Qurate, I should say . And David is President and CEO. As a reminder for everybody, we did this conversation last year, but I think it's important to remind everyone that you guys are a Fortune 500 company, a collection of retail brands, including the video-based shopping networks QVC and HSN, as well as Cornerstone Brands ca an you just give us a little bit more color on the business and what you guys do?
Yeah, it's great s o we're $10 billion top line w e're in the U.S., Japan, Italy, U.K. I always have to make sure to Germany to get all my countries t hey don't like it when I forget their country. And our basic business model is, when you grew up, you probably saw QVC or HSN on your television w e were probably there selling something.
We direct most of our live social shopping content to women tend to be women over 50s at a certain stage in life and a certain level of discretionary income. And then we also own a few other retail brands we own Frontgate outdoor furniture, Ballard Designs, largely indoor furniture, Garnet Hill and Grandin Road.
And so that's been the core of the business i t's a high-volume retail business w e had about 200 million transactions last year b ut we also had over 60 billion minutes of content viewed across all of the various platforms a nd so we're somewhere between entertainment and retail as a sort of category-crossing retailer.
Yeah, I'm always shocked when you say that number or just the scale of the business is incredible a nd is it predominantly in the video-based business? or is it sort of spread?
It's predominantly in the video-based business. Now, that expresses itself in a lot of ways s o we have a $6 billion e-commerce business. A lot of that is somebody watches on TV, goes to one of our websites, shops, and orders. But something like 70%-80% of our revenue was downstream of our video business.
Gotcha c ool. Last year when we spoke, you were sort of just seeing the positive results from your Project Athens initiative, which I think you launched in 2022, actually, right?
That's right.
That theoretically concluded.
November.
This past year, right?
Very recently.
Give us a reminder what that was? and is and what you're seeing from that?
That's great s o I'll try to paint the picture really quickly. You know, when I came in, I've been here for about three years. We were coming off the other end of the pandemic. The pandemic was great for us because people couldn't go outside, so they just watched their television, shopped, went on our websites and shopped s o we had a really big run-up a nd then.
I think we thought that was going to last forever, borrowed some money, put some debt on the balance sheet, and then were maybe surprised when people went outside again and they were doing something other than just consuming our content and buying our goods a nd so the business went into a bit of a decline a nd then we had a fire, the largest structural fire in history in North Carolina w e lost an employee, $500 million worth of inventory.
Really put the business on its back w e announced a turnaround plan targeting the real restoration of the bottom line of the business, and so we announced that we thought there was a $300-$600 million OIBDA. We used OIBDA instead of IBDA for some funky historical reasons, but $300-$600 million OIBDA opportunity.
And we concluded the program in November, having realized $500 million in incremental profitability on the business w e also needed to improve our free cash flow profile of the business, and so we targeted $300-$500 million, I think, and got to $400 million in incremental free cash flow for the business. But that whole program was targeted at getting our cash and profit profile back to a place where it made the business sustainable.
We had not concentrated on revenue really at all, and so we concluded that program w hat we announced in November was the start of a new strategy w e're renaming the company w e're going to become the QVC Group. We're no longer going to be Qurate Retail. I noticed you stumbled a little bit when you were pronouncing our name. Everybody does w e're going to fix that problem for you, just for you i renamed the company just so you didn't have to.
Appreciate it because I do it every time.
We're going to fix that just for you, and we're going to double down on our main brand, which is QVC, but the biggest piece of the news was that we are going to become a live social shopping company, which is our declaration and intention that we're moving not out of, but in addition to what we've always done, mostly on linear television and cable, and we're going to bring the power of our relationships, 100 celebrity relationships w e're going to bring the power.
Of our distribution center, the power of our content production, and we're moving very powerfully into social shopping. Most people say social shopping will double in the next four-to-five years. We think that may even be pessimistic. It's the fastest growing thing in retail. Everybody's been looking at Asia, waiting for it to happen in the U.S. We think it started to happen w e think you can look at TikTok Shop y ou can look at social shopping on Facebook. You can look at how intentional people are getting about additional opportunities for monetization on YouTube.
And you just see the sea wave coming i don't know if it's ever going to be China, but I do know I think it's going to be the fastest growing thing in retail over the course of the next few years. And I think we bring more to that fight than just about anybody o ne of the reasons I think everybody asked me, why hasn't it done better in the United States when it's been such a big hit in China? And one of the reasons is nobody's wanted to rebuild what we had to build in the first instance to do television shopping, right?
You actually not only need the personality, which everybody thinks about, that somebody trusts in the distribution. You also need the merchandise y ou need a merchandising team. And you need a distribution to be able to take ownership of inventory. And you need to be able to ship to every zip code.
And you need a call center to take calls when things don't go right and to take returns i t's the end-to-end process of the customer experience s o just because you have a social network and you can sell something to somebody doesn't mean you can do all of the things necessary to have a consistently transactional relationship with that customer. That's what we really bring into the social space a nd that's the real pivot and strategy. And we're excited about what we're seeing so far.
OK, so a couple of things to pull out of that and talk about. But first, just TikTok. Are you worried about the TikTok ban?
We're growing very fast on TikTok. i 'd like to continue growing very fast on TikTok.
Understood.
That said, I don't think if TikTok ends up ceasing to exist, that social media is going to cease to exist. I assume that activity and those users will go somewhere. We're on just about every social media platform w herever they go, we'll be there. I think TikTok has probably gotten a little bit out in front of the other social media companies in terms of capabilities around shopping.
And I think they're probably, most things I read say, they're probably growing in shopping faster than anybody else a nd so if anything, I think this probably gives, they were starting to run away with some things in terms of capabilities i t probably sets everybody back to an equal playing field if it happens. But I think either way, the strategy remains a sound strategy e ither way.
More people will be buying more things on social media five years from now than they're buying today i don't think anybody doubts that, and I think it's the natural application of the places we have competitive advantage.
It seems like you're totally well positioned for that based on all the work that you've done the last couple of years.
I think so.
Did that include some balance sheet stuff as well?
It included a lot of balance sheet stuff Bill Wafford, our CFO, is right there w e've done a few things. We did a sale-leaseback to do a raise w e paid off some debt over time. We also, importantly, we sold Zulily, the e-commerce business, which was a big source of losses and cash burn as part of the transformation, and so we feel like we're in a much better position than we have been to be able to really move into a growth mode in 2025 and 2026 now. I don't think some people say, well, why did you wait? I don't think we're in a position to move as forcefully as we're now going to move up until now.
OK, great. You mentioned your target demographic, typically women over 50 i know back in April you launched a new campaign called the Age of Possibility that celebrates that particular demographic. Talk to us about that. And how's it been going?
Yeah n umber one question I get is, how are you going to get younger? And I always sort of bristle at the question. It's like, why do we need to get younger? What's wrong with serving a woman over 50? Why shouldn't we be really proud? And so we sat with that.
And we talked to a lot of our customers a nd what we heard from a lot of them is it's a new beginning. A lot of times, children are out of the house a lot of times, these women who have built families and built communities get to concentrate on themselves and their friendships and relationships again. And for a lot of women over 50, it becomes a new age of possibility. For us, it also becomes a time where they have extraordinarily high discretionary income and not a lot of obligations for it.
But it is also a new age of possibility. And so we decided to team up with ambassadors that included Patti LaBelle, Martha Stewart, Billie Jean King, Queen Latifah, Naomi Watts i mean, just an amazing set of 50 iconic women, to talk about what is the Age of Possibility over 50. And it's been fantastic.
As a result of the Age of Possibility campaign, our followers on Facebook are up 300% over the course of the last year. And I think really, to me, the most powerful thing has been how many women have said, we've been creating space for them to have a lot of the most powerful conversations they need to have at this stage, at this moment in life it can be about menopause i t can be about grandchildren i t can be about elder care i t can be about investing i mean, there's so many things that are happening.
And society just hasn't created enough space for a lot of the heroes of every local community to have the right conversations and get the right support, and we're really proud of creating that space, and by the way, everybody says, well, how can you serve women over 50 and be pivoting to social media, and the first answer to that is, all of these women are on social media.
What do you think the average age of Facebook is now? They're all on social media. Number one, I noted TikTok last year i don't know if you caught this, it had a commercial of people in a nursing home doing TikTok dances, and you're like, why would TikTok put out that commercial, well, it's because people in nursing homes were on TikTok doing TikTok dances. Everybody's on social. Everybody's on social media, and so we really love that customer. We'll get a little bit younger over time as we go into social media, but our core customer stays the same, and we take a lot of pride in serving her.
My wife would be mortified if she knew I was going to say this, both that she is 50 and she has her five minutes of TikTok. What I think is interesting about what you're talking about.
Just make sure. I mean, the five minutes of TikTok is good. Five minutes of QVC is better. Make sure she's getting both.
Yeah. Last thing I need is a community forum about difficult husbands. But I do think that's an important word because I've heard you talk about this before. It's so much more than shopping, right? You've created a community for your target demographic.
That's really true.
They're sharing whatever it is that they need to and want to and everything else in that community t hat must be beneficial for you guys from a business standpoint, of course.
Yeah, it's really true.
You create an emotional connection with them?
It's really true, and you know I got to tell you, I think I mean, a couple of reflections on that t he first was when we launched the Q50, we brought everybody to Las Vegas, took over the Sphere, but a lot of these women, just legends, hadn't met each other, so you saw like Billie Jean King talking to Patti LaBelle, and you saw Queen Latifah talk to Martha Stewart.
And what was so interesting about what they told us about those conversations is because of the reason they were together, they were having conversations that they never otherwise would have had. Like there was something about getting together specifically to talk about and celebrate this moment in life that was extremely powerful.
And I think if you look at our Quintessential 50 Facebook group or you look at our QVC forums, what you see is people very quickly going right to the heart of difficult, life-changing, very relevant life experiences and sharing those across. And it's just been an incredibly powerful thing. One of the great things and one of the unfortunate things about my job is that, and I don't know how people get my information, but they do.
And they reach out to me directly when things go wrong. And when we let people down, it's clear that they don't feel like they're being let down by a retail company t hey feel like they're being let down by this person they saw on the screen who they think is their friend because it's been in their life for decades, who they ordered something from and didn't deliver it on time, right? David Venable or one of our hosts or the person who they feel like they have the relationship with.
And so it's a very interpersonal thing. And I feel a little bit cause-led because everybody recognizes that we're an increasingly lonely society l ike you look at the number of friends is down l ook at the number of children people are having is down y ou look at the number of marriages is down. You look at the time spent alone, it's up.
Increasingly, people are looking for new ways connect i think we do a lot to give people ways to connect, both with our personalities and with each other. And that's a reason why I'm so excited about social because, of course, social is that. It is an electronic medium for connection when it's done well. And we think we can do it well a nd we think we can be another healing presence a nd what's not always a healing place to spend time?
You talk about being well positioned now y ou're feeling much better to take advantage of the opportunities that are in front of you guys. And certainly, growth initiatives, new strategy, any detail on that would be great b ut in particular, can you connect it to potential financial impacts of what you're planning?
Yeah, let me start with the financial impact w hat we've said is we're going to target top-line growth over a three-year period. We're going to return the company to growth, which really hasn't happened in the company if you take out the pandemic since 2017, 2018. We're going to do so while holding profitability flat, or I should say profit margin and overall profitability flat.
We're going to make the investment through a set of continuing margin and cost opportunities. We think there's about $100 million worth of opportunities that we're going to go after that we'll reinvest in the business so that we can keep profitability flat while continuing to make the outsize investments we need to make in our move to becoming a live social company t hose are the basic economic output.
So the biggest change is a real concentration on growing the customer file and getting the top line to move again. Because of the impact of cord cutting on our top line, it's going to take a while for social and streaming to get big enough to fully counteract that decline b ut we're targeting for the first time in years top-line growth again.
And what do those investments? look like specifically? Where are you investing in the business to change over into the social business.
Yeah, the first investment I'm really excited about, it's called the Content Engine, so today, if you were to go into West Chester and invite you, invite anybody out to see it, especially after we finish the work we're doing now, what you see is a bunch of television studios, and that makes sense because we shoot more live television than anybody, about 100 hours of live television per day across our networks. What we are building is the ability to create shopping content for every medium.
And so instead of live television studios, you're going to see what really is a content engine that is pumping away and creating content for Facebook, content for TikTok, influencers coming into the studios to do specific shoots, also content for television, also content for QVC Plus and HSN Plus, our streaming services, and being able to do that in an efficient, serialized, comprehensive, systematic way. I don't think that's been built anywhere in North America.
I'm not sure it's been built at the scale that we're building it anywhere in the world. And we think it's going to position us to be the largest production house of live shopping content anywhere in the world by the end of it. And I just think it's really exciting about what it's going to mean for us and eventually for all of retail.
I mean, 100 hours a day is already a staggering number y ou're talking about taking that to an altogether different level.
Yeah, we really are. And I think it's going to be exciting.
Great o ne of the things I love about this conference is it's the beginning of January, and I get to ask, how? are you feeling about 2025, and what are you seeing from a consumer? Are you feeling good about the consumer in 2025?
I feel OK about the consumer. You know, I think a lot of us have been, given everything that's happened in the macro environment, waiting for the bottom to drop out i don't see any sign that the bottom is going to drop out. I would say I also don't see signs that the consumer is taking off. And so I feel like the consumer is reasonably solid right now i feel like most of the trends are continuing. And so I don't feel like I have either terrific news to share, nor do I have discouraging news t he consumer seems choosy, value-conscious, but reasonably solid to me.
That's not a divergence from where they've been for the last couple of years for you, right?
Yeah, I think that's right. I think that's right.
All right, good. Let's see. What did we miss? What do we miss? What do we need to know? What do you guys look like in three years from now?
I talked about the financial metrics.
Yeah.
I think we will be operationally a pretty different company. I think we're going to be really excellent at working with influencers. One of the things that happened this year, sometimes leadership is brilliant a nd sometimes you do the grand strategy and it works a nd sometimes it's just a little bit of dumb luck too s o we decided we were going to do a TikTok challenge a nd we were going to get to a specific number and a specific number of days because we had basically never sold anything on TikTok.
So we set up everything that it was going to take to start going down this journey. And then we turned on a functionality where influencers could send in requests to work with us, which we wanted to start working with some influencers. And like that, I think we had 9,000 requests a nd we could not handle them.
And that was the start of saying t hat's brilliant management.
Yeah, exactly t hank you. That was the start of saying, well, maybe this opportunity is even bigger than we thought in our own imaginations l ike, don't be limited by your own imagination t hey're telling us that the opportunity is huge. Let's see what we can understand.
But to serve them well so they can serve end customers well, there's a bunch of technology. We have to build a bunch of tools. There are a bunch of things that are not sexy, but that you have to spend time on, right? Like, we spend a lot of time thinking about if we're doing something in health and wellness, how do we not make medical claims?
If we are doing something with the product, how do we not say things about the product that subjects us to product liability? Building systems to protect the consumer and to protect us, none of that's been built in social media. Retail is going to be a huge part of social media s hopping is going to be a huge part of social media. None of those compliance systems are built. Influencers aren't going to build them a nd frankly, the platforms don't want to build them.
They want to partner with somebody who can sit in between, bring merchandise, delivery capability, personalities, but also make sure that what's happening in terms of transactions on retail transactions, that they're compliant. What I learned, the more I talk to everybody in the ecosystem, is how much of what we built was truly relevant to what was going to go there. Some of it will be directly relevant s ome of it, we're going to have to augment what we already have a nd I think at the end of all of that augmenting.
In a couple of years, we're going to be a pretty different company. In a couple of years, I think at this conference, in three years, I think you will have some people on the stages who will look brilliant because they got in front of social media.
And I think there will be some people who probably would have been on these stages who won't be because they missed it a nd I think we have every reason to be one of those companies because I think it's going to be everything that anybody can see says it's going to be big i 'm not saying it's going to be China e verybody keeps asking when we're going to be what live streaming is in China t he answer is probably never.
But if we're a fifth of what, as a percentage basis of total e-commerce, if we end up being a fifth of total e-commerce of what China is as a percentage of total e-commerce, you're talking about a growth in live social shopping or live stream shopping that's like five or six times where we are. Like, that's how big the opportunity is, even if we don't recreate what's happened in China.
And so I think it's a really exciting time. I think we're pointed in the right direction. That doesn't mean that we're going to win. So that's why I named our strategy WIN, W-I-N it's be wherever she shops with inspiring people and products and use new ways of working with the technology and cost reductions to fund the W and the I., I think we got to go WIN. I think now is the right time i think it's the right strategy i think we're shooting at the right target, and we're excited to take that.
Given the incredible experience with the TV that you have, you have to be well positioned to take advantage of it, perhaps better than anyone at that point, right?
I think so. We just got to go do it.
Awesome. Three years from now, we can sit here and talk about brilliant management.
I love it.
All right.
And maybe a little luck along the way too.
David Rawlinson, everybody.
Thank you.