QVC Group Inc. (QVCAQ) Earnings Call Transcript & Summary

Good morning, and thank you all for joining us today. I'm Jason Haas, and I cover retail hardlines here at Bank of America. I'm really fortunate to be joined today by the management team from Qurate. We have Mike George, CEO; and Jeff Davis, CFO. So thank you both, again for making time to be with us today.

Thank you, Jason. Great to be with all of you.

So to get started with some questions, can you provide some more color on what you're seeing in the business so far that gives you confidence that new customers acquired during the pandemic will continue to be retained at healthy rates?

We've been really encouraged by both the volume of new customers we're seeing across all of our business units and the quality of the new customers as measured by all the typical ways in which we measure with. It's fairly good predictability, the likelihood of new customers turning into high lifetime value customers. So focus specifically on our QxH business because the dynamics are a little different in every business unit. But at QxH, we're seeing this very -- and this really outsized growth in new customers, some of the highest growth rates we've seen in the history of the company. When we look at how to measure the quality of these new names, we think about a few things. First, we look at what categories they come in on, because your category first purchase tends to be quite predictive of your lifetime value. And we know that, that new customers that come in, in our fashion categories, have a much higher average value. And even though the fashion business is down, it's actually up with new customers. And so we're ironically bringing in a lot of new customers across our fashion businesses, in addition to our home business. And so we like the fact that she's coming in, in a variety of categories. When we look at our typical early-in predictors, like, her propensity to repeat purchase within 14 days, 30 days, 90 days of joining us, those metrics look virtually identical, if not a little better than in prior years. We even look at the percentage of new customers who become best customers within 90 days. And we define a best customer as someone who makes 20 purchases, or they made 20 purchases within 90 days. And that small percentage who hit that customer mark is the same as it's been in prior years. So we love all the early indicators of quality, we love the quantity, so even if quality were to moderate somewhat in the out periods, which we don't anticipate, but if it were, we're still going to win just on the volume of new customers we bought in. Final point I'd make is we're also investing heavily to do all we can to not take any of that for granted, but to influence her behavior, get her to quickly repeat purchase, so really some nice strides the team has made in personalized e-mail marketing, knowing what triggers we can use to get that second purchase retargeting that customer as she is in other channels like YouTube, and presenting her with great video content proactively, even sending her really interesting print pieces in areas like culinary, that tend to get her interested in a second purchase. So I think we're on the right path. We think that the expansion of the customer base in 2020 is really going to yield benefit for us over time.

That's great. And so you mentioned that fashion categories were down in aggregate during the pandemic. So I'm curious if you're starting to see any signs that these are coming back. And any additional color you could provide on just how you making sure you're well positioned if there is a potential resurgence in the categories?

Yes. Like everyone, we've definitely seeing pressure in the fashion categories through the pandemic. We are gaining market share, but the overall market is well down and our business is down as well. So for us, it is about trying to find those places she is interested in, and the power of our business model is, we can tell a new story tomorrow based on what she's interested in, and we program our TV presence, our digital presence to whatever she's interested in. In the last 2 months she's been interested in active cozy wear and athleisure and functional handbags and so we've been able to lean into those categories for some growth. We've been encouraged this year with sort of an early response to spring merchandise. She seems to be responding to spring product a few weeks earlier than we would have normally seen, as early as end of January, which to me just speaks to the customer who is desperate for something new. So what that all looks like in terms of the pace and timing of the fashion business turning around is hard to read, but what we know is we can respond quickly to whatever she's interested in, and more so than almost any other retail format and we took a prudent bet that a lot of fresh spring merchandise and we're one of the very few retailers on the planet that did that, most folks are going to try to sell last spring's merchandise. But once she's ready, we've got the product for her, we've got the ability to respond to programming, and of course we also have the customer base, because our fashion products are heavily purchased by our best customers, and while she spends less on fashion, the retention of those best customers is as strong as ever. If she's still with us, she's still interested, when she's ready to buy, we'll be there with the right product and the right programming and I think that gives us some nice optionality for growth going forward, with that business and eventually returns, which it will.

Can you provide more color on the work that you'd done to launch QVC and HSN on over the top and other non-traditional TV platforms? What should investors look for in 2021, in relation to some of these platform launches?

There's a lot going on in that area. And I think this is one of the most exciting opportunities we're facing, which is, what we're seeing today is the intersection of several years of getting ourselves ready, making the investments in access, in technology, in content to be a big player in streaming, now intersecting this rapid growth in all-in streaming that's been accelerated by the pandemic and is certainly here to stay. So we're just super well-positioned. What does that look like? So think about 3 or 4 big categories of video distribution. First, to your point, Jason, is traditional, linear TV, pay-TV subs are obviously down due to cord cutting, but what doesn't get a lot of attention is that a lot of folks have switched from pay TV to free over-the-air TV, you get it from your local broadcaster, you put up the rabbit ears, and we're in 18 million homes that cut the cord, but now are watching us through free over-the-air TV. That's the traditional side. Then all the ways you can get linear live TV through a streaming service. Big categories would be these virtual MVPDs, that's products like YouTube TV, Hulu TV, AT&T TV, all over the top, we're in 8 million or 9 million homes with those players. What we love about that is there are many fewer channels because they're skinny bundles, and we have a much bigger slice of the real estate. Then think about free linear TV streaming services, of which the leader is Pluto, where we're the only live shopping channel on Pluto, they're in 28 million homes. Then if you don't have any of that stuff, your smart TV box will probably have some built-in access to linear TV feeds. And so we're on LG Channel plus, Samsung TV plus XUMO, Visio Smart Cast, all -- so there's an infinite number of ways you can get our linear TV feeds, digital, paid, free. Then the next big component is sort of these value-added streaming shopping services. We have a core streaming app, that streaming app, you can get all 6 of our linear TV networks across QVC and HSN, all sorts of great short-form, long-form specialized contact content. You can interact, pick what you want to view, you're in control. We talk about being the Netflix of commerce. This is the app that will enable us to do that. That app is on Roku and Fire and Flex and soon on Apple and huge growth in downloads. We're in over 5.5 million Roku Homes, as an example. We're in specialized apps like the LG Shop app that we just launched late last year, then think about the whole category of social, 6 channels on YouTube TV. First broadcaster to broadcast on Facebook Live, now 400 hours on Facebook Live, early partner with Facebook on their new live shopping feature on IGTV. We've got podcasts on iTunes, early campaigns on TikTok with TikTok creators as well as with our own personalities. And then finally, huge investment to bring the video content to life on our own e-commerce and apps. So we're reimagining our e-commerce platform, qvc.com and hsn.com, be video first, where you can construct your own network with your favorite programming, really cool work. We're launching a new app in Europe first to do live streaming by customers, sort of user-generated content, and that could go on and on. So we're just basically surrounding the customer with an infinite variety of ways to access both traditional linear TV and the specialized on-demand shopping services, absolutely unique platform, completely unreplicated by anyone else in the world and just to us, it's an investment that's going to drive growth for the long term.

That's really helpful color. As a follow-up question, could you talk a little more about the process for getting on those platforms? If there's any sort of like hurdles you overcame or what the proposition is when you go to those different types of platforms and try to get QVC and HSN on to them?

I think the key is -- my experience in life is that economics tends to win. It just doesn't necessarily win in the short term. But if you're disciplined about your financial story, you win over time. And so when you think about -- every platform is different in terms of what it looks like and how you get on it, but what's generally true is the following: We pay people to carry our programming versus most traditional programming, it's the opposite, the cable company, let's say, pays the programmer. So we have a really good story to tell, which is, we're going to help you. And when you think about especially all these new services that are struggling financially to figure out how to make this work and need to live off of sometimes skinny subscription revenue or advertising revenue, we come in and say, we want a new win. And so take these virtual skinny bundles, like YouTube TV. Quite frankly, in the early days of those bundles, they weren't sure if wanted a QVC. They didn't know if that was brand right, but we were persistent. We set our financial terms, and we're on all of them today. So we're thoughtful, we're methodical, the financials will win out. And so it's just a matter of, kind of keeping it at it and making sure we're doing the right things to create big value-added content as well. So the economics are good but also, there's something for the subscribers of that channel. There's some specialized content. If you're on Roku, Roku is featuring one of our original series, which is a travel and cooking show with Curtis Stone, long form, fun, entertaining, that's a value-added content that gets them excited in addition to the underlying economics.

That's great color. Sticking with this line of questions. Can you also talk about what you're seeing in terms of your habits on those platforms. I'm curious if the demographic profile of those customers are any different, how much TV are they watching relative to your traditional pay TV customers? And then in terms of the spending, are they spending at the same rates as a traditional customer on a pay-TV platform?

It's -- I would say it's early days to have really strong points of view on those questions. And the data here is tricky because a lot of the data we don't have direct access to. So we're trying to make inferences from the ultimate behavior that -- what we see. So if you start with kind of what are we ultimately seeing defined as folks who are transacting with us, buying our product. What we're seeing is, we know they're at -- we know they're discovering us in a variety of ways through all of these kinds of platforms I just described. But ultimately, the profile of the new customer base, kind of going back to your first question, in age, behaviors, purchase frequency, categories of first purchase, today's customers look like last year's customers and look like the customers of 10 years ago. So I think the big picture view would be that life moves on, someone who, 10 years ago, was primarily watching linear TV, is now engaging in all of these other services, but it's still the same person, with the same values, the same expectations, the same aspirations, who ultimately, when she discovers us, acts the same as she did if she had discovered us 10 years ago. So the way she finds us, the way she engages with us is different in terms of the platform. But what she does, what she buys, her level of loyalty or level of frequency or demographics are amazingly constant. We just need to recognize that she finds us in this fragmented ecosystem, and we have to lean into being available through that ecosystem and investing in the marketing dollars, which we're doing, to drive her into that ecosystem. Once we've done that, she looks a lot like every customer we've ever had.

So switching to your topic, an increasing number of retailers have been adding buy now pay later services, pretty much primarily through third-party providers. And I know that this is something that you've been doing internally for quite some time now. So I'm curious if you still see that as a competitive advantage?

We do, although I'd start by saying it's immensely flattering to ask that the 2 hottest topics in retail today are live stream shopping and buy now pay later, both of which we invented 30 or 40 years ago. And so I love the fact that we've moved from a discussion about, now is our model still relevant to today's consumer to a discussion of the model is so relevant that how do you compete with all the folks that are trying to do what you do. And the answer is you stay focused on what we do well, you keep bringing it to life in all the new ways that we've been chatting about. and such that the aggregate experience remains highly differentiated and highly compelling. So to maybe come more centrally to your question, Jason, we certainly think that buy now pay later is an important part of our value proposition. It's one aspect of making this an easy engaging experience for her, an experience where she doesn't have to overthink her decision because she knows we will be flexible on how she pays for it, highly flexible and if she desires to return it. It's just that easy experience. So the fact that others are doing it, in some ways, I think it's -- yes, it's more competition for that one feature, but that feature divorced of the total experience doesn't mean that much. And at the same time, it's getting more people comfortable with that feature because as important as that is as a part of our value prop, new customers historically would look at that feature and wonder if it's a scam. There must be some trick here. They can't possibly tell me, I can pay this out over 5 months with no interest charge, no credit check. No, there's some trick there. And so now that they realize actually that's a common form of payment, and someone actually validates and reduces that upfront skepticism that consumers have. Final point I'd make on it is, the spec to sort of -- you went through the financials and you went through the economics. The economics of our Buy Now Pay Later program are dramatically better than the economics retailers are experiencing who partner with a third party to provide that service. So with those retailers pay that third party per transaction, it's probably a multiple of 3 to 5x what it cost us to provide our service. We've been doing it for 30 years. We know the customers. We know their default rates. We know everything about the program and how to optimize it. There's no third party that needs to make a lot of money on it and get a big market cap. And so we'll win that because it's part of offering a better aggregate value to the customer that just can't be replicated.

Got it. That makes a lot of sense. So Jeff, turning over to you for a question. Can you talk about margin headwinds and tailwinds for 2021 that investors should think about? And I know you don't have guidance, but at least directionally and kind of what the big factors are to think about?

Yes. So as we look at 2021, we're really excited about the fact that some of the tailwinds that we believe we'll have going into the year really come across from product margins. continued improvement at some level on our commission structure and then also in bad debt. So those are the 3 areas in which we're very supportive over the course of 2021. As you go into 20 -- I'm sorry, 2020, and going into 2021, we believe we'll have some momentum. And from a product margin standpoint, it's really twofold. One, this past year, as we have had the opportunity to have sort of oversized growth in home, as we believe that over the course of 2020, we should start to see some improvement in our apparel and fashion categories that those other categories have higher product margins than we did in home. Also, the fact that over the course of the last couple of years, we've been really leaning into some opportunities that drive better margin rates through strategic partnerships with our vendor partners. And while we've been able to do so in our home categories, we believe that we'll be able to further accelerate that as we continue to grow in 2021 in our fashion categories. As I think about some of the headwinds that we were having, probably the most significant that we've talked about over the course of the year, unfortunately, has been as a result of freight rates and surcharges associated with the business. As you see in the industry also, as e-commerce has become a much larger portion of retail. While we would expect those to abate at some level, quite honestly, during the course of 2021, we think that they're going to still be somewhat prevalent. There's ways that we can look to offset some of those rates, be it through the opportunity to get additional combined items into packages, being able to have multiple categories of products being delivered out of our facilities, which are closer to the customer. But we do believe that we're going to have some ongoing headwind within our fulfillment centers. And then it -- while it's -- it may seem to be a little bit of a headwind, it's an area that we want to continue investing in and it's around marketing. And it's important for us to continue to capitalize on this new customer base as Mike has mentioned, the ability to continue from a retention standpoint and growth we have been making about 35 to 50 basis points additional investment in marketing, and we're holding ourselves to some very disciplined returns as we look at continuing to deploy that. And we feel really good about what we've been able to achieve. That's one of the areas in which we believe that we'll continue to lean in to not only sustain our growth, but to also expand into some of these other digital platforms that Mike has also mentioned.

That's really helpful. And can I also ask what sort of improvements are you starting to see in working capital? There's some discussion on the call about AP terms and on AR as well. So if you could provide any additional color on that, that would be helpful.

Yes. So once you're not necessarily giving guidance, but in 2020, we had some discrete items that were very favorable for us in 2020 that as we now anniversary some of these, they're now in our base, so they're no longer necessarily a growth in free cash flow and working capital, but is now in our base. And what I'm very specifically talking about is, as part of this strategic sourcing that we were doing with our supplier partners, one of the elements was that we were getting more attuned to industry level payment terms. So we extended our payment terms on a number of different categories as part of the overall relationship with a supplier partner. We will anniversary a number of those actions through the back half of the year. In addition, this past year, we were -- we had pretty much a once-in-a-generation lifetime to pull back on some of the -- and reset some of the promotional activities that we were offering, one of which was around our -- the number of installment payments that you're offering our customers. So therefore, our accounts receivable balances have come down. And while we will continue to use those selectively and pulse those where we believe it's important as we look to continue growing our presence with our customers, this is an area that will also anniversary in the second half of the year. So it will be much less of a growth opportunity for us. And then last but not least, over the course of last year, we had a number of accruals. Last year in 2020 was a year which we were fortunate based upon the overall performance of the business to actually pay out incentive bonuses, where we didn't have that opportunity the year before. So we had a full complement of bonuses that we accrued last year. We also, as a result of the performance of the business and its strength, had higher tax liabilities that would have been accrued at the end of last year. A lot of these activities I've just outlined will, in the first half of the year, either we'll start to anniversary or those payments will go out. So therefore, the first half of the year, you would expect to see a higher use of working capital. But over the course of the year, we believe that we will still be able to generate working capital growth on a year-over-year basis.

That's really helpful color. So maybe turning, Mike, back to you for this question. Could you talk a little bit more about how you're thinking about pricing promotions, to make sure you're continuing to offer compelling value to your customer? Are you concerned at all with more customers buying digitally, that there's more comparison price shopping going on?

Yes. Our focus is always on making sure we're offering a compelling value to the customer. This is a very savvy shopper. And the reality is, she is always looking at comparison prices, right? And that's been true for a very long period of time. So we shouldn't be confused by the fact that virtually every customer is in the digital ecosystem, she price compares even if you find in a store or she's watching our TV programming she still going to the web to compare prices. So our view is very simple. We've always felt even in the days when the comparison was with the Sunday circular versus the web. Our view is simple. We have to offer an all-in discount to the prevailing and retail price in the marketplace that we've never wavered from that philosophy, and we really are able to deliver that. So we start there. But every item regardless of what is happening on a promotional front has to be a meaningful value to the all-in price, including the cost of shipping and handling that the customer could find elsewhere. Then within that, we think about a few things. We have a mix of business that we feature what we call our regular price and regular prices, again, an all-in value. And then we have a couple of tiers of discounts from that regular price where the value is even more extreme. We've been very proactive this past year at effectively reducing our promotional intensity in that reduction of promotional intensity has 3 components. One component is sell more goods at regular price versus these discounted price tiers. Second component is don't offer as much kind of free shipping and handling promotions. And the third element is back on the buy now pay later, instead of offering the customer the chance to pay over 5 months, we might offer the chance to pay over 4 months or 3 months versus 4 months. So we're reducing our installment payments, helping our working capital or in our bad debt rate. So the combination of those 3 things has really helped drive our product margins, help drive our working capital, improve our shipping and handling revenue profile. But it still comes back to all in, the price has to be a meaningful discount to the prevailing retail price. And what we've learned over the years is if it is, and she'll keep us honest, if she will not buy it. And if you watch the programming, tuning at midnight and depending on what we're selling, we will almost certainly -- when we launched our big item of the day, tell the customer, go please go check the price. Go check the price elsewhere because then we know it's a guaranteed sale. And we'd actually rather have you check the price elsewhere as you'll be that much more enthusiastic and proud of what you were able to buy and more likely to share that news with the friend. So we invite comparison shopping because we win when we get that comparison shopping. So we invite comparison shopping because we win when we get that comparison shopping. So I think it's one of the elements of the business probably not well understood, but it really sort of drives everything else. All the other things we've talked about this morning wouldn't matter if we didn't start with that fundamental tenet.

So turning over to your international business. The performance there has been, I would say, especially strong. So I'm curious if you could talk about what's driven that and then going forward, what you see as the opportunities?

Yes, team has just done an amazing job, to your point, driving really extraordinary growth during this past year, but also a multiyear track record of growth, albeit not at the levels, obviously, we've enjoyed these past 3 quarters. I would say more recently, part of the performance delta to what we saw -- the performance delta to the U.S. has generally been a few percentage points of better growth, a little more so in Q4, that's due to some relatively unique factors. The way in which markets around the world have responded to the pandemic has been a bit different. U.K. has responded in very similar ways to the U.S., where the growth is heavily coming in home. In Germany and Japan, as an example, the consumer hasn't been as aggressive in pulling back on fashion purchases, beauty purchases, and so we're seeing a little more distribution of the spend, which is obviously helping us sustain a higher growth rate in those markets. They also haven't had the same severity of product shortages that have hindered the U.S. They've had some, but some of the product shortages are really about -- especially the inbound flow within the U.S. from the LA ports on. So a little more favorability there. That's helped them, but those won't be evergreen benefits, but it's helped them in just the short term. Stepping back from the pandemic effect, a couple of things going on. We're still on a sort of a sales per capita or sales per home cover basis. Our sales in international are still lower than the U.S. So our view is, we have more market share headroom to grow the international businesses somewhat faster than the U.S. and they also don't have quite the same pronounced cord cutting issues that the U.S. has. So both those things give us a little more runway, we believe, to sustain growth a couple of points faster in international, at least that would be our aspiration. And then you add to all of that, that we spent the last couple of years reorganizing international, creating a kind of regional structure for international to invest in some better capabilities in areas like performance marketing, data and analytics, strategic merchandising for the benefit of all the markets. And those are new capabilities for us, we've really just stood them up, but we think those help us find some additional pathways to growth as well.

And likewise, Zulily and Cornerstone have been performing well. So I'm curious if you could also talk about what's driven that performance and how you keep that momentum going?

Yes. So thrilled with the performance at Zulily, really outsized growth. And clearly, they're benefiting from the tailwind towards ecommerce, but also that intersects with a couple of years of really fundamental work, an entirely new leadership team, a superbly talented new management team, a refocusing on their core brand promise, which is to help moms, and the brand got a little bit fragmented. Now it's sort of refocused with mom at the center. And then 3 or 4 big sets of initiatives that we know propel this business forward. One is around what the team would call fresh -- great fresh finds, which is about inflow of prestige brands into the platform that build credibility for the platform, and we shared on the Q4 earnings call examples of that. But just lots and lots of -- we have a new team purely focused on attracting prestige brands. And in this market, our story is even more compelling, that why those prestige brands should come to Zulily, that's part of it. And the other extreme is building a big China direct business, where we source and the product is shipped direct from China. That's a growing phenomenon that players like Wish, Amazon are big in China direct. We introduced 1,400 new vendors. These are long tail vendors at extreme values. And so both winning with prestige vendors and winning with these sort of long tail, amazing value vendors, largely direct sourced from China at very high product margins, but also equally amazing values to the end consumer. And then kind of reinventing the event experience. So Zulily is about launching 100 events a day. We still do that. But now we have more evergreen shops. We do more top-of-mind events that are very topical about whatever are the biggest issues at the moment. So all around great fresh finds, and then a reinvention of marketing, new leadership in marketing. We got with the wisdom of hindsight, kind of too focused on bringing in transactional new customers back in 2018 that weren't there to stay, they left in 2019, which hurt us. Now you look at the quality of new customers, the diversity of marketing sources, a lot of good work. We don't have time to talk about, all positive. And then a lot of work just on the fundamental shopping experience, hassle-free returns, better web experience. A lot going on, I think we can drive long-term growth in Zulily at really nice rates. On the Cornerstone side, a couple of big areas of focus. One is a lot of work over the last few years to move to very much a proprietary model. Our assortments, we design, develop, source ourselves, it keeps us out of the competitive fray with the big e-commerce home players. That's working for us. Product margins are up massively, massively on the back of these proprietary differentiated assortments. Big shift to digital marketing from catalogs, that's lowering our total marketing cost, but also letting us speak to the new kinds of consumers and in a more agile way. Then a big repositioning at Frontgate. It's our biggest brand within Cornerstone. It's a brand that people love. Quite frankly, a brand that had been allowed to get stale, fall a little bit behind the times. There's been a repositioning of that brand, new leadership. That brand is in -- has really good momentum. So again, a really, a hidden jewel in our company. It's a portfolio of home brands at a time when home is just growing at extraordinary rates. We've got highly, highly differentiated offering, big opportunity for us going forward.

So we're nearing the end of time. So I want to just make sure to cue the audience. You should be able to type in questions. So if you have one, please type it in. I'm happy to read it. So going to my next question. So at this point, I believe you're nearing the end of the integration with HSN, a lot of which was supply chain related. So I'm curious if you could give an update on what, if anything, remains less. And then as we look forward, are there any sort of like supply chain or other efficiency projects that you're planning?

Jeff, you want to take that one?

Sure. So, Jason, we -- this multiyear project we were on, with respect to the network optimization for the phases that we've embarked upon, we're coming to a near close on those. We still have the opportunity to have multiple brands being operating out of individual facilities, but we're marching towards that. But if you kind of think back, we stated back in 2018 that we were -- wanted to generate $370 million to $400 million of run rate synergies through 2022. Through 2020, we believe that we have already accomplished 70% of those. The remaining portion is still left to capitalize on the productivity measures that we believe we'll be able to get out of the new fulfillment center network, as well as some ongoing opportunities as it relates to fully completing out the strategic sourcing opportunities that we've talked about in the past. Those are some of the largest components that are still left in the integration. And we're real excited about the fact that we believe that we'll be able to meet or exceed that $370 million to $400 million within the time frame in which we've laid out.

That's helpful color. So I wanted to ask a question on just your thought process around returning excess capital to shareholders. And you can say any potential for acquisitions or divestitures or just anything on that front that you're thinking about?

At a high level, what we've stated publicly is that we're focused on returning the majority of our excess cash flow, free cash flow to our investors, and that we've used a couple of instruments to do so recently, as you all know, buybacks and special dividends, principally. We like that mix and we like the flexibility that, that gives us to reflect on the best return at any moment in time for our investors. And we would expect to continue to deploy both those mechanisms over time, to return cash to shareholders. Now we don't currently have any plans for major acquisitions or divestitures. That's the kind of topic you never want to say no to. And so certainly, we wouldn't rule out the possibility that some interesting acquisition would emerge that we thought may -- would be a better use of cash than directly returning it to investors. But clearly, that would have a high bar in terms of the confidence in the business case. We like the portfolio of businesses we have today. They're all performing very well. We want to keep at it. But we've got a lot on our plates and aren't necessarily looking to add to that. So the bias is towards return of cash to shareholders. But obviously, if something unique was to come our way, we would certainly be open to looking at it.

And as we're nearing out of time here, maybe a last question. So it's been very topical. The inventory shortages that a lot of retailers have been seeing. So I know it's something that you've been -- you've called out. So just curious on what you're seeing as we stand today and just how you think that evolves going forward?

Yes. We're certainly in a day-to-day fight around product shortages and inventory challenges and then they are fairly widespread, certainly with the extraordinary growth in home, getting home product made and here from Asia is a challenge, and we're in a constant casing mode for that demand. We're seeing other pressures throughout. But the primary pressures tend to be across the home categories, certainly some very specific pressures in consumer electronics that we called out in Q4. So we do think we'll be battling that all year. I would say though that it feels at this point manageable. We may forgo a little bit of the top line demand that had we had the product, we could have fulfilled it and gotten somewhat better sales performance. But because of the agility of the model and the diversity of product lines of businesses we're in, other than the very specific issue we had in Q4, where we just couldn't get major consumer electronics items, it feels like we're able to work around it, maybe give up a little bit of top line, but manageable. We'll have to monitor that as it goes. expect that it will start to moderate over the course of the year, but the pace of that, let's see.

Great. So we've reached the end of the allotted time. I don't want to keep you guys on schedule, but really appreciate all the time you -- gave really helpful color. So thanks again for joining us.

Great. Thanks for doing this, Jason, and thanks, everyone, for your interest in Qurate.