What happened
Qurate (QRTEA 1.46%) shareholders saw red on Friday, as their stock fell over 21% by 11:15 a.m. ET, compared to a slight decline in the broader market. The TV-shopping giant had been outperforming the market so far in 2022, but the decline pushed returns well below the 10% decline that's been logged in the S&P 500 to date.
Shares fell due to a surprisingly weak business update issued by the company.
Image source: Getty Images.
So what
Qurate, which owns seven leading video-retailing brands, including QVC and HSN, said in a preliminary earnings update that revenue is on pace to drop by between 8% and 9% for the key holiday-shopping quarter that ended on Dec. 31. Most investors were expecting a much more modest decline. Adjusted earnings will take a bigger hit, too, dropping by as much as 20%.
Executives said actual earnings results might be even worse after accounting for a fire that impacted its North Carolina fulfillment center. But the poor sales trends reflected market share losses, too. "We are not pleased with these results," management said in a press release, "and are actively taking steps to improve our long-term performance."
Now what
Qurate has a new CEO as of early October, and investors are hoping that this leadership change can help the company shift to a better operating performance. David Rawlingson's job is harder, in some respects, due to these decelerating growth trends.
In other ways, though, the weak performance could open the door for more aggressive strategic shifts, especially around cutting costs. Look for management to highlight these plans, along with Qurate's updated sales outlook, when the company reports full-Q4 results on Feb. 25.
