HSN’s Sales Rise 5 Percent In The Third Quarter

HSN’s net sales rose 5 percent in the third quarter versus the year-ago period, to $537.4 million, the home shopping network said Wednesday.

Digital sales grew 10 percent with penetration increasing 180 basis points to 34.6 percent.

Mindy Grossman

Strong sales growth primarily in home design, household, culinary and beauty were offset by the expected sales decline in electronics. Shipping and handling revenue decreased 6 percent, primarily due to an increase in shipping and handling promotions. The average price point decreased 4 percent and the units shipped increased 9 percent, primarily due to changes in product mix.

Gross profit increased 7 percent to $191.8 million. Gross profit margin improved 90 basis points to 35.7 percent from 34.8 percent. The margin was positively impacted by the product mix shift and lower transaction costs, partially offset by an increase in shipping and handling promotions.

Adjusted EBITDA increased 10 percent to $56.8 million compared to $51.8 million in the prior year. The increase was due to the growth in net sales and improvement in gross margin, offset by a 6.5 percent increase in operating expenses (excluding non-cash charges) primarily from digital and brand marketing, technology investments and employee-related costs, including the sales and service center.

Operating income increased 14 percent to $47.0 million compared to $41.4 million in the prior year.

HSN Inc., which includes the home shopping network and Cornerstone XXX, saw net sales increase 7 percent over the prior year to $778.8 million. Cornerstone’s net sales increased 13% to $241.4 million, including 22% growth in digital sales.

“Our strong financial performance during the quarter demonstrates the sustained effectiveness of our overall strategy of creating immersive experiences, offering differentiated products and leveraging technology to build relationships, not just transactions,” HSN Inc. CEO Mindy Grossman said in a canned statement.

“This approach enabled HSNi to achieve 7 percent sales growth and 32 persent growth in adjusted EPS (earnings per share)m” she said. “In addition, we continued to return value to shareholders by increasing our cash dividend and through our share repurchase program.”

During the third quarter, HSN Inc. repurchased 900,000 shares of its common stock at a cost of $41.7 million, or an average cost of $46.33 per share.

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