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Franklin D. Azar & Associates and Thornton Law Firm, LLP Announce the Filing of a Securities Class Action on Behalf of Qurate Retail, Inc. Investors (QRTEA)

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Franklin D. Azar & Associates and Thornton Law Firm, LLP Announce the Filing of a Securities Class Action on Behalf of Qurate Retail, Inc. Investors (QRTEA)

PR Newswire

DENVER, Sept. 6, 2018 /PRNewswire/ -- Franklin D. Azar & Associates ("FDA") and Thornton Law Firm, LLP ("Thornton") announced today that they have filed a securities class action lawsuit on behalf of Plaintiff Bristol County Retirement System against Qurate Retail, Inc. ("Qurate" or the "Company) (NASDAQ:QRTEA), Michael A. George, Gregory B. Maffei, Darrell Cavens, and Thaddeus "Ted" Jastrzebski. The class action, filed in United States District Court, District of Colorado, and docketed under 1:18-cv-2300, is on behalf of a class consisting of investors who purchased or otherwise, acquired Qurate securities between August 5, 2015, and September 7, 2016, both dates inclusive (the "Class Period"). Plaintiff seeks to recover compensable damages caused by Defendants' violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 10b-5 promulgated thereunder.

Qurate markets and sells various consumer products primarily through live merchandise-focused televised shopping programs, websites, and mobile applications. Qurate Retail, Inc. is comprised of eight leading retail brands – QVC, HSN, zulily, Ballard Designs, Frontgate, Garnet Hill, Grandin Road, and Improvements, all dedicated to providing a "third way to shop" that goes beyond transactional eCommerce and traditional stores. The Company is number one in video commerce, with a worldwide reach of nearly 360 million homes via 16 television channels and multiple media outlets. QVC, Inc. ("QVC") is Qurate's largest segment, accounting for roughly 85 percent of the Company's total revenue in 2016.

As a promotional tool used to spur sales, QVC offers a payment plan called Easy-Pay to its customers in the U.S., U.K., Germany and Italy (known as Q-Pay in Germany, and Italy). Easy Pay allows QVC customers to pay for certain merchandise in two or more monthly installments. When Easy-Pay is elected by the QVC customer, the first installment is billed to the customer's credit card upon shipment and an Easy-Pay receivable is established to account for the collection of subsequent installments. 

Qurate is exposed to the credit risk on the Easy-Pay receivables.  Specifically, if the QVC customer does not remit payment for the subsequent Easy-Pay installments, Qurate is required to record a loss and write off the Easy-Pay receivable. Under Generally Accepted Accounting Principles, the Company is required to establish adequate reserves for its Easy-Pay receivables. 

The Complaint alleges that throughout the Class Period, Qurate repeatedly attributed its growth to broad-based marketing and higher personalized customer experience, which the Company claimed would spur continued revenue growth. However, Defendants' Class Period statements pertaining to the Company's revenue growth were materially false and misleading because Defendants failed to disclose that: (1) the Company was aggressively loosening the credit standards of its Easy-Pay program to attract a large group of new customers; (2) the Company's strong sales growth was due to this loose credit policy; (3) accounts receivable associated with this new group of customers posed a high risk of write-off; and (4) as a result of the foregoing, the Company's positive statements about its business, operations, and prospects lacked a reasonable basis.

The slowdown in QVC sales began to emerge on August 5, 2016, when the Company issued a press release announcing financial results for the second quarter ended June 30, 2016, in which the Company disclosed "significant headwinds" and sales declines as compared to prior periods. Later that day, during the Company's Second Quarter 2016 Earnings Call with analysts and investors, the Company disclosed "higher than expected write-offs on Easy Pay purchases from October and November of last year" and announced increased reserves for prior period purchases. The Company also disclosed that "[g]iven heightened write-off risks, we choose to moderate our Easy Pay usage beginning in June, which puts some additional pressure on our sales." 

On news of Qurate's sales slowdown, the Company's stock price fell $5.69 per share, or 21.63 percent, to close on August 5, 2016 at $20.61 per share. On September 8, 2016, the Company disclosed the true impact of the Easy Pay issues, revealing to investors that it expects to see "higher default rates" associated with these sales. Moreover, the Company warned that this negative trend, while improved, would still, continue to impact its business. The Company's stock fell price $1.87 per share, or 8.71 percent, to close on September 8, 2016 at $19.59 per share.

If you wish to serve as Lead Plaintiff for the Class, you must file a motion with the Court no later than November 5, 2018, which is 60 days from the date of publication of notice of the pendency of the first filed, related securities class action on behalf of Qurate investors. Any member of the proposed Class may move the Court by the above deadline to serve as Lead Plaintiff through counsel of their choice, or may choose to do nothing and remain a member of the proposed Class.

If you would like to discuss this Action in more depth, or have any questions concerning this notice, your rights, or your interests, please contact Ivy Ngo at 303.757.3300 and/or Guillaume Buell at 617.531.3933 or by email at ngoi@FDAzar.com and gbuell@tenlaw.com. More information about FDA and Thornton may be found online at https://fdazar.com/class-action-law-suits/ and https://tenlaw.com/.

 

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SOURCE Franklin D. Azar & Associates, P.C.

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