Liberty Media Corp., controlled by billionaire John Malone, said third-quarter profit at its QVC home-shopping unit and retail Web sites fell 10 percent as the company struggled to maintain sales growth.
Operating income at Liberty Interactive, the unit that includes the shopping businesses, dropped to $231 million from $257 million a year earlier, the Douglas County-based Liberty Media said today in a statement. Sales rose 2 percent to $1.69 billion, below the $1.79 billion average of three analysts’ estimates compiled by Bloomberg.
QVC International, which accounts for about a third of QVC sales, has trailed last year’s growth pace all year, and third- quarter revenue rose 2 percent, missing Natixis Bleichroeder analyst Jeff Shelton’s 4.9 percent estimate. Sales from QVC’s U.S. division also rose 2 percent.
“There’s a sluggish retailing environment in the U.S. and continuing difficulties in Germany and Japan,” Shelton said. The New York-based analyst recommends investors neither buy Liberty Interactive tracking stock, which reflects QVC’s results, nor sell shares they already own. He said he owns shares.
Liberty Media’s second tracking stock, Liberty Capital, reflects the company’s stakes in other media companies including Time Warner Inc., Viacom Inc. and News Corp. Besides QVC, Liberty Interactive includes , online costume store , and outdoor retailer .
Liberty Interactive shares fell 61 cents, or 3 percent, to $10.90 at 1:49 p.m. New York time in Nasdaq Stock Market composite trading. They had lost 5 percent this year before today. Liberty Capital dropped $1.82 to $121.09.
Japan, Germany QVC international sales fell 3 percent after currency adjustments. The Japanese unit is struggling to boost cosmetics sales after regulators tightened product demonstration rules. A glut of microfiber clothing hurt German sales, Shelton said.
Growth in QVC’s U.S. division was the weakest since at least 2004, he said. Growth should return by mid-2008, if only because 2007 results are easy to beat, Lehman Bros. analyst Vijay Jayant said in an interview. The New York-based analyst rates Liberty Interactive “overweight” and doesn’t own shares.
“I don’t want to predict the timing of a turnaround until I know we can deliver on it,” QVC Chief Executive Michael George said on a conference call. “We need to raise our game.”
Liberty Capital’s largest operating business, Starz Entertainment, said operating profit almost doubled to $78 million. The company has boosted profit by tapping less expensive sources of movies for its cable-TV channel.
Liberty Media’s statement didn’t include the overall company’s net income for the quarter. That will be included in its quarterly Securities and Exchange Commission filing.
Malone’s 16 percent stake of News Corp. is being swapped for 39 percent of DirecTV Group Inc. in a deal scheduled to close by the end of the year.
