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Beyond Rescue: No Cure For Qurate's Decline

Aug. 17, 2023 7:16 PM ETQurate Retail, Inc. (QRTEA)QRTEB, QRTEP57 Comments
Alessandro Calvo profile picture
Alessandro Calvo


  • Qurate Retail is facing customer loss, layoffs, and the destruction of a major logistics center, making it an unfavorable investment.
  • The company's recovery plan based on cost-cutting is insufficient, and its high debt is concerning.
  • The business model is fragile, especially in the long run, due to declining revenues and a shift away from teleshopping.

Salesman and saleswoman marketing car products

simonkr/E+ via Getty Images

Qurate Retail (NASDAQ:QRTEA) is certainly not experiencing a good time: customers are leaving, the company is facing one round of layoffs after another, and all this after a fire in December 2021

This article was written by

Alessandro Calvo profile picture
Freelance analyst and financial journalist. Available for hire.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (57)

theheckwithtech profile picture
I'm out with a nice profit at $37. Will look to get back in under $25 again.
Has anyone an explanation why just the A stock is falling, while the B stock is rising?
@Strathos not sure. B has a very high insider ownership so perhaps that is playing into this. Quite interesting
Few possbile reasons why A shares continue to fall...
-forced selling by institutions
- tax loss harvesting
-B/P shares as alternative
-some may be putting in the "too hard" pile and exiting but not necessarily saying it is heading for bankruptcy.
- possible exit and reentrance when more clarity
QRTEP 32% yield. Wow
@Mrjs seems too.good...patiently holding looking to add
@Mrjs look at the price! this is basically a bet that the company is not bankrupt in 2 years. seems overly pessimistic
theheckwithtech profile picture
@hunter3 I'd argue it's very pragmatic.
I was on the call for the business update webinar, painfully unimpressed. The mentality has not changed.
@Kbtbbjm please elaborate
Completely disagree. Excellent CEO,CIO, and Chairman. Dividends all approved. Please disclose your experience and education background.
@you are wrong I want to hear more from you please elaborate. Thanks
@you are wrong What is the criteria for it being excellent management? Is there any evidence of their success? Just asking
2whiteroses profile picture
@you are wrong Thanks for your post... Your own disclosed experience and educational background is impeccable..
what an amateur
@hikaruLight explain more please, thanks
Thanks. Good article. I think we have a classic bear trap with little cause for optimism. Clearly nobody wants to buy this or they would have done so already. There is still great (albeit small) value in the brand. The debt level is suffocating, but not likely to precipitate bankruptcy soon. No catalyst, no interest and no growth. Sad.
So inventory is worth $0? Most of the company's debt, other than $1.5 billion, is out past its 2026 revolver.
@hunter3 sorry that I didn’t repiled your comment eariler, was a bit busy last few days. If you look at the overall market, a lot of retail company share price is suffering( especially the micro cap with huge debt, eg, delta ,children place, HBI, www), mainly due to decline margin and revenue, fear of recession, increased interest rate. To me, it is a once in few years great opportunity to buy in these companies.
1) they already priced in for recession, but actually no one knows what is going to happen, no one can predict the economy
2) the margin is going to go up in the second half of 2023, not only qurate, lots of other retail companies are saying the same thing, the shipping rate and other raw material like cotton already revert to normal price, but it takes a few quarter for the items to arrive and sold,it is how accounting work and lots of retail investor don’t understand
3) interest rate is not going to stay this high forever,it will drop eventually, the refinance market will turn better in a few years
4) the consumer spend a lots of money during Covid, it will take 1-2 years for them to be active again, especially the home category, consumer won’t stay passive forever, personally I also bought lots of stuff the last 2 years, I am buying less things now, but in the end the spending will go back up , it is how human nature work

As for qurate, it has a wide competitive moat that everyone underestimate, no one does video shopping better than them! The margin will increase and the revenue will be stable and the debt will become manageable.
@nathan.chui can they redeem the preferred early?
@Mrjs they can, but they do not have enough cash, qurate need the cash to repay debt due 2024,2025 and 2026, which I believe they will be manage to do so.In 2025-2026, they will refinance the debt beyond 2026, by that time they will have extra cash to do whatever they want(their interest expense will be lower also), but most of their cash in cash will be used to pay down the debt due 2024,2025 and 2026.
MillionsDollarMan profile picture
@Mrjs loan covenants may prevent buybacks
I think this is a very pessimistic outlook. This article makes it seem like the company will go bankrupt tomorrow. I think the core customer base keeps this company going well into the late 2020's from there the company can pivot to a new direction if they want. Also cable TV is declining but Roku/streaming TV is rising. I do not think the death of cable has a large impact on QVC.
Alessandro Calvo profile picture
@hunter3 I'm not saying that it's going bankrupt tomorrow, but that does not make the case for buying either. What I'm saying is that, if we look at profitability and free cash flow, the problems are already there even regardless of the -in any case concrete- risk of bankruptcy.
@Alessandro Calvo well it seems you have been correct since this post was made. I am still long but I give credit where credit is do.
theheckwithtech profile picture
@hunter3 Project Athens is just starting to work. FCF improved this latest quarter. Waiting to buy heavy back into QRTEP if it drops to $30, but if not, I'll still get back in in the next month or two.
When I walk into qvc you see the problems everywhere, moral is low and no one trusts management. There is no faith in buyers and some should have been fired along time ago. We give away our customers to Amazon by selling them products that push the Amazon ecosystem. They are not an authorized apple dealer so it’s always overpriced with some plastic throw ins.
Home goods quality has dropped. Q is about sales for the day and doesn’t look to the future. It’s a shame it use to be a good place to work, but the cliques has taken over. It’s not about fixing problems it’s about hiding them.
There are ways to fix qvc but no one wants to speak up since its seems it can get you fired if your ideas do well. It also doesn’t help when the Nepos are spread out into the company in positions that do damage.
If you ever seen boring shows on air you can chalk that to guest excellence , because it’s just been down hill .
It’s gotten so bad that there’s talk of unionizing and It’s going to be interesting to see what happens if these issues don’t get resolved. But to be honest I don’t see them fixing it with the Sears mentality that’s there, the focus is putting up signs everywhere in the building instead of actually fixing the real problems.
Alessandro Calvo profile picture
@Kbtbbjm Such an interesting point, thank you!
@Alessandro Calvo hopefully they get their act together.
I'm a financial advisor and I don't buy micro cap stocks. I think the company may survive but they may need to go through bankruptcy to move out of the current situation. I'm commenting because I think your view of the company is dated and doesn't match the reality in recent years. I can tell you that a lot of customers go directly to the websites and aren't driven there by the TV channels. I think it's been many years since shoppers were watching on TV often. Both QVC & HSN have in house brands of clothing, jewelry, & home goods that are very high quality, well made and there is no equivalent to many of these on Amazon. There are also some great designers who design lines for QVC & HSN but aren't on Amazon. I personally have tried to find very similar items on Amazon for a lower price and all I found were items of lesser quality & lower price. Both QVC & HSN let customers use items for 30 days and return them if they are dissatisfied. That's appealing to some shoppers and unavailable elsewhere. I am a picky shopper who prefers higher quality for a reasonable price and I don't want poorly made items. I work in a professional environment and the clothing on Amazon that I've tried is not even decent quality. Sure there are vitamins and sometimes shoes on Amazon that are good quality. Most items & brands through Qurate aren't available on Amazon. Qurate has a lot of obstacles to overcome but I hope they make it because they offer mostly high quality products and provide excellent customer service. They also provide many jobs in PA, FL, and at the warehouse locations.
Capt Stu profile picture
@boo151 as a bond holder, what can I expect to happen to the bonds as they go through bankruptcy? would they restructure? or would I get an ottoman? your input appreciated.
@Capt Stu I would ask the person who wrote the article. Your question is unrelated to my comment. I was simply clarifying some issues related to how the company does business and how customers buy from them.
@Capt Stu bankruptcy is not imminent
Any thoughts or recommendations on the preferred?
Alessandro Calvo profile picture
@idahojoe very risky, I personally wouldn't buy them, but as long as one is aware of the risks it's all doable!
theheckwithtech profile picture
@idahojoe the turnaround is slow, but it's working. I've been heavily accumulating the preferred this year. Thinking about a position in the common now that Burry is back in as of August 25th, but that would just be for a quick trade as my focus is on income.
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