QVC Group, Inc. Annual report [Section 13 and 15(d), not S-K Item 405]

Annual report [Section 13 and 15(d), not S-K Item 405]

Leases

Leases

12 Months Ended

Dec. 31, 2025

(7) Leases

Right-of-use assets and lease liabilities are initially recognized based on the present value of the future lease payments over the expected lease term. As for most leases the implicit rate is not readily determinable, the Company uses a discount rate in determining the present value of future payments based on the Company’s incremental borrowing rate on a collateralized basis aligning with the term of the lease. Our lease agreements include both lease and non-lease components, which the Company accounts for as a single lease component. The Company’s leases have base rent periods and some with optional renewal periods. Leases with base rent periods of less than 12 months are not recorded on the balance sheet. For purposes of measurement of lease liabilities, the expected lease terms may include renewal options when it is reasonably certain that the Company will exercise such options.

Leases with an initial term greater than twelve months are classified as either finance or operating. Finance leases are generally those that we substantially use or pay for the entire asset over its estimated useful life and are recorded in property and equipment. All other leases are categorized as operating leases and recorded in operating lease right-of-use assets.

We have entered into sale leaseback transactions. To determine whether the transaction should be accounted for as a sale, we evaluate whether control of the asset has transferred to a third party. If the transfer of the asset is determined to be a sale, we recognize the transaction price for the sale based on cash proceeds received, derecognize the carrying amount of the asset sold, and recognize a gain or loss in the consolidated statement of operations for any difference between the carrying value of the asset and the transaction price. The leaseback is accounted for according to our lease policy discussed above. If the transfer of the asset is not determined to be a sale, we account for the transaction as a financing arrangement.

The Company has lease agreements with transponder and transmitter network suppliers for the right to transmit its signals. The Company also leases data processing equipment, facilities, office space, retail space and land, which are classified as operating leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future lease payments using our incremental borrowing rate.

Our leases have remaining lease terms of less than one year to 17 years, some of which include options to extend or terminate the leases.

The components of lease cost during the years ended December 31, 2025, 2024 and 2023, were as follows:


	Years ended December 31,
	2025		2024	2023

	amounts in millions
Operating lease cost (1)	$	161	160	168

(1)Included within operating lease costs were short-term lease costs and variable lease costs, which were not material to the financial statements.

The remaining weighted-average lease term and the weighted-average discount rate were as follows:


	December 31,
	2025		2024		2023
Weighted-average remaining lease term (years):

Operating leases	11.6		12.2		12.6
Weighted-average discount rate:

Operating leases	18.3	%	14.4	%	13.4	%

Supplemental balance sheet information related to leases was as follows:


	December 31,
	2025		2024

	amounts in millions
Operating leases:
Operating lease ROU assets	$	570	600

Current operating lease liabilities (1)	$	38	41
Operating lease liabilities	580		598
Total operating lease liabilities	$	618	639

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(1)Included within the Other current liabilities line item on the consolidated balance sheets.

Supplemental cash flow information related to leases was as follows:


	December 31,
	2025		2024	2023

	amounts in millions
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases	$	123	116	126

ROU assets obtained in exchange for lease obligations:
Operating leases	$	10	25	163

Future lease payments under operating leases with initial terms of one year or more at December 31, 2025 consisted of the following:


	Operating Leases
	amounts in millions
2026	$	119
2027	116
2028	114
2029	111
2030	113
Thereafter	759
Total lease payments	$	1,332
Less: imputed interest	(714)
Total lease liabilities	$	618

In November 2022, QVC entered into agreements to sell two properties located in Germany and the U.K. to an independent third party. Under the terms of the agreements, QVC received net cash proceeds of $182 million related to its German and U.K. facilities when the sale closed in January 2023. Concurrent with the sale, the Company entered into agreements to lease each of the properties back from the purchaser over an initial term of 20 years, with the option to extend the terms of the property leases for up to four consecutive terms of five years. QVC recorded a gain of $113 million related to the successful sale leaseback of the German and U.K. properties during the first quarter of 2023 calculated as the difference between the aggregate consideration received and the carrying value of the properties. QVC accounted for the leases as operating at the close of the sale leaseback transaction and recorded $74 million of right-of-use assets and operating lease liabilities for the German and U.K. properties.

On October 31, 2022, the Company entered into foreign currency forward contracts with an aggregate notional amount of $167 million to mitigate the foreign currency risk associated with the sale and leaseback of Germany and U.K. properties. The forward did not qualify as a cash flow hedge under U.S. GAAP. Changes in the fair value of the forward are reflected in realized and unrealized gains (losses) on financial instruments, net in the consolidated statements of operations. The forward expired in January 2023 which resulted in a net cash settlement of $12 million.

In December 2023, QVC modified the lease for its distribution center in Ontario, California pursuant to which QVC extended the term of the lease through December 31, 2030 with an option to renew the lease for an additional 3-year term ending December 31, 2033.