Qurate Retail Group, Inc. (QRTEA) Accused of Misstating True Reasons for Sales Growth

According to the recently filed class action complaint, Qurate Retail Group, Inc. (QRTEA) claimed that its broad-based marketing and higher personalized customer experience would spur revenue growth. However, Qurate was aggressively loosening the credit standards of its Easy Pay program to attract more customers and boost its sales growth. As a result, Qurate was exposed to a greater credit risk on Easy Pay receivables if a QVC customer did not remit payment, which would require Qurate to record a loss and write off the Easy Pay receivable. On August 5, 2016, Qurate disclosed sales declines, attributing its poor results to "aggressive markdown activity" by department stores and lowered QVC station viewership due to television coverage of the 2016 U.S. presidential election. On this news, Qurate's stock fell over 21% that day. Then, on September 8, 2016, Qurate revealed that it expected to see "higher default rates" associated with its Easy Pay sales, causing its stock to drop further to close at $19.59 per share that day.

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