Shares in Liberty Interactive Corp. fell more than 21% to a 52-week low on Friday after the owner of the QVC shopping network reported it had begun to experience “significant headwinds” in the U.S.
For the second quarter, Liberty said revenue jumped 21% to $2.42 billion year-over-year, matching analysts’ estimates, while net income increased 13% to $127 million.
“We reported solid second-quarter results, with good sales growth in most markets,” QVC President and CEO Mike George said in a news release.
U.S. revenue increased 2% to $1.4 billion, with the apparel and accessories categories accounting for most of the growth. But Liberty said QVC’s U.S. sales began in early June to “experience significant headwinds, which have continued. The sales declines, as compared to prior periods, have averaged in the mid to high single digit percentages.”
“QVC has developed many initiatives intended to reverse the negative trends and QVC is optimistic, although there is no guarantee, that these actions will have a positive effect,” the company said.
In trading Friday, Liberty shares dropped 21.6% to $20.61, well below the previous 52-week low of $22.68 in February.
According to QVC Chief Executive Mike George, the network has seen softening demand in most categories, with fashion, which had been its strongest performer throughout the year, experiencing the biggest declines.
“The retail environment certainly continues to be challenging,” George said in an earnings call. “And in particular, we are seeing unusually aggressive markdown activity as department stores clear out spring and summer fashion goods.”
He also cited rising bad debt rates but added that “we do not believe that there are any abrupt changes in media viewership or e-commerce shopping patterns that are contributing materially to the soft sales.”
Zulily, which Liberty Interactive acquired last August for $2.4 billion to reinvigorate sales growth, contributed $366 million to the top line. Revenue in QVC’s domestic segment grew 2%, while international revenue rose 7%.
“QVC continues forward in a choppy retail environment,” Liberty CEO Greg Maffei said.