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HSN to cut hundreds of workers as it merges with QVC under new ‘QXH’ business unit

After struggling to turn a profit under its new parent company, HSN is being combined with QVC under a new name, prompting major layoffs at the local headquarters. [HSN file photo, 2017] After struggling to turn a profit under its new parent company, HSN is being combined with QVC under a new name, prompting major layoffs at the local headquarters.

Hundreds of HSN employees are losing their jobs as their parent company combines the local shopping network with long-time rival QVC under one operation with shared resources.

HSN and QVC will maintain their brand identities, but are now under a business unit called "QXH," owner Qurate Retail Group announced on Wednesday. Qurate said it will lay off 350 employees by the end of the year. The bulk of those positions will be between HSN’s St. Petersburg headquarters and offices in Long Island, N.Y.

"The actions we are taking today are difficult, but they are imperative for our long-term success," HSN president Mike Fitzharris said in a statement. "We thank all of our HSN team members for their hard work and dedication over the years, and for the support of the Tampa Bay community as we continue to evolve our business for the new retail economy."

RELATED: HSN acquired by rival retail giant QVC for $2.1 billion

Qurate did not specify how many local positions will be affected. Before this week’s announcement, roughly 2,500 people worked at the St. Petersburg office, which will be upgraded and still operate as HSN’s headquarters.

Fitzharris will maintain oversight of the St. Pete campus and be charged with growing the HSN brand as well as QXH video platforms and digital content. Mary Campbell, a QVC executive, will oversee QVC’s brand and QXH merchandising.

Last July, QVC’s parent company announced a $2.6 billion deal to buy HSN. Qurate now oversees eight retail companies.

The combined QXH unit will allow for faster shipping times and streamlined service for its shoppers, according to the company. Retail experts say such a move was bound to happen as the at-home network shopping industry continues its downturn.

QVC had already taken similar measures to streamline its European networks two years ago. It cut hundreds of positions as it moved much of its administrative operation to Poland.

It’s not profitable to have duplicate positions, said former QVC employee and London-based shopping network expert Budd Margolis.

For example, HSN is closing its "Ingenious Designs" offices in Long Island, N.Y. HSN design work will be shifted to the existing in-house team at Qurate’s offices in West Chester, Pa. A small number of positions will also be cut at Qurate and QVC.

"For years and years the rumors have been QVC and HSN merging, (and) spinning off a lot of synergistic advantages," Margolis said. "This is just another step in moving toward that vision."

Even under the same umbrella, the networks still are positioned as competitors with QVC beating HSN’s quarterly sales.

QVC and flash-sale website Zulily led Qurate’s growth in the second quarter this year. Meanwhile, HSN was a laggard in the conglomerate as its e-commerce sales dropped 13 percent compared to the year-ago period.

To process customer orders more efficiently,Qurate said it plans to build a new fulfillment center and employee 1,500 people in Bethlehem, Pa. in 2019. But by the end of the following year, it will cut 1,725 positions when it shut downs other centers in Lancaster, Pa., Virginia and Tennessee.

"Today’s initiatives are the next step in our ongoing review of how to best continue the integration of HSN and QVC," Qurate president and CEO Mike George said in a statement on Wednesday. "With a focus on driving digital transformation, these efforts will extend our leadership in social, digital, and video commerce."

Those next steps also include a redesign of the sprawling St. Petersburg campus, which includes call centers, TV studios and digital operations. Qurate did not provide details but said the new layout would "create a better working environment."

Fitzharris said HSN has begun to increase sales, while emphasizing Qurate is committed to the HSN brand and to "our St. Petersburg home."

In 2017, HSN and QVC generated $8.5 billion in revenue, reached 100 million homes and shipped more than 170 million items, according to Qurate. Together, they have five at-home shopping networks.

But Margolis doubts Qurate sees TV shopping as the future of retail.

As shoppers cut the cord with cable companies and move toward streaming services, TV shopping networks are becoming less relevant and accessible.

"QVC realizes that five, seven, 10 years from now, television probably won’t exist as it does today," Margolis said.

That doesn’t mean an environment without video, though. Even retail titan Amazon, another contributor to the decline of shopping networks, produces shows on its website that are like something one would see on HSN or QVC.

Still unclear is if the QVC and HSN brands will eventually merge. Margolis said Qurate likely held onto both names so it wouldn’t lose any loyal shoppers. The bigger question in his mind?

"Will TV shopping even be around in 10 years?" he said.


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