Just months after Qurate Retail Group, QVC. Inc.’s parent company, provided updates on its efforts to work out the kinks of integrating HSN into its business comes a slew of announcements from the retail group.
Qurate, No. 11 in the Internet Retailer 2018 Top 500, acquired TV and web retailer HSN and its brands in mid-2017 for $2.1 billion. Now, it is combining HSN and QVC U.S. into a new business unit called QXH.
HSN and QVC U.S. together generated $8.5 billion in revenue in 2017, garnered more than 1 billion visits to its websites and shipped more than 170 million items, Qurate says. It expects the merger of HSN and QVC U.S. to save $120 to $125 million in operating costs through 2022, with $40 million saved in 2019 alone.
“The changes announced today will enable us to accelerate this transformation by better leveraging the considerable scale and resources of our HSN and QVC U.S. businesses,” says Mike George, president and CEO of Qurate. “With a focus on driving digital transformation, these efforts will extend our leadership in social, digital and video commerce.”
The following retail brands now operate under Qurate: TV and web retailer QVC Inc. and flash-sale site Zulily.com, as well as HSN and Cornerstone Brands, which include Ballard Designs, Frontgate, Garnet Hill, Grandin Road and Improvements.
Qurate reported e-commerce revenue of $1.9 billion for the second quarter ended June 30. This represents 59.4% of the quarter’s revenue of $3.2 billion. Zulily had the most sales growth among Qurate’s assets because of “strong customer growth,” George said, according to a SeekingAlpha transcript. In fact, total customers for Zulily.com grew 29%, the retailer reported.
Fulfillment center changes
Qurate is integrating HSN and QVC U.S.’s fulfillment networks to improve delivery times and lower delivery costs. It’s also investing in a new fulfillment center and closing others. Currently, Qurate operates four HSN and five QVC fulfillment centers.
Qurate plans to open a new fulfillment center in Bethlehem, Pennsylvania, in 2019, which it says will fulfill about 25% of the QXH volume. The facility is in addition to an existing Zulily fulfillment center also located in Bethlehem, but the new center will not affect operations for Zulily, Qurate says. The company anticipates the new facility will cost about $30 million and plans to invest an additional $200 million through 2022 in new fulfillment centers and technology within the centers.
It also plans to close fulfillment centers in Lancaster, Pennsylvania; Roanoke, Virginia; and Greeneville, Tennessee, in 2020 after the Bethlehem facility is up and running. About 1,725 jobs will be eliminated by the three closures. Qurate expects to hire about 1,200 to 1,500 workers at the new Bethlehem facility.
“This difficult decision… is expected to provide us with the capability to fulfill packages across brands and consolidate shipments for a better, faster and more environmentally friendly customer experience with lower shipping costs,” says Bob Spieth, chief operations officer at Qurate.
HSN also is closing its Ingenious Designs facility in Long Island, New York. It will shift its design and sourcing operations to Qurate’s in-house design and sourcing team, but did not specify a timeframe for this plan.
Executive shuffling
Qurate also has made a few senior executive changes.
Mary Campbell is now chief merchandising officer for Qurate, as well as chief commerce officer for QVC U.S. She’s been with QVC for 14 years in various senior roles. In this new dual role, she will be responsible for QXH’s merchandising, marketing and digital strategy and QVC U.S.’s digital and broadcast operations to develop and grow the QVC brand.
Mike Fitzharris will expand his role as president of HSN, a title he’s held since January 2018, to also handle QXH’s video platform expansion and distribution, as well as HSN’s digital and broadcast operations to develop and grow the HSN brand.
QVC U.S.’s president role, currently held by Steve Hofmann, has been eliminated as of Oct. 19.
April Berthene contributed to this report.
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