Zulily is helping QVC post profits amid what the home shopping network calls a “choppy retail environment.”
Liberty Interactive Group, which owns QVC, posted its second quarter earnings on Friday. Net income for QVC increased 13 percent to $127 million, while revenue increased 21 percent to $2.4 billion.
“QVC continues forward in a choppy retail environment,” Liberty CEO Greg Maffei said in a statement.
Added QVC President and CEO Mike George: “Late in the quarter, we experienced a deceleration in demand in the US that has continued. As a result, our near-term perspective is more cautious.”
That sentiment may have worried investors, as shares dropped more than 20 percent on Friday.
Regardless, Zulily certainly helping QVC’s top and bottom line. The Seattle-based retailer, which was acquired by QVC for $2.4 billion last year, saw its revenue grow year-over-year by 23 percent to $366 million, also up from $355 million in Q1. Non-GAAP operating income grew 121 percent from last year to $31 million, which is also up from $23 million in Q1.
“We accelerated our revenue growth in the second quarter,” Zulily President and CEO Darrell Cavens said in a statement. “Our merchandising and operational execution are driving strong growth in our business. As we look to the back half of 2016 and beyond, we remain obsessed about offering fresh new products and experiences every day that strengthen our brand and market presence. Additionally, we continue to find valuable new ways to expand our customer reach and leverage the collaboration with QVC to deliver incremental growth opportunities.”
The $2.4 billion acquisition came five years after Zulily was founded by Cavens and Mark Vadon, two former Blue Nile veterans, and two years after a skyrocketing IPO. The deal also went down as Zulily’s stock sunk significantly, following a series of earnings misses, and three months after Chinese retailing giant Alibaba disclosed a 9.3 percent stake in Zulily. QVC’s purchase price marked a 49 percent premium over Zulily’s most recent stock close before the acquisition.
“I think with this partnership with QVC, it allows us to go after brands and categories that we weren’t deep in, like health, beauty and jewelry,” Cavens said this past August. “They are categories we dabbled in, but haven’t done big business in. And, on the brand side, QVC has proprietary brands and exclusive relationships. We can bring a set of emerging brands that really have phenomenal product but not great distribution and expose that to QVC to keep the freshness and newness there.”