Qurate Retail announces long-term iniatitives
Qurate Retail Group announced a series of initiatives designed to better position its HSN and QVC US businesses and accelerate the company's digital transformation, building on the integration strategy following the HSNi acquisition in December 2017. Initiatives include: combining the HSN and QVC US business units into a new business unit that will be referred to as QXH; streamlining operations, principally at HSN; approximately 350 positions will be eliminated by year-end 2018; integrating the HSN and QVC US fulfillment networks. The first phase includes opening a new fulfillment center in Bethlehem, PA in 2019 as well as anticipated closures of fulfillment centers in Lancaster, PA, Roanoke, VA, and Greeneville, TN in 2020. Approximately 1,725 positions will be eliminated in these centers upon closure, partially offset by the anticipated hiring of 1,200 - 1,500 positions at the new Bethlehem facility. Additionally, QRG will evolve toward a leased vs. owned model for many of its fulfillment facilities. Taken together, HSN and QVC US generated $8.5B in revenue in 2017. Team members impacted by these reductions and closures will receive support to aid in their transition. The initiatives are expected to deliver an additional $120M-$125M of synergies from the HSNi acquisition, bringing total estimated run-rate operating synergies to $320M-$345M by 2022. Incremental one-time costs include: $40M-$45M severance and restructuring expense in Q3; $30M startup and dual running costs of new facilities over the course of 2019-2021 and $200M one-time net capital investment through 2022 for new fulfillment centers, automation, and technology investments, net of anticipated proceeds from sale of existing facilities.