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Liberty Interactive Poised to Gain from Rise in Online Sales

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On Dec 19, we issued an updated research report on Liberty Interactive Corporation . Through the gradual expansion of its presence in developed markets such as Japan, Germany, Italy and the U.K., Liberty Interactive’s QVC division has been quite active on the international front. The company is also optimistic about its operations in China where recent data show a sharp uptrend in online sales. We believe the company’s widespread international presence coupled with encouraging sales bodes well for growth.  

However, increased exposure to international markets has its own share of foreign exchange risks. The strong dollar against other international currencies may have a negative impact on the company’s margins. Moreover, the ongoing economic crisis in European countries and its rippling effect on the U.S. economy may result in a prolonged economic slump, reflecting lower disposable income in the hands of consumers. This situation may significantly jeopardize Liberty Interactive’s financial results.

Nevertheless, the QVC division is benefiting from the surge in online sales. The major thrust is expected to come from the growing adoption of high-end smartphones in the U.S. QVC is the second largest e-commerce retailer in the U.S. after Amazon.com, Inc. (AMZN - Free Report) . Recently, it launched synchronized content for its mobile applications to promote online sales. Notably, QVC reported its all-time high digital sales week during Thanksgiving, courtesy of the attractive deals and gift items. This underlines the growing preference among consumers to shop online rather than in traditional brick-and-mortar shops. The sales upside was primarily driven by electronic gadgets and home appliances from leading brands like Canon Inc. , Dell, KitchenAid and Susan Graver.

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