Mike George, President and CEO of Qurate Retail, joins Yahoo Finance Live to discuss the company's strong second-quarter results, supply chain constraints, and weigh in on the outlook for retailers post-pandemic.

Video Transcript

- All right, welcome back to Yahoo Finance Live on this Tuesday morning. Qurate Retail, parent company of QVC and other shopping brands, reported revenues and earnings last week that beat expectations across the board. We see shares on this Tuesday morning up about 3.5%. Joining us now to talk more about the quarter and the brand is Mike George, CEO and President at Qurate Retail. Mike, Thanks for taking the time to speak with us this morning.

I want to start with shortages, inventory struggles that you guys have had. Talked about it a bit on the call. Just the inability to either keep in stock or get in stock some of the products that you'd like to have. Where do those pressures stand with you guys now? Is it a freight problem? Is it a inability for your partners to make the goods that you're hoping to sell? Where do we stand today?

MIKE GEORGE: Thanks for having me on today. The supply challenges are real. They're affecting the whole industry and they're really all the way through the supply chain. So certainly, seeing pressure in factories in Asia to stay open and to produce at the right level, given the health crisis around the world. You're seeing a pressure on ocean shipping. You're seeing pressure at the ports. So challenges throughout the supply chain.

And it's one of the reasons we were so excited by our results in Q2. As you noted, a really strong performance across the board, despite having all those challenges. So we think that really bodes well for the future. As the supply chain normalizes, it may take several months, but we'll get back to a better cadence. And underneath that, challenge supply chain is I think a healthy consumer and a healthy Qurate business.

- Hey, Mike. It's Julie here. So when you look across the different parts of the business, I want to zoom in on Zulily for just a second because we saw a decline in sales there. And what do you think is the biggest challenge that you now need to work on? Is that a supply chain issue? Is there a demand issue with that business? What do you think needs to get turned around there?

MIKE GEORGE: Well, most importantly at Zulily, I think it's critical to look at the performance over a two year time frame. So of course, Q2 this year, we were copying a really rapid and steep increase in sales at the start of the pandemic last year at Zulily, and at all of our businesses. Very heavy sales of masks and other personal protective gear, especially. So we knew it would be hard to come up and over those really big numbers. And so we did have a slight decline in the quarter. But on a two year basis, sales are up nearly 20%. I think that speaks to the underlying health of the business.

And as we're able to continue to lean into marketing, continue to work with our national partners on great new product offerings, I think we'll see that business lead to sustainably healthy growth over time once we comp that really extreme period of the early stages of the pandemic.

- And switching gears a little bit Mike, I wanted to ask about how you guys are seeing the media landscape. You announced recently a deal with Comcast to have your channels both on their cable, but also their streaming packages. And just as you think about future present and of course, future distribution of QVC and other parts of the platform, how do you see media kind of shaking out here as this I guess, unbundling we could say, is continuing.

MIKE GEORGE: Yeah, it's really an exciting time for us because there is this massive unbundling. But the other side of unbundling is that the consumer has more ways than ever to access great video content. She's more in control of the experience than ever before and of course, she's consuming more video content than ever before. So we've made a multiyear bet to really lean into all forms of digital video access and we've been at it for a handful of years. And we've just seen a huge response to that focus.

So you mentioned our streaming service. This is really our flagship experience where you get six QVC and HSN live networks, all forms of on demand content, in one streaming service. And soon it'll be a shoppable service, meaning you can interact and buy without ever leaving the streaming service, just using your remote control. So a really powerful experience that's now available across the entire Comcast platform, both those who get paid TV services and just those who get broadband only services from Comcast. Available on Roku, Amazon Fire, Apple.

We love the way in which the digital ecosystem is expanding and for each part of that ecosystem we've got a strategy and a way to play to be present, to be relevant, and to access new consumer segments.

- And Mike, staying on distribution and kind of marketing I guess we could say you, talked a little bit about Zulilly's shift away from from Facebook and towards some more influencer channels. I'm just curious what you see on both sides of that. How effective or whether the prices on Facebook are just getting a little bit less attractive and sort of how the influencer channel continues to mature as we can see it of course, across all of our feeds.

- You certainly see a lot of volatility in marketing. Last year the price of marketing really fell, as people pull back. This year everyone is trying to reach that consumer, so you're seeing some natural inflation and marketing costs. And then you couple that with Apple's iOS privacy changes and it's a little more difficult landscape. So to your point, our goal is to diversify, to find new marketing channels and importantly, new channels that we think really speak uniquely to our brand propositions and give us a way to win in the marketing space in a differentiated approach.

So with Zulily, they've done a terrific job building up this influencer network who can drive interest and attraction to different categories and segments within Zulily. We're doing something similar at QVC and HSN, where now your favorite YouTube personality as an example, might have a connection with us and we might be able to bring that audience onto our platforms. So for us, it's all about finding unique marketing approaches that really speak to our brand values and can help differentiate us in the marketplace.

- Mike, of course, you are almost done with your time as CEO of Qurate. October 1 David Rollinson takes over. And I believe you're chairman of the board of the National Retail Federation. Taking a step back from this specific company for a moment, what do you think needs to be the priority of retail going over the next 12 months, two years, three years, et cetera?

MIKE GEORGE: Well, I think for the industry, one of the things I've said before on this program, is I'm so proud of how our industry has is done a couple of things over the last challenging 18 months. One is all the work to protect the safety and wellness of our team members, our customers, and the communities in which we work and heroic actions, challenging choices to make a lot of courage on the part of our front line employees to keep everyone safe.

And of course, in the US, with the rising caseload from the Delta variant, that's still a focus and still an area of emphasis for our industry. We're spending a lot of time bringing the CEOs together to talk about what actions they're taking to speak with the administration, to speak with other health officials, to make sure we stay close stay focused on health and safety. That's priority one.

Priority two is continue to drive innovation. And when you look at the amount of focus that's been put on creating a really compelling multiplatform experiences across retail, that's what it's about. It's about a shopping journey that's increasingly digitally influenced. Brick and mortar still matters. People still want to spend time with brick and mortar, but we need to have an integrated shopping journey where maybe you start that journey digitally, maybe even finish it digitally, and you store experiences or great video experiences as a way to get an immersive connection to the products and the store. So in various ways all of retail is really on that journey together.

- And then Mike, quickly, before we let you go, just thinking about your comments here, I'm curious what you've heard from from your peers in terms of the labor side? I mean, it's been an extremely competitive environment for retailers. I'm sure you guys have seen it as well. And how that maybe changes some of the thinking here industry-wide as we go forward past the pandemic.

MIKE GEORGE: It is a very competitive market, for sure. We're all in that together and we just need to make sure we're doing the right things to take care of our employees. And both lean into attracting great talent, but also all the things we need to do as an industry to be a first choice for talent. Retail has always been that industry that provided sort of the first rung on the job ladder. It's still that, but it's also much more than that. We have amazing digitally oriented jobs, technology-driven jobs. We're in a war for talent across the industry and we just need to lean in and have a differentiated employee value proposition and attract great talent to our companies.

- I certainly learn a lot in this job, but probably not as much as I ever did while working for a specialty running store for five years back back in high school and college.

MIKE GEORGE: I'm sure.

- Experiences you take with you. So all right, Mike George, President and CEO of Qurate Retail. Mike, congratulations on your run there and I hope we'll talk with David Rollinson in the quarters to come. Appreciate the time this morning.