rules regarding requirements to disclose efforts to identify the origin and existence of certain "conflict minerals" or abusive labor practices in portions of our supply chain, could increase the cost of doing business, adversely affecting our results of operations.
Similarly, new disclosure and reporting requirements, established under existing or new state or federal laws, such as requirements to disclose efforts to identify the origin and existence of certain "conflict minerals" or abusive labor practices in portions of our supply chain, could increase the cost of doing business, adversely affecting our results of operations.
Additionally, as new devices and new platforms are continually being released, it is difficult to predict the challenges that may be encountered in developing versions of our Ecommerce business offering for use on these alternative devices, and our Ecommerce business may need to devote significant resources to the creation, support, and maintenance of their services on such devices.
Additionally, as new devices and new platforms are continually being released, it is difficult to predict the challenges that may be encountered in developing versions of our e-commerce business offering for use on these alternative devices, and our e-commerce business may need to devote significant resources to the creation, support, and maintenance of their services on such devices.
I-24 Table of Contents Our business is subject to cyber security risks, including cyber security threats and cybersecurity incidents, such as security breaches and identity theft Through our operations, sales, marketing activities, and use of third-party information, we collect and store certain non-public personal information that customers provide to purchase products, enroll in promotional programs, register on websites, or otherwise communicate with us.
Our business is subject to cyber security risks, including cyber security threats and cybersecurity incidents, such as security breaches and identity theft Through our operations, sales, marketing activities, and use of third-party information, we collect and store certain non-public personal information that customers provide to purchase products, enroll in promotional programs, register on websites, or otherwise communicate with us.
The full potential impact to us of the UFPLA and similar potential legislations in other countries and jurisdictions remains uncertain and could have an adverse effect on our business and results of operations.
The full potential impact to us of the UFLPA and similar potential legislations in other countries and jurisdictions remains uncertain and could have an adverse effect on our business and results of operations.
Consequently, until our leverage ratio under our senior secured notes is not greater than 3.5 to 1.0, Qurate Retail will not be able to rely on our cash flow for any purposes other than the service of its debt and to pay certain tax obligations related to us and our subsidiaries (which payments may be made by us under an intercompany tax sharing agreement).
Consequently, until our leverage ratio under our senior secured notes is not greater than 3.5 to 1.0, QVC Group will not be able to rely on our cash flow for any purposes other than the service of its debt and to pay certain tax obligations related to us and our subsidiaries (which payments may be made by us under an intercompany tax sharing agreement).
Third-party digital platforms, such as Google and Facebook, frequently update and change the logic that determines the placement and display of results of a user’s search, or advertiser content, such that the purchased or algorithmic placement of advertisements or links to the websites of our Ecommerce business can be negatively affected.
Third-party digital platforms, such as Google and Facebook, frequently update and change the logic that determines the placement and display of results of a user’s search, or advertiser content, such that the purchased or algorithmic placement of advertisements or links to the websites of our e-commerce business can be negatively affected.
If a major search engine or third-party digital platform changes its algorithms in a manner that negatively affects our paid advertisement distribution or unpaid search ranking, the business and financial performance of our Ecommerce business would be adversely affected, potentially to a material extent.
If a major search engine or third-party digital platform changes its algorithms in a manner that negatively affects our paid advertisement distribution or unpaid search ranking, the business and financial performance of our e-commerce business would be adversely affected, potentially to a material extent.
Although we believe we take reasonable and customary measures to ensure continued satellite transmission capability and that these international transponder service agreements can be renewed (or replaced, if necessary) in the ordinary course of business, termination or interruption of satellite I-23 Table of Contents transmissions may occur, particularly if we are not able to successfully negotiate renewals or replacements of any of our expiring transponder service agreements in the future.
Although we believe we take reasonable and customary measures to ensure continued satellite transmission capability and that these international transponder service agreements can be renewed (or replaced, if necessary) in the ordinary course of business, termination or interruption of satellite transmissions may occur, particularly if we are not able to successfully negotiate renewals or replacements of any of our expiring transponder service agreements in the future.
System interruption and the lack of integration and redundancy in these systems and infrastructures may adversely affect our ability to transmit our television programs, operate websites, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations Our success depends, in part, on our ability to maintain the integrity of our transmissions, systems and infrastructures, including the transmission of our television programs, as well as our websites, information and related systems, contact centers and fulfillment facilities.
I-27 Table of Contents System interruption and the lack of integration and redundancy in these systems and infrastructures may adversely affect our ability to transmit our television programs, operate websites, process and fulfill transactions, respond to customer inquiries and generally maintain cost-efficient operations Our success depends, in part, on our ability to maintain the integrity of our transmissions, systems and infrastructures, including the transmission of our television programs, as well as our websites, information and related systems, contact centers and fulfillment facilities.
I-26 Table of Contents Risks Related to Economic Conditions We have operations outside of the U.S. that are subject to numerous operational and financial risks We have operations in countries other than the U.S. and we are subject to the following risks inherent in international operations: • fluctuations in currency exchange rates; • longer payment cycles for sales in foreign countries that may increase the uncertainty associated with recoverable accounts; • recessionary conditions and economic instability, including fiscal policies that are implementing austerity measures in certain countries, which are affecting markets overseas; • inflationary pressures, such as those the market is currently experiencing, which may increase the costs of the products we sell, as well as the shipping and delivery of these products; • our ability to repatriate funds held by our foreign subsidiaries to the U.S. at favorable tax rates; • potentially adverse tax consequences; • export and import restrictions, changes in tariffs, trade policies and trade relations; • disruptions to international shipping and supply chains; • increases in taxes and governmental royalties and fees; • our ability to obtain and maintain required licenses or certifications, such as for web services and electronic devices, that enable us to operate our business in foreign jurisdictions; • changes in foreign and U.S. laws, regulations and policies that govern operations of foreign-based companies; • changes to general consumer protection laws and regulations; • difficulties in staffing and managing international operations; and • threatened and actual terrorist attacks, political unrest in international markets and ongoing military action around the world that may result in disruptions of services that are critical to our international businesses.
Risks Related to Economic Conditions We have operations outside of the U.S. that are subject to numerous operational and financial risks We have operations in countries other than the U.S. and we are subject to the following risks inherent in international operations: • fluctuations in currency exchange rates; • longer payment cycles for sales in foreign countries that may increase the uncertainty associated with recoverable accounts; • recessionary conditions and economic instability may affect markets overseas; • inflationary pressures, such as those the market is currently experiencing, which have increased, and may in the future increase the costs of the products we sell, as well as the shipping and delivery of these products; • our ability to repatriate funds held by our foreign subsidiaries to the U.S. at favorable tax rates; • potentially adverse tax consequences; • export and import restrictions, changes in tariffs, trade policies and trade relations; • disruptions to international shipping and supply chains; • increases in taxes and governmental royalties and fees; I-29 Table of Contents • our ability to obtain and maintain required licenses or certifications, such as for web services and electronic devices, that enable us to operate our business in foreign jurisdictions; • changes in foreign and U.S. laws, regulations and policies that govern operations of foreign-based companies; • changes to general consumer protection laws and regulations; • difficulties in staffing and managing international operations; and • threatened and actual terrorist attacks, political unrest in international markets and ongoing military action around the world that may result in disruptions of services that are critical to our international businesses.
Additionally, a future pandemic or epidemic, including a resurgence of COVID-19, may adversely impact our ability to comply with various legal and contractual obligations and may expose us to increased litigation, including labor and employment claims, breach of contract claims and consumer claims by our customers.
Additionally, a future pandemic or epidemic may adversely impact our ability to comply with various legal and contractual obligations and may expose us to increased litigation, including labor and employment claims, breach of contract claims and consumer claims by our customers.
Even if our Ecommerce business is successful in generating a high level of website traffic, no assurance can be given that our Ecommerce business will be successful in achieving repeat user loyalty or that new visitors will explore the offerings on our site.
Even if our e-commerce business is successful in generating a high level of website traffic, no assurance can be given that our e-commerce business will be successful in achieving repeat user loyalty or that new visitors will explore the offerings on our site.
If the services or applications we develop in response to changes in consumer behavior are defective, unstable or viewed as ineffective by consumers, our Ecommerce business may experience difficulty attracting and retaining traffic on these platforms.
If the services or applications we develop in response to changes in consumer behavior are defective, unstable or viewed as ineffective by consumers, our e-commerce business may experience difficulty attracting and retaining traffic on these platforms.
Any of these events could cause transmission or system interruption, delays and loss of critical data, and could prevent us from providing services, fulfilling orders and/or processing transactions. While we have backup systems for certain aspects of our operations, these systems are not fully redundant and disaster recovery planning is not sufficient for all possible risks.
Any of these events could cause transmission or system interruption, delays and loss of critical data, and could prevent us from providing services, fulfilling orders and/or processing transactions. While we have backup systems for many aspects of our operations, our systems are not fully redundant and disaster recovery planning is not sufficient for all possible scenarios.
I-17 Table of Contents The failure to maintain suitable placement for our programming or to adapt to changes in consumer behavior driven by online video distribution platforms for viewing content could adversely affect our ability to attract and retain television viewers and could result in a decrease in revenue We are dependent upon the continued ability of our programming to compete for viewers.
The failure to maintain suitable placement for our programming or to adapt to changes in consumer behavior driven by online video distribution platforms for viewing content could adversely affect our ability to attract and retain television viewers and could result in a decrease in revenue We are dependent upon the continued ability of our programming to compete for viewers.
These distribution platforms are driving changes in consumer behavior as consumers seek more control over when, where and how they consume content. Consumers are increasingly turning to online sources for viewing content, which has and likely will continue to reduce the number of viewers of our television programming.
These distribution platforms are driving changes in consumer behavior as consumers seek more control over when, where and how they consume content. I-19 Table of Contents Consumers are increasingly turning to online sources for viewing content, which has and likely will continue to reduce the number of viewers of our television programming.
These factors or future developments could include the incurrence of higher than expected costs or delays in workforce reduction measures, actual savings differing from anticipated cost savings, anticipated benefits from business improvement initiatives not materializing and disruptions to normal operations or other unintended adverse impacts resulting from the initiatives.
These factors or future developments could include the incurrence of higher than expected costs or delays in workforce reduction I-17 Table of Contents measures, actual savings differing from anticipated cost savings, anticipated benefits from business improvement initiatives not materializing and disruptions to normal operations or other unintended adverse impacts resulting from the initiatives.
Our inability to compete effectively with regard to the assortment, product price, shipping terms, shipping pricing or free shipping and quality of the merchandise we offer for sale or to keep pace with I-16 Table of Contents competitors in our marketing, service, location, reputation, credit availability and technologies, could have a material adverse effect.
Our inability to compete effectively with regard to the assortment, product price, shipping terms, shipping pricing or free shipping and quality of the merchandise we offer for sale or to keep pace with competitors in our marketing, service, location, reputation, credit availability and technologies, could have a material adverse effect.
If we were unsuccessful, the lenders under our senior secured credit facility and the holders of our existing notes could demand repayment of the indebtedness owed to them on the relevant maturity date, which could adversely affect our financial condition. I-33 Table of Contents Despite our current level of indebtedness, we may still incur substantially more indebtedness.
If we were unsuccessful, the lenders under our senior secured credit facility and the holders of our existing notes could demand repayment of the indebtedness owed to them on the relevant maturity date, which could adversely affect our financial condition. Despite our current level of indebtedness, we may still incur substantially more indebtedness.
I-30 Table of Contents The unanticipated loss of certain larger vendors or the consolidation of our vendors could negatively impact our sales and profitability on a short term basis It is possible that one or more of our larger vendors could experience financial difficulties, including bankruptcy, or otherwise could elect to cease doing business with us.
The unanticipated loss of certain larger vendors or the consolidation of our vendors could negatively impact our sales and profitability on a short-term basis It is possible that one or more of our larger vendors could experience financial difficulties, including bankruptcy, or otherwise could elect to cease doing business with us.
For example, Qurate Retail’s dependence on our cash flow for servicing Qurate Retail’s debt and for other purposes, including payments of dividends on Qurate Retail’s capital stock, stock repurchases or to fund acquisitions or other operational requirements of Qurate Retail and its subsidiaries is likely to result in our payment of large dividends to Qurate Retail when permitted by law or the terms of our senior secured credit facility and the indentures governing our outstanding senior secured notes, which may increase our accumulated deficit or require us to borrow under our senior secured credit facility, increasing our leverage and decreasing our liquidity.
For example, QVC Group’s dependence on our cash flow for servicing QVC Group’s debt and for other purposes, including payments of dividends on QVC Group’s capital stock, stock repurchases or to fund acquisitions or other operational requirements of QVC Group and its subsidiaries is likely to result in our payment of large dividends to QVC Group when permitted by law or the terms of our senior secured credit facility and the indentures governing our outstanding senior secured notes, which may increase our accumulated deficit or require us to borrow under our senior secured credit facility, increasing our leverage and decreasing our liquidity.
I-32 Table of Contents Our level of indebtedness could limit our flexibility in responding to current market conditions, adversely affect our financial position, prevent us from meeting our obligations under our debt instruments or otherwise restrict our business activities The existence of and limitations on the availability of our debt could have important consequences.
Our level of indebtedness could limit our flexibility in responding to current market conditions, adversely affect our financial position, prevent us from meeting our obligations under our debt instruments or otherwise restrict our business activities The existence of and limitations on the availability of our debt could have important consequences.
We cannot be certain that we will be able to identify alternative sources for our products without delay or without greater cost to us.
We cannot be certain that we would be able to identify alternative sources for our products without delay or without greater cost to us.
Risks Related to our Facilities and Third-Party Suppliers and Vendors We rely on distribution facilities to operate our business, and any damage to one of these facilities, or any disruptions caused by incorporating new facilities into our operations, could have a material adverse impact on our business We operate a limited number of distribution facilities worldwide.
I-31 Table of Contents Risks Related to our Facilities and Third-Party Suppliers and Vendors We rely on distribution facilities to operate our business, and any damage to one of these facilities, or any disruptions caused by incorporating new facilities into our operations, could have a material adverse impact on our business We operate a limited number of distribution facilities worldwide.
We have made significant distributions to Qurate Retail in the past. See Item 1. "Business - Qurate Retail relationship and related party transactions." Risks Related to Our Indebtedness We have a substantial amount of indebtedness, which could adversely affect our financial position and prevent us from fulfilling our debt obligations We have a substantial amount of indebtedness.
We have made significant distributions to QVC Group in the past. See Item 1. "Business - QVC Group relationship and related party transactions." Risks Related to Our Indebtedness We have a substantial amount of indebtedness, which could adversely affect our financial position and prevent us from fulfilling our debt obligations We have a substantial amount of indebtedness.
We may be limited in our ability to pay dividends or make other restricted payments to Qurate Retail Our bond indentures limit our ability to pay dividends or make other restricted payments if we are in default on our senior secured notes and our consolidated leverage ratio is greater than 3.5 to 1.0.
We may be limited in our ability to pay dividends or make other restricted payments to QVC Group Our bond indentures limit our ability to pay dividends or make other restricted payments if we are in default on our senior secured notes and our consolidated leverage ratio is greater than 3.5 to 1.0.
We may fail to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties We regard our intellectual property rights, including our service marks, trademarks, patents and domain names, copyrights (including our programming and our websites), trade secrets and similar intellectual property, as critical to our success.
I-22 Table of Contents We may fail to adequately protect our intellectual property rights or may be accused of infringing intellectual property rights of third parties We regard our intellectual property rights, including our service marks, trademarks, patents and domain names, copyrights (including our programming and our websites), trade secrets and similar intellectual property, as critical to our success.
In the U.S., QxH has agreements with a large consumer financial institution (the "Bank") pursuant to which the Bank provides revolving credit directly to our customers for the sole purpose of purchasing merchandise from us with a Private Label Credit Card ("PLCC").
I-23 Table of Contents In the U.S., QxH has agreements with a large consumer financial institution (the "Bank") pursuant to which the Bank provides revolving credit directly to our customers for the sole purpose of purchasing merchandise from us with a Private Label Credit Card ("PLCC").
The interests of our stockholder may not coincide with your interests and our stockholder may make decisions with which you may disagree Our stockholder is an indirect wholly owned subsidiary of Qurate Retail. As a “close corporation” under Delaware law, our stockholder, rather than a board of directors, manages our business.
The interests of our stockholder may not coincide with your interests and our stockholder may make decisions with which you may disagree Our stockholder is an indirect wholly owned subsidiary of QVC Group. As a “close corporation” under Delaware law, our stockholder, rather than a board of directors, manages our business.
Although we do not knowingly do business with XPCC, we could be subject to penalties, I-28 Table of Contents fines or sanctions if any of the vendors from which we purchase goods is found to have dealings, directly or indirectly with XPCC or entities it controls.
Although we do not knowingly do business with XPCC, we could be subject to penalties, fines or sanctions if any of the vendors from which we purchase goods is found to have dealings, directly or indirectly with XPCC or entities it controls.
The seasonality of our business places increased strain on our operations Our net revenue in recent years indicates that our business is seasonal due to a higher volume of sales in the fourth calendar quarter related to year-end holiday shopping.
I-33 Table of Contents The seasonality of our business places increased strain on our operations Our net revenue in recent years indicates that our business is seasonal due to a higher volume of sales in the fourth calendar quarter related to year-end holiday shopping.
As existing Ecommerce and social media platforms continue to rapidly evolve and new platforms develop, we must continue to maintain a presence on these platforms and establish presences on new or emerging popular social media platforms.
As existing e-commerce and social media platforms continue to rapidly evolve and new platforms develop, we must continue to maintain a presence on these platforms and establish presences on new or emerging popular social media platforms.
There can be no assurance that the long term effects of COVID-19, or the future occurrence of a pandemic or epidemic, will not result in recession for the U.S. economy and other major global economies and we anticipate our businesses and operations would be materially adversely affected by a prolonged recession in the U.S. and other major markets.
There can be no assurance that the future occurrence of a pandemic or epidemic, will not result in recession for the U.S. economy and other major global economies and we anticipate our businesses and operations would be materially adversely affected by a prolonged recession in the U.S. and other major markets.
Any failure to sustain user traffic or to monetize such traffic could materially adversely affect the financial performance of our Ecommerce business and, as a result, adversely affect our financial results.
Any failure to sustain user traffic or to monetize such traffic could materially adversely affect the financial performance of our e-commerce business and, as a result, adversely affect our financial results.
In recent years, we have earned, on average, between 21% and 24% of our global revenue in each of the first three quarters of the year and between 30% and 32% of our global revenue in the fourth quarter of the year.
In recent years, we have earned, on average, between 22% and 24% of our global revenue in each of the first three quarters of the year and 30% of our global revenue in the fourth quarter of the year.
As a “close corporation” under Delaware law, our stockholder, rather than a board of directors, manages our business. Our stockholder is an indirect wholly owned subsidiary of Qurate Retail, meaning that we do not have any independent governing body.
As a “close corporation” under Delaware law, our stockholder, rather than a board of directors, manages our business. Our stockholder is an indirect wholly owned subsidiary of QVC Group, meaning that we do not have any independent governing body.
This could exacerbate the risks associated with our existing indebtedness. • Covenants in our debt agreements restrict our business in many ways. • We may be limited in our ability to pay dividends or make other restricted payments to Qurate Retail.
This could exacerbate the risks associated with our existing indebtedness. • Covenants in our debt agreements restrict our business in many ways. • We may be limited in our ability to pay dividends or make other restricted payments to QVC Group.
Violation of the I-18 Table of Contents QVC consent decree may result in the imposition of significant civil penalties for non-compliance and related redress to consumers and/or the issuance of an injunction enjoining us from engaging in prohibited activities.
Violation of the QVC consent decree may result in the imposition of significant civil penalties for non-compliance and related redress to consumers and/or the issuance of an injunction enjoining us from engaging in prohibited activities.
While we have made significant distributions to Qurate Retail in the past, we will be unable to do so in the near term and Qurate Retail may need to obtain other funding sources for any purposes other than to service its debt.
While we have made significant distributions to QVC Group in the past, we will be unable to do so in the near term and QVC Group may need to obtain other funding sources for any purposes other than to service its debt.
We cannot assure you that if we experience turnover of our key employees we will I-31 Table of Contents be able to recruit and retain acceptable replacements because the market for such employees is very competitive and limited.
We cannot assure you that if we experience turnover of our key employees we will be able to recruit and retain acceptable replacements because the market for such employees is very competitive and limited.
Our failure, and/or the failure by the various third party vendors and service providers with which we do business, to comply with applicable privacy policies or federal, state or similar international laws and regulations, or changes in applicable laws and regulations, or any compromise of security that results in the unauthorized release of personally identifiable information or other user data could damage our reputation and the reputation of our third party vendors and service providers, discourage potential users from trying our products and services and/or result in fines and/or proceedings by governmental agencies and/or consumers, any one or all of which could adversely affect our business, financial condition and results of operations.
Our failure, and/or the failure by the various third party vendors and service providers with which we do business, to comply with applicable privacy policies or federal, state or similar international laws and regulations, or changes in applicable laws and regulations, or changes in the policies of third party platforms where we conduct business, or any compromise of security that results in the unauthorized release of personal identifiable information or other user data could damage our reputation and the reputation of our third party vendors and service providers, discourage potential users from trying our products and services and/or result in fines and/or proceedings by governmental agencies and/or consumers and/or result in limits on our use of personal information we use in the operation of our business, any one or all of which could adversely affect our business, financial condition and results of operations.
For example, these types of events could negatively impact consumer spending in the impacted regions or depending upon the severity, globally, which could adversely impact our business, financial condition and results of operations.
For example, these types of events I-24 Table of Contents could negatively impact consumer spending in the impacted regions or depending upon the severity, globally, which could adversely impact our business, financial condition and results of operations.
Any litigation of this nature, regardless of outcome or merit, could result in I-20 Table of Contents substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition and results of operations.
Any litigation of this nature, regardless of outcome or merit, could result in substantial costs and diversion of management and technical resources, any of which could adversely affect our business, financial condition and results of operations.
From time to time, legislative proposals are made to increase federal, state and local minimum wage rates , to limit exemptions from federal and state minimum wage laws for white collar jobs and to create or extend benefit I-21 Table of Contents programs, such as health insurance and paid sick and other leave programs.
From time to time, legislative proposals are made to increase federal, state and local minimum wage rates , to limit exemptions from federal and state minimum wage laws for white collar jobs and to create or extend benefit programs, such as health insurance and paid sick and other leave programs.
Following the "Brexit" withdrawal of the U.K. from the E.U., on June 28, 2021, the European Commission determined that the U.K.’s data protection laws essentially are equivalent to data protection laws in the European Economic Area. As a result, personal data transfers from the E.U. to the U.K. may continue without a new data transfer framework.
(“Brexit”), on June 28, 2021, the European Commission determined that the U.K.’s data protection laws essentially are equivalent to data protection laws in the European Economic Area. As a result, personal data transfers from the E.U. to the U.K. may continue without a new data transfer framework.
Investors should bear in mind our current lack of independent directors, the positions with Qurate Retail that are held by Mr. Rawlinson and corporate governance measures in formulating their investment decisions.
Investors should bear in mind our current lack of independent directors, the positions with QVC Group that are held by Mr. Rawlinson and corporate governance measures in formulating their investment decisions.
Fire, flood, power loss, I-25 Table of Contents telecommunications failure, hurricanes, tornadoes, earthquakes, public health crises (such as pandemics and epidemics), acts of war or terrorism, acts of God and similar events or disruptions may damage or interrupt television transmissions, computer, broadband or other communications systems and infrastructures at any time.
Fire, flood, power loss, telecommunications failure, hurricanes, tornadoes, earthquakes, public health crises (such as pandemics and epidemics), acts of war or terrorism, geopolitical tension, acts of God and similar events or disruptions may damage or interrupt television transmissions, computer, broadband or other communications systems and infrastructures at any time.
The majority of our affiliation agreements with distributors are scheduled to expire between 2024 to 2029 unless renewed prior to the applicable expiration. As part of normal course renewal discussions, occasionally we have disagreements with our distributors over the terms of our carriage, such as channel placement or other contract terms.
The majority of our affiliation agreements with distributors have expired and are in renegotiations or are scheduled to expire between 2025 to 2029 unless renewed prior to the applicable expiration. As part of normal course renewal discussions, occasionally we have disagreements with our distributors over the terms of our carriage, such as channel placement or other contract terms.
I-27 Table of Contents Weak and uncertain economic conditions worldwide may reduce consumer demand for our products and services Prolonged economic weakness and uncertainty in various regions of the world in which we and our subsidiaries and affiliates operate could 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 during times of inflation, recession and economic instability.
Weak and uncertain economic conditions worldwide may reduce consumer demand for our products and services Prolonged economic weakness and uncertainty in various regions of the world in which we and 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 during times of inflation, recession and economic instability.
As a result, Qurate Retail controls certain aspects of our management, including the approval of significant corporate transactions such as a change of control. The interests of Qurate Retail may not coincide with our interests or your interests.
As a result, QVC Group controls certain aspects of our management, including the approval of significant corporate transactions such as a change of control. The interests of QVC Group may not coincide with our interests or your interests.
Future delays by manufacturers and vendors could result in delays to delivery dates to our customers, which could result in the cancellation of orders, customers’ refusal to accept deliveries, a reduction in purchase prices and ultimately, termination of customer relationships.
Delays by manufacturers and vendors as a result of a future pandemic or epidemic could also result in delays to delivery dates to our customers, which could result in the cancellation of orders, customers’ refusal to accept deliveries, a reduction in purchase prices and ultimately, termination of customer relationships.
Further, the General Data Protection Regulation (“GDPR”), which became effective in 2018, gives consumers in the E.U. additional rights and imposes additional restrictions and penalties on companies for illegal collection and misuse of personal information.
The U.S. and the E.U. implemented the DPF in July 2023. Further, the General Data Protection Regulation (“GDPR”), which became effective in 2018, gives consumers in the E.U. additional rights and imposes additional restrictions and penalties on companies for illegal collection and misuse of personal information.
While our bond indentures and our senior I-34 Table of Contents secured credit facility credit agreement both allow for unlimited dividends to service the debt of Qurate Retail so long as there is no default (i.e., no leverage test is needed), we will remain limited in our ability to distribute cash to Qurate for any other purpose.
While our bond indentures and our senior secured credit facility credit agreement both allow for unlimited dividends to service the debt of QVC Group so long as there is no default (i.e., no leverage test is needed), we will remain limited in our ability to distribute cash to QVC Group for any other purpose.
Furthermore, as laws and regulations and public opinion rapidly evolve to govern the use of these platforms and devices, the failure by us, our employees, or our network of celebrities, designers and other well-known personalities to abide by applicable laws and regulations in the use of these platforms and devices or otherwise could subject us to regulatory investigations, class action lawsuits, liability, fines or other penalties and have a material adverse effect on our business, financial condition and operating results.
The failure by us, our employees, or our network of celebrities, designers and other well-known personalities and influencers to abide by applicable laws and regulations in the use of these platforms and devices or otherwise could subject us to regulatory investigations, class action lawsuits, liability, fines or other penalties and have a material adverse effect on our business, financial condition and operating results.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeGovernance Role of the Qurate Retail Board of Directors The Qurate Retail board of directors has overall responsibility for risk oversight and has delegated to its Audit Committee primary enterprise risk oversight responsibility, including privacy and cybersecurity risk exposures, policies and practices, the steps management takes to detect, monitor and mitigate such risks and the potential impact of those exposures on our business, financial results, operations and reputation.
Biggest changeI-38 Table of Contents Governance Role of the QVC Group Board of Directors The QVC Group board of directors has overall responsibility for risk oversight and has delegated to its Audit Committee primary enterprise risk oversight responsibility, including privacy and cybersecurity risk exposures, policies and practices, the steps management takes to detect, monitor and mitigate such risks and the potential impact of those exposures on our business, financial results, operations and reputation.
The VP Information Security provides regular reporting to the ISSC and QVC executive management, including quarterly updates on security hot topics, threat intelligence, incidents (if any) and the status of the cybersecurity program to the Chief Executive Officer and the broader executive leadership team.
The VP of Cybersecurity provides regular reporting to the ISSC and QVC executive management, including quarterly updates on security hot topics, threat intelligence, incidents (if any) and the status of the cybersecurity program to the Chief Executive Officer and the broader executive leadership team.
QVC’s VP Information Security has more than 30 years of IT experience and holds multiple certifications, including Certified Information Security System Professional and Certified Information Security Manager.
QVC’s VP of Cybersecurity has more than 30 years of IT experience and holds multiple certifications, including Certified Information Security System Professional and Certified Information Security Manager.
The Audit Committee receives quarterly updates on the enterprise risk management program, including cybersecurity risks and the initiatives undertaken to identify, assess and mitigate such risks. This cybersecurity reporting may include threat and incident reporting, vulnerability detection reporting, risk mitigation metrics, systems and security operations updates, employee education initiatives, and internal audit observations, if applicable.
QVC Group’s audit committee receives quarterly updates on the enterprise risk management program, including cybersecurity risks and the initiatives undertaken to identify, assess and mitigate such risks. This cybersecurity reporting may include threat and incident reporting, vulnerability detection reporting, risk mitigation metrics, systems and security operations updates, employee education initiatives, and internal audit observations, if applicable.
Together this management team has worked at a variety of companies, including large publicly traded companies, implementing and managing IT and cybersecurity programs and teams, developing tools and processes to protect internal networks, business applications, customer facing applications and customer payment systems. I-36 Table of Contents
Together this management team has worked at a variety of companies, including large publicly traded companies, implementing and managing IT and cybersecurity programs and teams, developing tools and processes to protect internal networks, business applications, customer facing applications and customer payment systems. I-39 Table of Contents
The ISSC has management oversight responsibility for assessing and managing technology and operational risk, including information security, fraud, vendor, data protection and privacy, business continuity and resilience, and cybersecurity risks at Qurate Retail and at QVC. At QVC, the VP Information Security is responsible for day-to-day management and oversight of cybersecurity, including assessing, monitoring and mitigating cybersecurity risk.
The ISSC has management oversight responsibility for assessing and managing technology and operational risk, including information security, fraud, vendor, data protection and privacy, business continuity and resilience, and cybersecurity risks at QVC Group and at QVC. At QVC, the VP of Cybersecurity is responsible for day-to-day management and oversight of cybersecurity, including assessing, monitoring and mitigating cybersecurity risk.
The experience of the combined QVC and Qurate Retail management teams includes a diverse background in telecom, retail and other industries, with decades of experience in various aspects of technology and cybersecurity.
The experience of the combined QVC and QVC Group management teams includes a diverse background in telecom, retail and other industries, with decades of experience in various aspects of technology and cybersecurity.
I-35 Table of Contents Impact of cybersecurity risks on business strategy, results of operations or financial condition As of the date of this Annual Report on Form 10-K, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition.
Impact of cybersecurity risks on business strategy, results of operations or financial condition As of the date of this Annual Report on Form 10-K, we are not aware of any risks from cybersecurity threats that have materially affected or are reasonably likely to materially affect our business strategy, results of operations or financial condition.
Role of Management Through a services agreement between Qurate Retail and Liberty Media Corporation (“LMC”), Qurate Retail has established a cross functional Information Security Steering Committee (“ISSC”) with executives from the Legal, Accounting, Internal Audit and Risk Management, Cybersecurity and Facilities departments.
Role of Management Through a services agreement between QVC Group and Liberty Media Corporation (“LMC”), QVC Group has established a cross functional Information Security Steering Committee (“ISSC”) with executives from the Legal, Accounting, Internal Audit and Risk Management, Cybersecurity and Facilities departments.
In addition to the efforts undertaken by the Audit Committee, Qurate Retail’s board of directors regularly reviews matters relating to cybersecurity risk and cybersecurity risk management. Any material cybersecurity events are brought to the attention of Qurate Retail’s board of directors once the event is deemed material.
In addition to the efforts undertaken by the audit committee, QVC Group’s board of directors regularly reviews matters relating to cybersecurity risk and cybersecurity risk management. Any material cybersecurity events are brought to the attention of QVC Group’s board of directors once the event is deemed material.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe believe that the duration of each lease is adequate and we do not anticipate any future problems renewing or obtaining suitable leases for our principal properties. On December 18, 2021, QxH experienced a fire at its Rocky Mount distribution center in North Carolina and as a result closed the facility.
Biggest changeWe believe that the duration of each lease is adequate and we do not anticipate any future problems renewing or obtaining suitable leases for our principal properties.
Our corporate headquarters and the remainder of our material properties are summarized as follows: Properties Location Type Own or Lease Operating Segment West Chester, Pennsylvania Corporate Headquarters Lease QxH Kassel, Germany Contact Center Own QVC-International Bethlehem, Pennsylvania Distribution Center Lease QxH Suffolk, Virginia Distribution Center Lease QxH Florence, South Carolina Distribution Center Lease QxH Ontario, California Distribution Center Lease QxH Piney Flats, Tennessee Distribution Center Lease QxH Chiba, Japan Distribution Center Own QVC-International Hückelhoven, Germany Distribution Center Lease QVC-International St.
Our corporate headquarters and the remainder of our material properties are summarized as follows: Properties Location Type Own or Lease Operating Segment West Chester, Pennsylvania Corporate Headquarters Lease QxH Bethlehem, Pennsylvania Distribution Center Lease QxH Suffolk, Virginia Distribution Center Lease QxH Florence, South Carolina Distribution Center Lease QxH Ontario, California Distribution Center Lease QxH Piney Flats, Tennessee Distribution Center Lease QxH Chiba, Japan Distribution Center Own QVC-International Hückelhoven, Germany Distribution Center Lease QVC-International St.
Removed
The Company leveraged its existing fulfillment centers and supplemented these facilities with short-term leased space as needed during 2022 and 2023. We continue to assess our network footprint and are making investments to expand capacity and increase throughput as a result of the loss of the Rocky Mount fulfillment center.
Removed
In December 2023, QVC entered into an agreement to sell an owned and operated property in Germany to an independent third party. This property is owned as of December 31, 2023, but included as an assets held for sale noncurrent in the accompanying consolidated balance sheet.
Removed
Refer to note 18 in the accompanying notes to our consolidated financial statements for further details.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities There is no established trading market for our equity securities. There is one holder of record of our equity, Qurate Retail Group, Inc., an indirect wholly-owned subsidiary of Qurate Retail, Inc. ("Qurate Retail"). See also Item 1.
Biggest changeItem 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities There is no established trading market for our equity securities. There is one holder of record of our equity, Qurate Retail Group, Inc., an indirect wholly-owned subsidiary of QVC Group, Inc., formerly Qurate Retail, Inc. (“QVC Group”). See also Item 1.
“Business - Qurate Retail relationship and related party transactions" for information related to our dividends to Qurate Retail and note 7 to our consolidated financial statements for our debt issuance descriptions. Item 6. [Reserved]
“Business - QVC Group relationship and related party transactions" for information related to our dividends to QVC Group and note 7 to our consolidated financial statements for our debt issuance descriptions. Item 6. [Reserved]

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. [Reserved] II- 1 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations II- 1 Item 7A. Quantitative and Qualitative Disclosures About Market Risk II- 18 Item 8. Financial Statements and Supplementary Data II- 19
Biggest changeItem 6. [Reserved] II- 1 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations II- 1 Item 7A. Quantitative and Qualitative Disclosures About Market Risk II- 15 Item 8. Financial Statements and Supplementary Data II- 16

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeII-4 Table of Contents Results of Operations- QVC Consolidated QVC's operating results were as follows: Years ended December 31, (in millions) 2023 2022 2021 Net revenue $ 9,449 9,887 11,354 Operating costs and expenses: Cost of goods sold (exclusive of depreciation, amortization and Rocky Mount inventory losses shown below) 6,273 6,751 7,368 Operating 739 760 791 Selling, general and administrative excluding stock-based compensation 1,366 1,268 1,194 Adjusted OIBDA (defined below) 1,071 1,108 2,001 Restructuring, penalties and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) (196) (10) 21 Gains on sale of assets and sale leaseback transactions (113) (520) — Impairment losses 326 2,600 — Stock-based compensation 37 36 44 Depreciation 90 111 159 Amortization 282 290 270 Operating income (loss) 645 (1,399) 1,507 Other (expense) income: Equity in losses of investee — — (2) (Losses) gains on financial instruments (1) (9) 8 Interest expense, net (228) (228) (249) Foreign currency (loss) gain (10) 32 (9) Gain (loss) on extinguishment of debt 10 (6) (7) Other income — 20 11 (229) (191) (248) Income (loss) before income taxes 416 (1,590) 1,259 Income tax expense (205) (220) (408) Net income (loss) 211 (1,810) 851 Less net income attributable to the noncontrolling interest (52) (57) (64) Net income (loss) attributable to QVC, Inc. stockholder $ 159 (1,867) 787 Net revenue Net revenue for each of QVC's segments was as follows: Years ended December 31, (in millions) 2023 2022 2021 QxH $ 6,995 7,359 8,277 QVC-International 2,454 2,528 3,077 Consolidated QVC $ 9,449 9,887 11,354 QVC's consolidated net revenue decreased 4.4% and 12.9% for the years ended December 31, 2023 and 2022, respectively, as compared to the corresponding prior years.
Biggest changeII-3 Table of Contents Results of Operations- QVC Consolidated QVC's operating results were as follows: Years ended December 31, (in millions) 2024 2023 Net revenue $ 8,997 9,449 Operating costs and expenses: Cost of goods sold (exclusive of depreciation, amortization and Rocky Mount inventory losses shown below) 5,905 6,273 Operating 693 739 Advertising 312 289 Selling, general and administrative excluding stock-based compensation and advertising 989 1,077 Adjusted OIBDA (defined below) 1,098 1,071 Impairment losses 1,480 326 Restructuring, penalties and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) 18 (196) Gains on sales of assets and sale leaseback transactions (1) (113) Stock-based compensation 20 37 Depreciation 77 90 Amortization 274 282 Operating (loss) income (770) 645 Other (expense) income: Losses on financial instruments — (1) Interest expense, net (251) (228) Foreign currency gain (loss) 9 (10) Gain on extinguishment of debt — 10 Other expense (7) — (249) (229) (Loss) income before income taxes (1,019) 416 Income tax expense (3) (205) Net (loss) income (1,022) 211 Less: net income attributable to the noncontrolling interest (47) (52) Net (loss) income attributable to QVC, Inc. stockholder $ (1,069) 159 Net revenue Net revenue for each of QVC's segments was as follows: Years ended December 31, (in millions) 2024 2023 QxH $ 6,598 6,995 QVC-International 2,399 2,454 Consolidated QVC $ 8,997 9,449 QVC's consolidated net revenue decreased $452 million, or 4.8% for the year ended December 31, 2024.
QVC's international business employs product sourcing teams who select products tailored to the interests of each local market. The Company's Japanese operations ("QVC-Japan") are conducted through a joint venture with Mitsui & Co. LTD. QVC-Japan is owned 60% by the Company and 40% by Mitsui.
QVC's international business employs product sourcing teams who select products tailored to the interests of each local market. The Company's Japanese operations ("QVC-Japan") are conducted through a joint venture with Mitsui & Co., LTD ("Mitsui"). QVC-Japan is owned 60% by the Company and 40% by Mitsui.
Global financial markets may 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 Japan and Europe, continue to be uncertain or deteriorate, our customers may respond by suspending, delaying or reducing their discretionary spending.
Global financial markets may 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, our customers may respond by suspending, delaying or reducing their discretionary spending.
No mandatory prepayments will be required other than when borrowings and letter of credit usage exceed availability; provided that, if Zulily, CBI, QVC Global or any other borrower (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.
No mandatory prepayments will be required other than when borrowings and letter of credit usage exceed availability; provided that, if CBI, QVC Global or any other borrower (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.
Impairment losses QVC recorded an impairment loss of $326 million for the year ended December 31, 2023 related to the decrease in fair value of the QxH reporting unit as a result of the quantitative assessment that was performed by the Company (refer to note 6 to the accompanying consolidated financial statements).
QVC recorded an impairment loss of $326 million for the year ended December 31, 2023 related to the decrease in fair value of the QxH reporting unit as a result of the quantitative assessment that was performed by the Company (refer to note 6 to the accompanying consolidated financial statements).
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; AST Sub, Inc.; 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.
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.
QVC is comprised of the reportable segments of QxH, which is comprised of 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.
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.
The Fifth Amended and Restated Credit Agreement may be borrowed by any Borrower, with each Borrower jointly and severally liable for the outstanding borrowings. Borrowings 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.
The Fifth Amended and Restated Credit Agreement may be borrowed by any Borrower, with each Borrower jointly and severally liable for the outstanding borrowings. Borrowings 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.
Although QVC will not be able to make unlimited dividends or other restricted payments under the senior secured notes leverage basket, QVC will continue to be permitted to make unlimited dividends to parent entities of QVC to service the principal and interest when due in respect of indebtedness of such parent entities (so long as there is no default under the indentures governing QVC’s senior secured notes) and permitted to make certain restricted payments to Qurate Retail under an intercompany tax sharing agreement in respect of certain tax obligations of QVC and its subsidiaries.
Although QVC will not be able to make unlimited dividends or other restricted payments under the senior secured notes leverage basket, QVC will continue to be permitted to make unlimited dividends to parent entities of QVC to service the principal and interest when due in respect of indebtedness of such parent entities (so long as there is no default under the indentures governing QVC’s senior secured notes) and permitted to make certain restricted payments to QVC Group under an intercompany tax sharing agreement in respect of certain tax obligations of QVC and its subsidiaries.
Although QVC will not be able to make unlimited dividends or other restricted payments under the senior secured notes leverage basket, QVC will continue to be permitted to make unlimited dividends under the senior secured notes to parent entities of QVC to service the principal and interest when due in respect of indebtedness of such parent entities (so long as there is no default under the indentures governing QVC’s senior secured notes) and permitted to make certain restricted payments to Qurate Retail under an intercompany tax sharing agreement in respect of certain tax obligations of QVC and its subsidiaries.
Although QVC will not be able to make unlimited dividends or other restricted payments under the senior secured notes leverage basket, QVC will continue to be permitted to make unlimited dividends under the senior secured notes to parent entities of QVC to service the principal and interest when due in respect of indebtedness of such parent entities (so long as there is no default under the indentures governing QVC’s senior secured notes) and permitted to make certain restricted payments to QVC Group under an intercompany tax sharing agreement in respect of certain tax obligations of QVC and its subsidiaries.
As of December 31, 2023, QVC’s consolidated leverage ratio (as calculated under QVC’s senior secured notes) was greater than 3.5 to 1.0 and as a result QVC is restricted in its ability to make dividends or other restricted payments under the senior secured notes.
As of December 31, 2024, QVC’s consolidated leverage ratio (as calculated under QVC’s senior secured notes) was greater than 3.5 to 1.0 and as a result, QVC is restricted in its ability to make dividends or other restricted payments under the senior secured notes.
As of December 31, 2023, QVC’s consolidated leverage ratio (as calculated under QVC’s senior secured notes) was greater than 3.5 to 1.0 and as a result QVC is restricted in its ability to make dividends or other restricted payments under the senior secured notes.
As of December 31, 2024, QVC’s consolidated leverage ratio (as calculated under QVC’s senior secured notes) was greater than 3.5 to 1.0 and as a result QVC is restricted in its ability to make dividends or other restricted payments under the senior secured notes.
The Company's U.S. programming is also available on QVC.com and HSN.com, which we refer to as our "U.S. websites"; virtual multichannel video programming distributors (including Hulu + Live TV, DirecTV Stream and YouTube TV); applications via streaming video; Facebook Live, Roku, Apple TV, Amazon Fire, Xfinity Flex and Samsung TV Plus; mobile applications; social media pages and over-the-air broadcasters.
The Company's U.S. programming is also available on QVC.com and HSN.com, which we refer to as our "U.S. websites"; virtual multichannel video programming distributors (including Hulu + Live TV, DirecTV Stream and YouTube TV); applications via streaming video; Facebook Live, Roku, Apple TV, Amazon Fire, Xfinity Flex and Samsung TV Plus; mobile applications; social media pages and over-the-air broadcasters (collectively, our “Digital Platforms”).
II-12 Table of Contents The Fifth Amended and Restated 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 leverage ratio.
The Fifth Amended and Restated 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 leverage ratio.
A discussion of our results of operations for the year ended December 31, 2021 is included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations-QVC Consolidated” section in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the “SEC”) at http://www.sec.gov.
A discussion of our results of operations for the year ended December 31, 2023 is included in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations-QVC Consolidated” section in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2023 filed with the Securities and Exchange Commission (the “SEC”) at http://www.sec.gov.
There are no restrictions under the debt agreements on QVC’s ability to pay dividends or make other restricted payments if QVC is not in default on its senior secured notes or the Fifth Amended and Restated Credit Agreement and (i) with respect to QVC’s senior secured notes, QVC’s consolidated leverage ratio would be no greater than 3.5 to 1.0 and (ii) with respect to the Fifth Amended and Restated Credit Agreement, the consolidated net leverage basket for QVC, QVC Global and CBI, would be no greater than 4.0 to 1.0.
II-11 Table of Contents There are no restrictions under the debt agreements on QVC’s ability to pay dividends or make other restricted payments if QVC is not in default on its senior secured notes or the Fifth Amended and Restated Credit Agreement and (i) with respect to QVC’s senior secured notes, QVC’s consolidated leverage ratio would be no greater than 3.5 to 1.0 and (ii) with respect to the Fifth Amended and Restated Credit Agreement, the consolidated net leverage basket for QVC, QVC Global and CBI, would be no greater than 4.0 to 1.0.
As of December 31, 2023, 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.
As of December 31, 2024, 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.
A 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 our expansion into new European and other markets.
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 our expansion into new European and other markets.
In the opinion of management, it is expected that amounts, if any, that may be required to satisfy such contingencies will not be material in relation to the Company's consolidated financial statements.
In the opinion of management, it is expected that amounts, if any, that may be required to satisfy such contingencies will not be material in relation to the accompanying consolidated financial statements.
II-11 Table of Contents The senior secured 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.
The senior secured 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.
Strategies and challenges of business units The goal of QVC is to extend its leadership in video commerce, e-commerce, streaming commerce and social commerce by continuing to create the world’s most engaging shopping experiences, combining the best of retail, media, and social, highly differentiated from traditional brick-and-mortar stores or transactional e-commerce.
Strategies The goal of QVC is to extend its leadership in video commerce, e-commerce, streaming commerce and social commerce by continuing to create the world’s most engaging shopping experiences, combining the best of retail, media, and social, highly differentiated from traditional brick-and-mortar stores or transactional e-commerce.
General Historically, QVC's primary sources of cash have been cash provided by operating activities and borrowings. In general, QVC uses this cash to fund its operations, make capital purchases, make dividend payments to Qurate Retail, make interest payments and minimize QVC's outstanding senior secured credit facility balance.
General Historically, QVC's primary sources of cash have been cash provided by operating activities and borrowings. In general, QVC uses this cash to fund its operations, make capital purchases, make dividend payments to QVC Group, make interest payments and minimize QVC's outstanding senior secured credit facility balance.
As a result, Qurate Retail will, in many instances, be permitted to rely on QVC’s cash flow for servicing Qurate Retail’s debt. These events may increase accumulated deficit or require QVC to borrow under the Fifth Amended and Restated Credit Agreement, increasing QVC’s leverage and decreasing liquidity. QVC has made significant distributions to Qurate Retail in the past.
As a result, QVC Group will, in many instances, be permitted to rely on QVC’s cash flow for servicing QVC Group’s debt. These events may increase accumulated deficit or require QVC to borrow under the Fifth Amended and Restated Credit Agreement, increasing QVC’s leverage and decreasing liquidity. QVC has made significant distributions to QVC Group in the past.
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.
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 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.
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 statement of operations. Sales returns represented 16.3% and 15.3% of gross product revenue for the years ended December 31, 2023 and 2022, respectively, and 15.3% for the year ended December 31, 2021.
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 statement of operations. Sales returns represented 15.9% and 16.3% of gross product revenue for the years ended December 31, 2024 and 2023, respectively.
QVC recognized a $69 million and $44 million gain related to the successful sale leaseback of the German and U.K. properties, respectively, during the first quarter of 2023 calculated as the difference between the aggregate consideration received and the carrying value of the properties.
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.
The change in foreign currency gain (loss) was also due to variances in 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.
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.
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.
II-10 Table of Contents 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.
For the year ended December 31, 2023, the gain related to a $240 million gain on insurance proceeds received in excess of fire losses and a $17 million gain on the sale of the Rocky Mount property, partially offset by $32 million of other fire related costs, a CPSC civil penalty of $16 million and $13 million of restructuring costs related to workforce reduction.
For the year ended December 31, 2023, the gain related to a $240 million gain on insurance proceeds received in excess of fire losses and a $17 million gain on the sale of the Rocky Mount property, partially offset by $32 million of other fire related costs, a Consumer Product Safety Commission (“CPSC”) civil penalty of $16 million and $13 million of restructuring costs related to workforce reduction.
II-9 Table of Contents Gain (loss) on extinguishment of debt For the year ended December 31, 2023, QVC recorded a gain on extinguishment of debt of $10 million related to the repurchase of the 4.85% Senior Secured Notes due 2024 (the “2024 Notes”) and 4.45% Senior Secured Notes due 2025 (the “2025 Notes”).
Gain on extinguishment of debt For the year ended December 31, 2023, QVC recorded a gain on extinguishment of debt of $10 million related to the repurchase of the 4.85% Senior Secured Notes due 2024 (“2024 Notes”) and 4.45% Senior Secured Notes due 2025 (“2025 Notes”).
On June 27, 2022, Qurate Retail announced a five-point turnaround plan designed to stabilize and differentiate its core HSN and QVC-U.S. brands and expand the Company's leadership in video streaming commerce (“Project Athens”).
On June 27, 2022, QVC Group announced a five-point turnaround plan designed to stabilize and differentiate its core HSN and QVC-U.S. businesses and expand the Company's leadership in video streaming commerce (“Project Athens”).
QVC defines Adjusted OIBDA as operating income plus depreciation and amortization, impairment losses, stock-based compensation and excluding restructuring, penalties and fire related costs, net of recoveries (including Rocky Mount inventory losses) and gains on sale of intangible asset and sale leaseback transactions.
QVC defines Adjusted OIBDA as operating (loss) income plus depreciation and amortization, impairment losses (where applicable), stock-based compensation and excluding restructuring, penalties and fire related costs, net of recoveries (including Rocky Mount inventory losses) and gains on sale of assets and sale-leaseback transactions.
Trade accounts receivable (including installment payment, credit card and customer receivables) was $1,294 million and $1,319 million, as of December 31, 2023 and 2022, respectively. Allowance for credit losses related to uncollectible trade accounts receivable was $82 million and $87 million as of December 31, 2023 and 2022, respectively. Each of these adjustments requires management judgment.
Trade accounts receivable (including installment payment, credit card and customer receivables) was $1,140 million and $1,294 million, as of December 31, 2024 and 2023, respectively. Allowance for credit losses related to uncollectible trade accounts receivable was $75 million and $82 million as of December 31, 2024 and 2023, respectively. Each of these adjustments requires management judgment.
II-2 Table of Contents The current economic uncertainty in various regions of the world in which our subsidiaries and affiliates operate could 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 during times of economic instability.
II-2 Table of Contents 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.
Stockholder 159 II-13 Table of Contents Other Debt Related Information QVC was in compliance with all of its debt covenants as of December 31, 2023. The weighted average interest rate applicable to all of the outstanding debt (excluding finance leases) prior to amortization of bond discounts and related debt issuance costs was 5.7% as of December 31, 2023.
Stockholder (1,069) Other Debt Related Information QVC was in compliance with all of its debt covenants as of December 31, 2024. The weighted average interest rate applicable to all outstanding debt (excluding finance leases) prior to amortization of bond discounts and related debt issuance costs was 5.9% and 5.7% as of December 31, 2024 and 2023, respectively.
Senior Secured Credit Facility On October 27, 2021, QVC entered into the Fifth Amended and Restated Credit Agreement (the "Fifth Amended and Restated Credit Agreement") with Zulily, CBI, and QVC Global, each a direct or indirect (or former in the case of Zulily) wholly owned subsidiary of Qurate Retail, as borrowers (collectively, the “Borrowers”).
II-9 Table of Contents Senior Secured Credit Facility On October 27, 2021, QVC entered into the Fifth Amended and Restated Credit Agreement (the "Fifth Amended and Restated Credit Agreement") with Zulily, CBI, and QVC Global Corporate Holdings, LLC ("QVC Global"), each a direct or indirect (or former, in the case of Zulily) wholly owned subsidiary of QVC Group, as borrowers (collectively, the “Borrowers”).
The change in the reserve is included in cost of goods sold in the consolidated statements of operations. As of December 31, 2023, inventory was $860 million, which was net of the obsolescence reserve of $115 million. As of December 31, 2022, inventory was $1,035 million, which was net of the obsolescence reserve of $143 million.
The change in the reserve is included in cost of goods sold in the consolidated statements of operations. As of December 31, 2024, inventory was $901 million, which was net of the obsolescence reserve of $112 million. As of December 31, 2023, inventory was $860 million, which was net of the obsolescence reserve of $115 million.
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. Throughout our discussion, we refer to the results of this calculation as the impact of currency exchange rate fluctuations.
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 refers to operating results without the impact of the currency exchange rate fluctuations.
The Company and Mitsui share in all profits and losses based on their respective ownership interests. QVC-Japan paid dividends to Mitsui of $53 million, $68 million, and $60 million in the years ended December 31, 2023, 2022 and 2021, respectively. II-1 Table of Contents The Company is an indirect wholly-owned subsidiary of Qurate Retail, Inc.
The Company and Mitsui share in all profits and losses based on their respective ownership interests. QVC-Japan paid dividends to Mitsui of $51 million and $53 million in the years ended December 31, 2024 and 2023. II-1 Table of Contents The Company is an indirect wholly-owned subsidiary of QVC Group.
In connection with Qurate Retail's divestiture of Zulily (see note 1 to the consolidated financial statements), Zulily is no longer a co-borrower in the senior secured credit facility and Zulily repaid its outstanding borrowings under the Fifth Amended and Restated Credit Agreement using cash contributed from Qurate Retail.
In connection with QVC Group's divestiture of Zulily (see note 1), Zulily is no longer a co-borrower in the senior secured credit facility, and Zulily repaid its outstanding borrowings under the Fifth Amended and Restated Credit Agreement using cash contributed from QVC Group.
(3) Amounts include open purchase orders for inventory and non-inventory purchases along with other contractual obligations, regardless of our ability to cancel such obligations Critical Accounting Estimates The preparation of consolidated financial statements in conformity with 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.
(2) Amounts (i) are based on the terms of our senior secured notes and (ii) assumes that our existing debt is repaid at maturity (3) Amounts include open purchase orders for inventory and non-inventory purchases along with other contractual obligations, regardless of our ability to cancel such obligations Critical Accounting Estimates The preparation of consolidated financial statements in conformity with 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.
II-7 Table of Contents Restructuring, penalties and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) QVC recorded a gain of $196 million and a gain of $10 million for the years ended December 31, 2023 and 2022, respectively, in restructuring, penalties and fire related costs, net of recoveries.
Restructuring, penalties and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) QVC recorded a loss of $18 million and a gain of $196 million for the years ended December 31, 2024 and 2023, respectively, in restructuring, penalties and fire related costs, net of recoveries.
II-3 Table of Contents In November 2022, QVC-International 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 $102 million related to its German facility and $80 million related to its U.K. facility when the sale closed in January 2023.
Sale-leaseback Transactions In November 2022, QVC-International 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.
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 a non-U.S. generally accepted accounting principles ("U.S. GAAP") measure.
This increase is attributable to state and foreign items. II-7 Table of Contents 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 a non-U.S. generally accepted accounting principles ("U.S. GAAP") measure.
Other QVC’s material cash requirements for the next year, outside of normal operating expenses, include the costs to service outstanding debt, expenditures for affiliation agreements with television providers, and capital expenditures expected to be between $210 and $225 million. The Company also may make dividend payments to Qurate Retail.
II-12 Table of Contents Other QVC’s material cash requirements for the next year, outside of normal operating expenses, include the costs to service outstanding debt, expenditures for affiliation agreements with television providers, and capital expenditures. Capital expenditures are expected to be between $200 and $215 million. The Company also may make dividend payments to QVC Group.
("Qurate Retail") (Nasdaq: QRTEA, QRTEB and QRTEP), which owns Cornerstone Brands, Inc. ("CBI"), as well as other minority investments. QVC is part of the Qurate Retail Group ("QRG"), a portfolio of brands including QVC and CBI. Zulily, LLC (“Zulily”) was a wholly owned subsidiary of Qurate Retail until its divestiture on May 24, 2023.
QVC Group is a portfolio of brands including Cornerstone Brands, Inc. ("CBI"), as well as other minority investments. Zulily, LLC (“Zulily”) was a wholly owned subsidiary of QVC Group until its divestiture on May 24, 2023.
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.
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.
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. As of December 31, 2022, $238 million of the $367 million in cash, cash equivalents and restricted cash was held by foreign subsidiaries.
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.
Senior Secured Notes All of QVC's senior secured notes are secured by the capital stock of QVC and have equal priority to the senior secured credit facility.
II-8 Table of Contents Financial Position, Liquidity and Capital Resources Senior Secured Notes All of QVC's senior secured notes are secured by the capital stock of QVC and have equal priority to the senior secured credit facility.
Summarized financial information for the most recent annual period was as follows: Combined Parent-QVC, Inc. and Subsidiary Guarantors December 31, 2023 Current assets $ 1,849 Intercompany payable to non-guarantor subsidiaries (2,672) Note receivable - related party 1,740 Noncurrent assets 5,888 Current liabilities 1,712 Noncurrent liabilities 4,809 Combined Parent-QVC, Inc. and Subsidiary Guarantors Year ended December 31, 2023 Net revenue $ 7,657 Net revenue less cost of goods sold 3,160 Income before taxes 192 Net income 211 Net income attributable to QVC, Inc.
Summarized financial information for the most recent annual period was as follows: Combined Parent-QVC, Inc. and Subsidiary Guarantors December 31, 2024 Current assets $ 1,776 Intercompany payable to non-guarantor subsidiaries (2,418) Note receivable - related party 1,740 Noncurrent assets 4,300 Current liabilities 1,705 Noncurrent liabilities 3,961 Combined Parent-QVC, Inc. and Subsidiary Guarantors Year ended December 31, 2024 Net revenue $ 7,214 Net revenue less cost of goods sold 3,038 Loss before taxes (1,115) Net loss (1,022) Net loss attributable to QVC, Inc.
QVC recognized a $277 million gain related to the successful sale leaseback during the third quarter of 2022 calculated as the difference between the aggregate consideration received and the carrying value of the properties.
QVC recognized a $1 million gain related to the sale during the first quarter of 2024, calculated as the difference between the aggregate consideration received and the carrying value of the property.
During the second quarter of 2023, QVC purchased $177 million of the outstanding 2024 Notes and $15 million of the outstanding 2025 Notes. As a result of the repurchases, the Company recorded a gain on extinguishment of debt in the consolidated statements of operations of $10 million for the year ended December 31, 2023.
As a result of the repurchases, the Company recorded a gain on extinguishment of debt in the consolidated statements of operations of $10 million for the year ended December 31, 2023. The remaining outstanding 2024 Notes were repaid in March 2024.
QVC's digital platforms enable consumers to purchase goods offered on our televised programming, along with a wide assortment of products that are available only on our U.S. websites and our other digital platforms (including our mobile applications, social media pages and others) are natural extensions of our business model, allowing customers to engage in our shopping experience wherever they are, with live or on-demand content customized to the device they are using.
Our other Digital Platforms (including our mobile applications, social media pages and others) are natural extensions of our business model, allowing customers to engage in our shopping experience wherever they are, with live or on-demand content customized to the device they are using.
We continue to assess our network footprint and are making investments to expand capacity and 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.
QVC sold the property in February 2023, and received net cash proceeds of $19 million. We assessed our network footprint and are 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 addition to offering video content, our 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.
In addition to offering video content, our 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 primarily in Germany, Japan, the United Kingdom ("U.K."), and Italy.
Rocky Mount was the Company’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 would not reopen.
Fire at Rocky Mount Fulfillment Center In December 2021, QVC experienced a fire at its Rocky Mount fulfillment center in North Carolina. Rocky Mount was the Company’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.
Foreign currency gain (loss) 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 consolidated statements of operations.
This increase was due to the reversal of interest expense related to the settlement of state income tax reserves during the prior year. Foreign currency gain (loss) 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 consolidated statements of operations.
Goodwill and long-lived assets QVC's long-lived asset valuations are primarily comprised of the annual assessment of the recoverability of goodwill and other nonamortizable intangibles, such as tradenames, and the evaluation of the recoverability of other long-lived assets upon certain triggering events.
In addition, as circumstances change, QVC may revise the basis of its estimates accordingly. II-13 Table of Contents Goodwill and long-lived assets QVC's long-lived asset valuations are primarily comprised of the annual assessment of the recoverability of goodwill and other nonamortizable intangibles, such as tradenames, and the evaluation of the recoverability of other long-lived assets upon certain triggering events.
Additional Cash Flow Information During the year ended December 31, 2023, QVC's primary uses of cash were $1,354 million of principal payments on debt and finance lease obligations, $437 million of dividends to Qurate Retail, $396 million of principal repayment of senior secured notes, $295 million of capital and television distribution rights expenditures and $53 million in dividend payments from QVC-Japan to Mitsui.
Additional Cash Flow Information During the year ended December 31, 2024, QVC's primary uses of cash were $1,677 million of principal payments of the senior secured credit facility and finance lease obligations, $775 million of principal repayment of senior secured notes, $210 million of capital and television distribution rights expenditures, $108 million of dividends to QVC Group, and $51 million in dividend payments from the Company’s Japanese operations ("QVC-Japan") to Mitsui & Co.
When we refer to "constant currency operating results", this means operating results without the impact of the currency exchange rate fluctuations. The disclosure of constant currency amounts or results permits investors to understand better QVC’s underlying performance without the effects of currency exchange rate fluctuations. The percentage change in net revenue for each of QVC's segments in U.S.
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 each of QVC's segments in U.S. Dollars and in constant currency was as follows: Year ended December 31, 2024 Year ended December 31, 2023 U.S.
The interest on QVC's senior secured notes is payable semi-annually with the exception of the 6.375% Senior Secured Notes due 2067 (the "2067 Notes") and the 6.25% Senior Secured Notes due 2068 (the "2068 Notes"), which are payable quarterly. The remaining outstanding 4.375% Senior Secured Notes due 2023 were repaid at maturity in March 2023.
The interest on QVC's senior secured notes is payable semi-annually with the exception of interest on the 6.375% Senior Secured Notes due 2067 (“2067 Notes”) and the 6.25% Senior Secured Notes due 2068 (“2068 Notes”), which is payable quarterly.
Stock-based compensation Stock-based compensation includes compensation related to options and restricted stock granted to certain officers and employees. QVC recorded $37 million, $36 million and $44 million of stock-based compensation expense for the years ended December 31, 2023, 2022 and 2021, respectively. The decrease in 2022 was primarily due to the retirement of our former Chief Executive Officer.
Stock-based compensation Stock-based compensation includes compensation related to options and restricted stock granted to certain officers and employees. QVC recorded $20 million and $37 million of stock-based compensation expense for the years ended December 31, 2024 and 2023, respectively.
These declines were partially offset by a $161 million decrease in estimated product returns, primarily driven by QxH. During the years ended December 31, 2023 and 2022, the changes in revenue and expenses were affected by changes in the exchange rates for the U.K. Pound Sterling, the Euro and the Japanese Yen. In the event the U.S.
These decreases to net revenue were partially offset by a $112 million decrease in estimated product returns attributable to QxH. II-4 Table of Contents During the year ended December 31, 2024 the changes in revenue and expenses were affected by changes in the exchange rates for the Japanese Yen, the Euro and the U.K. Pound Sterling.
Gains on sale of assets and sale leaseback transactions QVC recorded $113 million of gains on sale of assets and sale leaseback transactions for the year ended December 31, 2023. These gains primarily related to the sale leaseback of two owned and operated properties located in Germany and the U.K.
Gains on sales of assets and sale-leaseback transactions QVC recorded a $1 million 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. QVC recorded $113 million of gains on sale of assets and sale leaseback transactions for the year ended December 31, 2023.
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 22% and 24% of its revenue in each of the first three quarters of the year and 30% in the fourth quarter of the year.
In recent years, QVC has earned, on average, between 22% and 24% of its revenue in each of the first three quarters of the year and 30% of its revenue in the fourth quarter of the year.
QVC recorded impairment losses of $2,600 million for the year ended December 31, 2022, including $180 million related to a decrease in the fair value of the HSN indefinite-lived tradename and $2,420 million related to a decrease in the fair value of the QxH reporting unit (refer to note 6 to the accompanying consolidated financial statements).
Impairment losses QVC recorded impairment losses of $1,480 million for the year ended December 31, 2024, including $578 million related to the decrease in the fair value of the QVC and HSN tradenames and $902 million related to a decrease in the fair value of the QxH reporting unit goodwill as a result of quantitative assessments performed by the Company (refer to note 6 to the accompanying consolidated financial statements).
Years ended December 31, (in millions) 2023 2022 2021 Operating income (loss) $ 645 (1,399) 1,507 Depreciation and amortization 372 401 429 Stock-based compensation 37 36 44 Restructuring, penalties and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) (196) (10) 21 Impairment losses 326 2,600 — Gains on sale of assets and sale leaseback transactions (113) (520) — Adjusted OIBDA $ 1,071 1,108 2,001 II-10 Table of Contents QVC Adjusted OIBDA decreased by $37 million and $893 million for the years ended December 31, 2023 and 2022, respectively, as compared to the corresponding prior year.
Years ended December 31, (in millions) 2024 2023 Operating (loss) income $ (770) 645 Depreciation and amortization 351 372 Stock-based compensation 20 37 Restructuring, penalties and fire related costs, net of (recoveries) (including Rocky Mount inventory losses) 18 (196) Impairment losses 1,480 326 Gains on sales of assets and sale leaseback transactions (1) (113) Adjusted OIBDA $ 1,098 1,071 QVC Adjusted OIBDA increased by $27 million for the year ended December 31, 2024.
As of December 31, 2023, the remaining outstanding 2024 Notes are classified within the current portion of long term debt as they mature in less than one year. On February 27, 2024, QVC delivered a notice of redemption to the trustee and holders of the 2024 Notes.
As of December 31, 2024, the remaining outstanding 2025 Notes are classified within the current portion of long term debt as they mature in less than one year. On February 18, 2025, QVC repaid the remaining 2025 Notes, at maturity, using availability on the Credit Facility and cash on hand.
II-6 Table of Contents Cost of goods sold (excluding depreciation, amortization and Rocky Mount Inventory Losses, net) QVC's cost of goods sold as a percentage of net revenue was 66.4%, 68.3%, and 64.9% for years ended December 31, 2023, 2022 and 2021, respectively.
Cost of goods sold (excluding depreciation, amortization and fire related costs, net) QVC's cost of goods sold as a percentage of net revenue was 65.6% and 66.4% for years ended December 31, 2024 and 2023, respectively.
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.
Approximately 61% 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.
These uses of cash were funded primarily with $1,169 million of cash provided by operating activities, $705 million of principal borrowings from the senior secured credit facility and $311 million of proceeds from settlements of financial instruments. As of December 31, 2021, QVC's cash, cash equivalents and restricted cash balance was $519 million.
LTD (“Mitsui”). These uses of cash were funded primarily with $2,014 million of principal borrowings from the senior secured credit facility, $535 million of cash provided by operating activities and $277 million of capital contributions from QVC Group. As of December 31, 2024, QVC's cash, cash equivalents and restricted cash balance was $315 million.
Dollars Foreign Currency Exchange Impact Constant Currency QxH (5.0) % — % (5.0) % (11.1) % — % (11.1) % QVC-International (2.9) % (1.6) % (1.3) % (17.8) % (12.1) % (5.7) % In 2023, the QxH net revenue decrease was primarily due to a 6.3% decrease in units shipped, a $55 million increase in estimated product returns, and a $34 million decrease in shipping and handling revenue.
Dollars Foreign Currency Exchange Impact Constant Currency QxH (5.7) % — % (5.7) % (5.0) % — % (5.0) % QVC-International (2.2) % (2.0) % (0.2) % (2.9) % (1.6) % (1.3) % In 2024, QxH's net revenue decline of $397 million, or 5.7% was attributable to a 5.3% decrease in units shipped, a 0.7% decrease in ASP and a $25 million decrease in shipping and handling revenue.
In June 2023, the Company agreed to a final insurance settlement with its insurance company and received all remaining proceeds related to the Rocky Mount claim. As of December 31, 2022 and 2023 the Company recorded cumulative fire related costs of $407 million and $439 million, respectively.
In June 2023, the Company 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, the Company received $280 million of insurance proceeds, of which $210 million represented recoveries for business interruption losses.
II-15 Table of Contents Off-balance Sheet Arrangements and Aggregate Contractual Obligations Information concerning the amount and timing of cash requirements, both accrued and off-balance sheet, under our contractual obligations at December 31, 2023 is summarized below: Payments due by period (in millions) 2024 2025 2026 2027 2028 Thereafter Total Long-term debt (1) $ 423 586 857 575 500 1,425 4,366 Interest payments (2) 237 214 190 121 107 2,195 3,064 Finance lease obligations (including imputed interest) 1 1 — — — — 2 Operating lease obligations 87 84 83 83 84 790 1,211 Purchase obligations and other (3) 1,864 40 15 7 3 — 1,929 (1) Amounts exclude finance lease obligations and the issue discounts on the 4.45%, 4.85%, 5.45% and 5.95% senior secured notes.
Off-balance Sheet Arrangements and Aggregate Contractual Obligations Information concerning the amount and timing of cash requirements, both accrued and off-balance sheet, under our contractual obligations at December 31, 2024 is summarized below: Payments due by period (in millions) 2025 2026 2027 2028 2029 Thereafter Total Long-term debt (1) $ 586 1,195 44 72 605 1,425 3,927 Interest payments (2) 231 198 131 130 106 2,110 2,906 Operating lease obligations 90 86 85 85 86 696 1,128 Purchase obligations and other (3) 1,970 186 133 81 64 — 2,434 (1) Amounts exclude the issue discounts on the 2025 Notes, 5.45% Senior Secured Notes due 2034 and 5.95% Senior Secured Notes due 2043.
These declines were partially offset by a 1.7% increase in ASP driven by the U.K. and Japan and a $12 million decrease in estimated product returns across all markets except the U.K. QVC-International experienced shipped sales decline in constant currency in all categories except apparel.
These declines were primarily offset by a 2.6% increase in units shipped across all markets except Italy and Japan and a $15 million decrease in estimated product returns. For the year ended December 31, 2024, QVC-International experienced shipped sales declines in apparel and beauty and growth in constant currency across all other product categories.
Of the $280 million of insurance proceeds received during the year ended December 31, 2023, $210 million represents recoveries for business interruption losses. The fire related costs and gains related to insurance recoveries are included in restructuring, penalties and fire related costs, net of (recoveries) in the consolidated statement of operations.
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.
The decrease in 2022 was primarily due to a $31 million decrease as a result of favorable exchange rates. Selling, general and administrative expenses excluding stock-based compensation QVC's selling, general, and administrative expenses excluding stock-based compensation include personnel, information technology (“IT”), provision for doubtful accounts, production costs, and marketing and advertising expenses.
II-5 Table of Contents Selling, general and administrative expenses excluding stock-based compensation and advertising QVC's selling, general, and administrative expenses excluding stock-based compensation and advertising include personnel, information technology (“IT”), production costs and the provision for doubtful accounts.
It was determined that an impairment existed for the QxH reporting unit related to its tradenames and goodwill and impairments of $180 million related to the HSN tradename and $2,420 million related to goodwill were recorded in impairment losses in the consolidated statements of operations.
For the year ended December 31, 2024 an impairment of $578 million was recorded on the QxH reporting unit related to the QVC and HSN tradenames in impairment losses in the consolidated statements of operations. No tradename impairments were recorded during the year ended December 31, 2023.
In 2022, the QxH net revenue decrease was primarily due to a 9.3% decrease in units shipped, a 1.8% decline in ASP and a $104 million decrease in shipping and handling revenue, partially offset by a $149 million decrease in estimated product returns. For the year ended December 31, 2022, QxH experienced shipped sales declines across all categories.
These declines were partially offset by a $97 million decrease in estimated product returns. For the year ended December 31, 2024, QxH experienced shipped sales declines across all product categories. QVC-International’s net revenue declined $4 million, or 0.2% in constant currency primarily due to a 2.9% decrease in ASP across all markets.
The 2023 and 2022 rates differ from the U.S. federal income tax rate of 21% primarily due to goodwill impairment losses of $326 million and $2,420 million during 2023 and 2022 respectively, that are not deductible for tax purposes.
The 2023 rate differs from the U.S. federal income tax rate of 21% primarily due to goodwill impairment losses of $326 million, that are not deductible for tax purposes. Excluding both the goodwill and tradename impairment losses, our effective tax rate would be 30.8% and 27.6% for the years ended December 31, 2024 and 2023, respectively.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−2 removed7 unchanged
Biggest changeThe swap arrangement expired in July 2022 and was in a net liability position of $1 million as of December 31, 2021, which was included in accrued liabilities. Foreign currency exchange rate risk QVC is exposed to foreign exchange rate fluctuations related to the monetary assets and liabilities and the financial results of its foreign subsidiaries.
Biggest changeN/A - Not applicable. II-15 Table of Contents Foreign currency exchange rate risk QVC is exposed to foreign exchange rate fluctuations related to the monetary assets and liabilities and the financial results of its foreign subsidiaries. Assets and liabilities of foreign subsidiaries for which the functional currency is the local currency are translated into U.S.
QVC's reported Adjusted OIBDA for the years ended December 31, 2023, 2022 and 2021 would have been impacted by approximately $3 million, $4 million, and $6 million, respectively, for every 1% change in foreign currency exchange rates relative to the U.S. Dollar. The Fifth Amended and Restated Credit Agreement provides QVC with the ability to borrow in multiple currencies.
QVC's reported Adjusted OIBDA for the years ended December 31, 2024, 2023 and 2022 would have been impacted by approximately $3 million, $3 million, and $4 million, respectively, for every 1% change in foreign currency exchange rates relative to the U.S. Dollar. The Fifth Amended and Restated Credit Agreement provides QVC with the ability to borrow in multiple currencies.
This allows QVC to somewhat mitigate foreign currency exchange rate risks. As of December 31, 2023, 2022 and 2021, no borrowings in foreign currencies were outstanding.
This allows QVC to somewhat mitigate foreign currency exchange rate risks. As of December 31, 2024, 2023 and 2022, no borrowings in foreign currencies were outstanding.
QVC has established procedures and internal processes governing the management of market risks and the use of financial instruments to manage exposure to such risks. II-18 Table of Contents Interest rate risk QVC is exposed to changes in interest rates primarily as a result of borrowing activities.
QVC has established procedures and internal processes governing the management of market risks and the use of financial instruments to manage exposure to such risks. Interest rate risk QVC is exposed to changes in interest rates primarily as a result of borrowing activities.
Dollars that result in unrealized gains or losses are referred to as translation adjustments. Cumulative translation adjustments are recorded in other comprehensive income as a separate component of stockholder's equity. Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise.
Cumulative translation adjustments are recorded in other comprehensive income as a separate component of stockholder's equity. Transactions denominated in currencies other than the functional currency are recorded based on exchange rates at the time such transactions arise.
The table below summarizes the Company’s debt obligations, related interest rates and fair value of debt at December 31, 2023: (in millions, except percentages) 2024 2025 2026 2027 2028 Thereafter Total Fair Value Fixed rate debt (1) (2) $ 423 586 — 575 500 1,425 3,509 2,513 Weighted average interest rate on fixed rate debt 4.9 % 4.5 % — % 4.8 % 4.4 % 6.0 % 5.2 % N/A Variable rate debt (1) $ — — 857 — — — 857 857 Average interest rate on variable rate debt — % — % 7.0 % — % — % — % 7.0 % N/A (1) Amounts exclude finance lease obligations and the issue discounts on the 4.45%, 4.85%, 5.45% and 5.95% senior secured notes.
The table below summarizes the Company’s debt obligations, related interest rates and fair value of debt at December 31, 2024: (in millions, except percentages) 2025 2026 2027 2028 2029 Thereafter Total Fair Value Fixed rate debt (1) $ 586 — 44 72 605 1,425 2,732 1,942 Weighted average interest rate on fixed rate debt 4.5 % — % 4.8 % 4.4 % 6.9 % 6.0 % 5.8 % N/A Variable rate debt (1) $ — 1,195 — — — — 1,195 1,195 Average interest rate on variable rate debt — % 6.1 % — % — % — % — % 6.1 % N/A (1) Amounts exclude the issue discounts on the 2025 Notes, 5.45% Senior Secured Notes due 2034 and 5.95% Senior Secured Notes due 2043.
Assets and liabilities of foreign subsidiaries for which the functional currency is the local currency are translated into U.S. Dollars at period-end exchange rates, and the statements of operations are translated at the average exchange rate for the period. Exchange rate fluctuations on translating foreign currency financial statements into U.S.
Dollars at period-end exchange rates, and the statements of operations are translated at the average exchange rate for the period. Exchange rate fluctuations on translating foreign currency financial statements into U.S. Dollars that result in unrealized gains or losses are referred to as translation adjustments.
Removed
(2) Amounts exclude impact related to interest rate swaps, which we have discussed further below. N/A - Not applicable. In July 2019, the Company entered into a three-year interest swap arrangement with a notional amount of $125 million to mitigate the interest rate risk associated with interest payments related to its variable rate debt.
Removed
The swap arrangement did not qualify as a cash flow hedge under U.S. GAAP. Changes in the fair value of the swap arrangement are reflected in (losses) gains on financial instruments in the consolidated statements of operations.

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