UNITED STATES

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D. C. 20549

FORM 10-Q


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2023



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-33982

QURATE RETAIL, INC.

(Exact name of Registrant as specified in its charter)

incorporation or organization)	Identification No.)
State of Delaware (State or other jurisdiction of incorporation or organization)	84-1288730 (I.R.S. Employer Identification No.)

12300 Liberty Boulevard Englewood, Colorado (Address of principal executive offices)	80112 (Zip Code)

Registrant's telephone number, including area code: (720) 875-5300

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Series A common stock	QRTEA	The Nasdaq Stock Market LLC
Series B common stock	QRTEB	The Nasdaq Stock Market LLC
8.0% Series A Cumulative Redeemable Preferred Stock	QRTEP	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ◻

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ⌧ No ◻

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company" and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large Accelerated Filer ☒	Accelerated Filer ☐	Non-accelerated Filer ☐	Smaller Reporting Company ☐	Emerging Growth Company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company as defined in Rule 12b-2 of the Exchange Act. Yes ☐ No ☒

The number of outstanding shares of Qurate Retail, Inc.'s common stock as of July 31, 2023 was:


Series A common stock		380,088,011
Series B common stock		8,700,380

Table of Contents

Table of Contents


PART I – FINANCIAL INFORMATION
Item 1. Financial Statements.
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Balance Sheets (unaudited)		I-3
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Operations (unaudited)		I-5
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Comprehensive Earnings (Loss) (unaudited)		I-6
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Cash Flows (unaudited)		I-7
QURATE RETAIL, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Equity (unaudited)		I-8
QURATE RETAIL, INC. AND SUBSIDIARIES Notes to Condensed Consolidated Financial Statements (unaudited)		I-10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		I-26
Item 3. Quantitative and Qualitative Disclosures about Market Risk.		I-39
Item 4. Controls and Procedures.		I-40

PART II—OTHER INFORMATION		II-1
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		II-1
Item 5. Other Information		II-1
Item 6. Exhibits		II-2

SIGNATURES		II-3

I-2

Table of Contents

QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets

(unaudited)


	June 30,		December 31,
	2023		2022

	amounts in millions
Assets
Current assets:
Cash and cash equivalents	$	1,483	1,275
Trade and other receivables, net of allowance for credit losses of $93 million and $111 million, respectively		931	1,394
Inventory, net		1,168	1,346
Indemnification agreement receivable		10	50
Other current assets		167	210
Total current assets		3,759	4,275
Property and equipment, net		513	570
Intangible assets not subject to amortization (note 5):
Goodwill		3,482	3,501
Trademarks		2,698	2,718
		6,180	6,219
Intangible assets subject to amortization, net (note 5)		610	612
Operating lease right-of-use assets		585	585
Other assets, at cost, net of accumulated amortization		152	310
Total assets	$	11,799	12,571

(continued)

See accompanying notes to condensed consolidated financial statements.

I-3

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QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Balance Sheets (Continued)

(unaudited)


	June 30,		December 31,
	2023		2022

	amounts in millions,
	except share amounts
Liabilities and Equity
Current liabilities:
Accounts payable	$	697	976
Accrued liabilities		843	1,133
Current portion of debt, $287 million and $614 million measured at fair value (note 6)		710	828
Other current liabilities		147	162
Total current liabilities		2,397	3,099
Long-term debt (note 6)		5,268	5,525
Deferred income tax liabilities		1,478	1,440
Preferred stock (note 7)		1,269	1,266
Operating lease liabilities		544	518
Other liabilities		116	198
Total liabilities		11,072	12,046
Equity
Stockholders' equity:
Series A common stock, $.01 par value. Authorized 4,000,000,000 shares; issued and outstanding 380,088,011 shares at June 30, 2023 and 374,390,323 shares at December 31, 2022		4	4
Series B common stock, $.01 par value. Authorized 150,000,000 shares; issued and outstanding 8,700,380 shares at June 30, 2023 and 8,373,512 shares at December 31, 2022		—	—
Series C common stock, $.01 par value. Authorized 4,000,000,000 shares; no shares issued		—	—
Additional paid-in capital		79	53
Accumulated other comprehensive earnings (loss), net of taxes		71	18
Retained earnings		467	337
Total stockholders' equity		621	412
Noncontrolling interests in equity of subsidiaries		106	113
Total equity		727	525
Commitments and contingencies (note 8)
Total liabilities and equity	$	11,799	12,571

See accompanying notes to condensed consolidated financial statements.

I-4

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QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Operations

(unaudited)


	Three months ended			Six months ended
	June 30,			June 30,
	2023		2022	2023		2022

	amounts in millions, except per share amounts
Total revenue, net	$	2,649	2,953		5,293	5,836
Operating costs and expenses:
Cost of goods sold (exclusive of depreciation shown separately below)		1,734	1,978		3,543	3,980
Operating expense		193	198		387	394
Selling, general and administrative, including stock-based compensation (note 2)		466	461		944	906
Restructuring and fire related costs, net of (recoveries) (note 8)		(208)	7		(208)	11
Depreciation and amortization		104	134		204	264
Gains on sale of intangible asset and sale leaseback transactions (note 8)		(6)	(243)		(119)	(243)
		2,283	2,535		4,751	5,312
Operating income (loss)		366	418		542	524
Other income (expense):
Interest expense		(123)	(119)		(217)	(236)
Realized and unrealized gains (losses) on financial instruments, net (note 4)		(33)	7		(80)	37
Loss on disposition of Zulily, net		(64)	—		(64)	—
Gain (loss) on extinguishment of debt		29	(6)		44	(6)
Other, net		10	41		25	93
		(181)	(77)		(292)	(112)
Earnings (loss) before income taxes		185	341		250	412
Income tax (expense) benefit		(66)	(120)		(98)	(178)
Net earnings (loss)		119	221		152	234
Less net earnings (loss) attributable to the noncontrolling interests		12	18		25	30
Net earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	107	203		127	204

Basic net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):	$	0.28	0.53		0.33	0.54
Diluted net earnings (loss) attributable to Series A and Series B Qurate Retail, Inc. shareholders per common share (note 3):	$	0.28	0.53		0.33	0.53

See accompanying notes to condensed consolidated financial statements.

I-5

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QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Comprehensive Earnings (Loss)

(unaudited)


	Three months ended			Six months ended
	June 30,			June 30,
	2023		2022	2023	2022

	amounts in millions
Net earnings (loss)	$	119	221	152	234
Other comprehensive earnings (loss), net of taxes:
Foreign currency translation adjustments		(24)	(143)	(4)	(203)
Recognition of previously unrealized losses (gains) on debt, net		(13)	—	(32)	—
Credit risk on fair value debt instruments gains (loss)		(48)	145	81	174
Other comprehensive earnings (loss)		(85)	2	45	(29)
Comprehensive earnings (loss)		34	223	197	205
Less comprehensive earnings (loss) attributable to the noncontrolling interests		5	5	17	11
Comprehensive earnings (loss) attributable to Qurate Retail, Inc. shareholders	$	29	218	180	194

See accompanying notes to condensed consolidated financial statements.

I-6

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QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(unaudited)


	Six months ended
	June 30,
	2023		2022

	amounts in millions
Cash flows from operating activities:
Net earnings (loss)	$	152	234
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation and amortization		204	264
Stock-based compensation		30	31
Realized and unrealized (gains) losses on financial instruments, net		80	(37)
Gain on sale of intangible asset and sale leaseback transactions		(119)	(243)
Gain on insurance proceeds, net of fire related costs		(228)	—
Insurance proceeds received for operating expenses and business interruption losses		226	30
Loss on disposition of Zulily, net		64	—
(Gain) loss on extinguishment of debt		(44)	6
Deferred income tax expense (benefit)		25	56
Other, net		16	(40)
Changes in operating assets and liabilities
Decrease (increase) in accounts receivable		403	420
Decrease (increase) in inventory		131	(139)
Decrease (increase) in prepaid expenses and other assets		61	41
(Decrease) increase in trade accounts payable		(220)	(364)
(Decrease) increase in accrued and other liabilities		(313)	(317)
Net cash provided (used) by operating activities		468	(58)
Cash flows from investing activities:
Capital expenditures		(105)	(101)
Expenditures for television distribution rights		(107)	(15)
Cash proceeds from dispositions of investments		71	12
Cash paid for disposal of Zulily		(28)	—
Proceeds from sale of fixed assets		200	256
Insurance proceeds received for fixed asset loss		54	70
Payments for settlements of financial instruments		(179)	—
Proceeds from settlements of financial instruments		167	—
Other investing activities, net		(1)	15
Net cash provided (used) by investing activities		72	237
Cash flows from financing activities:
Borrowings of debt		1,002	1,355
Repayments of debt		(1,320)	(1,466)
Dividends paid to noncontrolling interest		(24)	(27)
Dividends paid to common shareholders		(7)	(10)
Indemnification agreement settlement		25	—
Other financing activities, net		(2)	(18)
Net cash provided (used) by financing activities		(326)	(166)
Effect of foreign currency exchange rates on cash, cash equivalents and restricted cash		(7)	(39)
Net increase (decrease) in cash, cash equivalents and restricted cash		207	(26)
Cash, cash equivalents and restricted cash at beginning of period		1,285	596
Cash, cash equivalents and restricted cash at end of period	$	1,492	570

The following table reconciles cash, cash equivalents and restricted cash reported in our condensed consolidated balance sheets to the total amount presented in our condensed consolidated statements of cash flows:


		June 30,	December 31,
		2023	2022

	in millions
Cash and cash equivalents	$	1,483	1,275
Restricted cash included in other current assets		9	10
Total cash, cash equivalents and restricted cash in the condensed consolidated statement of cash flows	$	1,492	1,285

See accompanying notes to condensed consolidated financial statements.

I-7

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QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Equity

(unaudited)



	Stockholders' Equity
						Accumulated
					Additional	other		Noncontrolling
	Preferred		Common stock		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity

	amounts in millions
Balance at January 1, 2023	$	—	4	—	53	18	337	113	525
Net earnings (loss)		—	—	—	—	—	127	25	152
Other comprehensive earnings (loss)		—	—	—	—	53	—	(8)	45
Stock-based compensation		—	—	—	25	—	—	—	25
Distribution to noncontrolling interest		—	—	—	—	—	—	(24)	(24)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	(1)	—	—	—	(1)
Other		—	—	—	2	—	3	—	5
Balance at June 30, 2023	$	—	4	—	79	71	467	106	727



	Stockholders' Equity
						Accumulated
					Additional	other		Noncontrolling
	Preferred		Common stock		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity

	amounts in millions
Balance at March 31, 2023	$	—	4	—	67	149	358	113	691
Net earnings (loss)		—	—	—	—	—	107	12	119
Other comprehensive earnings (loss)		—	—	—	—	(78)	—	(7)	(85)
Stock-based compensation		—	—	—	11	—	—	—	11
Distribution to noncontrolling interest		—	—	—	—	—	—	(12)	(12)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	—	—	—	—	—
Other		—	—	—	1	—	2	—	3
Balance at June 30, 2023	$	—	4	—	79	71	467	106	727

I-8

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QURATE RETAIL, INC. AND SUBSIDIARIES

Condensed Consolidated Statement of Equity (continued)

(unaudited)



	Stockholders' Equity
						Accumulated
					Additional	other		Noncontrolling
	Preferred		Common stock		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity

	amounts in millions
Balance at January 1, 2022	$	—	4	—	—	(79)	2,925	136	2,986
Net earnings (loss)		—	—	—	—	—	204	30	234
Other comprehensive earnings (loss)		—	—	—	—	(10)	—	(19)	(29)
Stock-based compensation		—	—	—	30	—	—	—	30
Distribution to noncontrolling interest		—	—	—	—	—	—	(28)	(28)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	(8)	—	—	—	(8)
Other		—	—	—	1	—	5	—	6
Balance at June 30, 2022	$	—	4	—	23	(89)	3,134	119	3,191



	Stockholders' Equity
			Common stock					Accumulated
			Qurate		Additional	other		Noncontrolling
	Preferred		Retail		paid-in	comprehensive	Retained	interest in equity	Total
	stock		Series A	Series B	capital	earnings (loss)	earnings	of subsidiaries	equity

	amounts in millions
Balance at March 31, 2022	$	—	4	—	7	(104)	2,929	127	2,963
Net earnings (loss)		—	—	—	—	—	203	18	221
Other comprehensive income (loss)		—	—	—	—	15	—	(13)	2
Stock-based compensation		—	—	—	16	—	—	—	16
Distribution to noncontrolling interest		—	—	—	—	—	—	(13)	(13)
Withholding taxes on net share settlements of stock-based compensation		—	—	—	(1)	—	—	—	(1)
Other		—	—	—	1	—	2	—	3
Balance at June 30, 2022	$	—	4	—	23	(89)	3,134	119	3,191

See accompanying notes to condensed consolidated financial statements.

I-9

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements

(unaudited)

(1) Basis of Presentation

The accompanying condensed consolidated financial statements include the accounts of Qurate Retail, Inc. and its controlled subsidiaries (collectively, "Qurate Retail," the "Company," “Consolidated Qurate Retail,” “us,” “we,” or “our” unless the context otherwise requires). All significant intercompany accounts and transactions have been eliminated in consolidation. Qurate Retail is made up of wholly-owned subsidiaries QVC, Inc. (“QVC”), which includes HSN, Inc. (“HSN”), Cornerstone Brands, Inc. (“CBI”), and other cost method investments.

Qurate Retail is primarily engaged in the video and online commerce industries in North America, Europe and Asia. The businesses of the Company’s wholly-owned subsidiaries, QVC and CBI, are seasonal due to a higher volume of sales in the fourth calendar quarter related to year-end holiday shopping.

The accompanying (a) condensed consolidated balance sheet as of December 31, 2022, which has been derived from audited financial statements, and (b) the interim unaudited condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles ("GAAP") for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X as promulgated by the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the results for such periods have been included. Additionally, certain prior period amounts have been reclassified for comparability with current period presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto contained in Qurate Retail's Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 10-K”).

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Qurate Retail considers (i) fair value measurements, (ii) accounting for income taxes, and (iii) estimates of retail-related adjustments and allowances to be its most significant estimates.

Qurate Retail has entered into certain agreements with Liberty Media Corporation ("LMC"), a separate publicly traded company. These agreements include a reorganization agreement, services agreement and facilities sharing agreement. As a result of certain corporate transactions, LMC and Qurate Retail may have obligations to each other for certain tax related matters. Neither Qurate Retail nor LMC has any stock ownership, beneficial or otherwise, in the other. In connection with a split-off transaction that occurred in the first quarter of 2018 (the “GCI Liberty Split-Off”), Qurate Retail and GCI Liberty, Inc. (“GCI Liberty”) entered into a tax sharing agreement. Pursuant to the tax sharing agreement, GCI Liberty agreed to indemnify Qurate Retail for taxes and tax-related losses resulting from the GCI Liberty Split-Off to the extent such taxes or tax-related losses (i) result primarily from, individually or in the aggregate, the breach of certain restrictive covenants made by GCI Liberty (applicable to actions or failures to act by GCI Liberty and its subsidiaries following the completion of the GCI Liberty Split-Off), or (ii) result from Section 355(e) of the Internal Revenue Code applying to the GCI Liberty Split-Off as a result of the GCI Liberty Split-Off being part of a plan (or series of related transactions) pursuant to which one or more persons acquire, directly or indirectly, a 50-percent or greater interest (measured by vote or value) in the stock of GCI Liberty (or any successor corporation). Following a merger between Liberty Broadband Corporation (“Liberty Broadband”) and GCI Liberty, Liberty Broadband has assumed the tax sharing agreement.

In December 2019, the Company entered into an amendment to the services agreement in connection with LMC’s entry into a new employment arrangement with Gregory B. Maffei, the Company’s Chairman of the Board (the “Chairman” or “Mr. Maffei”). Under the amended services agreement, components of his compensation will either be paid directly to him by each of the Company, Liberty TripAdvisor Holdings, Inc., and Liberty Broadband (collectively, the “Service Companies”) or reimbursed to LMC, in each case, based on allocations among LMC and the Service Companies set forth in the amended services agreement, currently set at 11% for the Company.

I-10

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QURATE RETAIL, INC. AND SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Continued)

(unaudited)

The reorganization agreement with LMC provides for, among other things, provisions governing the relationship between Qurate Retail and LMC, including certain cross-indemnities. Pursuant to the services agreement, LMC provides Qurate Retail with certain general and administrative services including legal, tax, accounting, treasury and investor relations support. Qurate Retail reimburses LMC for direct, out-of-pocket expenses incurred by LMC in providing these services and for Qurate Retail's allocable portion of costs associated with any shared services or personnel based on an estimated percentage of time spent providing services to Qurate Retail. Under the facilities sharing agreement, LMC shares office space and related amenities at its corporate headquarters with Qurate Retail. Under these various agreements, approximately $2 million and $2 million was reimbursable to LMC for the three months ended June 30, 2023 and 2022, respectively, and $4 million and $5 million was reimbursable to LMC for the six months ended June 30, 2023 and 2022, respectively. Qurate Retail had a tax sharing payable to LMC and Liberty Broadband in the amount of approximately $13 million and $18 million as of June 30, 2023 and December 31, 2022, respectively, included in other liabilities in the condensed consolidated balance sheets.

Zulily, LLC (“Zulily”) was a wholly owned subsidiary of Qurate Retail until its divestiture on May 24, 2023. Qurate Retail recognized a loss on the divestiture of $64 million in the second quarter of 2023. Zulily is included in Corporate and other through May 23, 2023 and is not presented as a discontinued operation as the disposition did not represent a strategic shift that had a major effect on Qurate Retail’s operations and financial results.

Included in revenue in the accompanying condensed consolidated statements of operations is $109 million and $220 million for the three months ended June 30, 2023 and 2022, respectively, and $301 million and $452 million for the six months ended June 30, 2023 and 2022, respectively, related to Zulily. Included in net earnings (loss) in the accompanying condensed consolidated statement of operations are losses of $9 million and $40