Sales of QVC, the West Chester-based home-shopping center controlled by telecom billionaire John Malone, closed below $20 for the first time sinced 2013 on Thursday after CEO Michael A. George detailed continued slow sales and job and spending cuts. (Read about earlier sales decline here).
"We are working on a number of initiatives to lower our (selling, general and administrative) costs to find about $30 million to $35 million in savings on the SG&A line next year," including cutting 100 jobs at Studio Park near West Chester, which the Inquirer reported here Wednesday.
That's a nearly 3% cut from QVC's total selling, general and administrative expenses, which totalled $1.078 billion last year, including $154 million for advertising, according to QVC's annual report.
The job cuts were "very difficult for us, because it's an amazing team. But we thought the right thing to do in the current kind of business climate," George told investors at a Goldman Sachs conference. He said QVC will pay $10-12 million in severance for the former workers. The company also plans to "cut another $11 million to $12 million" by consolidating employee services.
QVC sales are still down "in the high single digits" from last year, though the drop is "modestly" less than it was earlier this summer, George added.
"The pressure was greatest with our best customers," who buy from QVC several times a month and enjoys higher income and "much higher household wealth" than most Americans, George said.
It's not that "she" (most are women) stopped buying: "We just saw a bit of pullback in her spend... Especially consumer electronics and jewelry," also kitchen items like Keurig and juicers, and WEN shampoo, which "has been subject to some customer complaints."
Women's clothes are "flat" as QVC competes with troubled chain stores' discount sales, but "I think we have some good areas for growth in fashion," George added.
Goldman analyst Matthew Jeremy Fassler asked if QVC was having to fight for "eyeballs" against the Olympics and Presidential election coverage.
That has been "a source of distraction," and the election "does create a headwind," George said. Customers "may be a little more hesitant to make that discretionary purchase."
Plus, QVC's Easy Pay program has suffered "a tick-up in writeoffs," and though losses are still "sub-2%," QVC has "slightly" tightened EasyPay credit.