On Dec 28, we issued an updated research report on Liberty Interactive Corporation QVCA.
Liberty Interactive reported strong financial results in third-quarter 2015 with both the top and the bottom line surpassing the Zacks Consensus Estimate.
QVC, a segment of Liberty Interactive, is a major e-commerce retailer in the U.S. competing with the likes of Amazon.com Inc. AMZN. The division is benefiting from a surge in online sales. Also, a major thrust is expected from the growing adoption of high-end smartphones in the U.S.
In addition, exposure to international markets such as Japan, Germany, Italy and the U.K. will help QVC achieve a higher growth rate. The company is also optimistic about its operations in China where recent data represents a sharp hike in online sales.
Moreover, QVC reported all-time high digital sales in the Thanksgiving week, thanks to attractive deals and gift items. This also underlines the growing trend of online shopping. The sales upside was primarily driven by electronic gadgets and home appliances by leading brands like Canon Inc., Dell, KitchenAid and Susan Graver.
Meanwhile, in Oct 2015, QVC completed the pending acquisition of Seattle-based e-commerce company – zulily Inc. – for $2.4 billion or $18.75 per share. Going forward, zulily’s personalization and e-commerce know-how should help QVC advance its leading position in the retailing business. Also, the deal should considerably open doors to a much broader audience and result in significant new customer additions for the segment.
However, the company’s businesses are susceptible to rapid technological changes. Mounting TV carriage costs continue to hurt margins. Increased exposure to international markets also raises foreign exchange concerns for the company. The strong dollar against other international currencies may further impact the company’s margins.
Moreover, persistent global economic headwinds and intensifying competition are potent risks.
Notably, Liberty Interactive holds approximately 38% of HSN Inc. HSNI and about 22% of the equity and 57% of the total votes of all classes of TripAdvisor Inc.’s TRIP common stock.
Liberty Interactive currently carries a Zacks Rank #3 (Hold).
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