Liberty Interactive Corp. said in the aggregate, Liberty Interactive Group's eCommerce businesses increased revenue 8 percent to $487 million in the fourth quarter and 12 percent to $1.7 billion for the year, but still generated operating lossses for both periods. The increased revenue was the result of increased marketing efforts driving additional traffic, investments in site improvements, increased shipping charges and broader inventory offerings.
ADVERTISEMENT Additionally, the increased revenue was partially driven by product discounting to move seasonal inventory. Adjusted OIBDA decreased 29 percent to $25 million for the quarter and 11 percent to $85 million for the year. The decrease in adjusted OIBDA for the quarter and the year was the result of lower product margins from continued product discounts and promotions. Additionally, increased credit card chargebacks impacted the annual results.
The most significant declines in operating results for the eCommerce businesses, as compared to prior periods, were the Celebrate retail business and the Red Envelope business within Provide. These businesses had declining revenues as well as decreasing contribution margin (product margin less direct expenses of the business), which hurt the overall Celebrate and Provide businesses. These declining operating results were partially offset by the growth of other eCommerce businesses primarily, CommerceHub and Bodybuilding.com. Operating income improved by $18 million to a loss of $21 million for the quarter and improved by 38 percent to a loss of $50 million for the year. The improvement in the operating loss for the quarter and the year was primarily due to lower impairment charges offset somewhat by the lower adjusted OIBDA and higher stock compensation expense.
On Oct. 10, 2013, Liberty announced that its board has authorized management to pursue a plan to recapitalize its Liberty Interactive Group tracking stock into two new tracking stocks, one (currently the Liberty Interactive common stock) to be renamed the QVC Group common stock and the other to be designated as the Liberty Digital Commerce common stock. The Liberty Digital Commerce Group would have attributed to it Liberty's subsidiaries Provide Commerce, Backcountry.com, Bodybuilding.com, CommerceHub, Right Start, and Evite, which is currently a part of Liberty's subsidiary Celebrate, along with cash and certain liabilities. The QVC Group, which is currently known as the Liberty Interactive Group, would have attributed to it Liberty's subsidiary QVC, Inc. and its approximate 38 percent interest in HSN, Inc., along with cash and certain liabilities. Management continues to review the proposed recapitalization and no assurance can be given as to when or if it will be completed.
