HSN Lays Big Egg With Flat Third-Quarter Sales

HSN had a pretty dour third quarter, with its sales virtually flat at $538.6 million compared to $537.4 million in the the prior year. No wonder the company is laying off employees at its headquarters in St. Pete.

That compares to 5 percent sales growth, to $1.3 billion, that QVC reported earlier this week for the third quarter.

Mindy Grossman

Mindy Grossman

We didn’t get a chance to listen to HSN’s third-quarter call with analysts Wednesday, but here is a link to the transcript from Seeking Alpha.


HSN COO Judy Schmeling had this to say.

“We had sales growth in home design, household and beauty,” she told analysts. “Sales were down in jewelry, apparel and accessories and culinary. As we stated on the last earnings call, we are in a process of repositioning our jewelry and culinary businesses. Apparel, in general, continues to be challenged similar to what is occurring in the broader retail market.”

Gross profit at the No. 2 home shopping network dipped 3 percent to $186.2 million. Gross margin decreased 110 basis points to 34.6 percent “primarily due to the product mix shift and increased promotional activity,” the company said in a press release.

Operating expenses (excluding non-cash charges) decreased 4 percent to $129.1 million primarily due to the timing of certain marketing programs and bad debt expenses.

Adjusted EBITDA increased 1 percent to $57.1 million compared to $56.8 million in the prior year primarily due to the decrease in operating expenses, partially offset by the decline in gross profit. Operating income increased 1 percent to $47.6 million compared to $47 million in the prior year.

Digital sales increased 7 percent, with penetration increasing 220 basis points to 36.8 percent, the company reported.

Net sales at HSN Inc., which includes the home shopping network and the Cornerstone unit, rose 3 percent over the prior-year period to $798.9 million. Cornerstone’s net sales increased 8 percent to $260.3 million, including 10 percent growth in digital sales.

“HSNi has built a powerful and diverse portfolio of brands and products enabling us to capitalize on consumer trends, manage marketplace dynamics and position the company for long-term success,” HSN CEO Mindy Grossman said in a canned statement.

“During the third quarter, this strategy resulted in record customer levels at HSNi, an increase in digital penetration of 230 basis points—including strong growth in mobile, which now represents 12% of our total business—and Adjusted EPS growth of 19%.”

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19 Responses to “HSN Lays Big Egg With Flat Third-Quarter Sales”

  1. Donna Says:

    Here is my unsolicited advice as a HSN stockholder. Quit being the “paparazzi shopping network”. Enough with the celebrities and one hit wonders. Go back to basics and determine how to self-sustain.

    Do a nationwide search for unique NON FAMOUS jewelry artisans who have a compelling story to tell. Do remotes from their “studios”, whether it be an office or a garage and assist them in manufacturing and bringing their goods to market. In my opinion there is too much focus on costume jewelry, over the top fads and celebrities who would not be caught dead in their own wares. You need a niche HSN and something unique to you. Some United States born and bred success stories are waiting to be told. Find them, tell their stories and invest in their success.

    As for culinary, I hate to compare siblings but the celebrity chef thing is blasé, overdone and ripe for the picking (i.e. Emeril, Debra Murray etc…) Hire a food host similar to David or Daniel with some kind of passion and expertise. Pushing Marlo or Alyce into pseudo food hosts is not convincing or fair to them. The co-op effort with Barilla, Maxwell House and others was a bust. Set some dedicated times where home cooks can rely on a good show, a knowledgeable host and quality products.

    Overall, I feel HSN has too many gimmicks and celebrities trying to invent a second career. If you want to attract the buyer with disposable income IN THIS ECONOMY go for the “natural, organic and home grown” and I don’t necessarily mean in the literal sense. The majority of the public like to see people like them. The girl next door with a dream and determination. The retired dad who tinkered and invented something so usable your audience says “Why didn’t I think if that?” The American consumer has gone back to basics. Take a tip from Small Business Saturday and start ups and grass roots strategies. Home Shopping is like any other industry at the core. Few companies have many loyal vendors or employees for that matter. It’s too easy to be lured to a higher bidder, smoother talker, a better deal or another network. It’s about finding fish who are comfortable in your pond. HSN, in my opinion has struggled creating a pond that can sustain itself. Take a tip from your former employer Ms. Grossman sell the American Dream, the struggle and the success. Be amiable and affable and down to earth. I must say when I read an article about Diane Gilman showing up to an interview with fanfare in multi thousand dollar shoes, handbags, jewelry and accessories with only the DG2 Jeans as a sign of her faux humility, I immediately donated every pair I had purchased of hers as pretention and greed have no place in my home.

    Define your market, your niche and your goal. Don’t try and be everything to everybody. Decide what to do and do it well. Make your products easy to explain, consistent, competitive and sustainable. Hire hosts who are credible, likable and most importantly qualified. Remember when Reebok dislodged Nike’s number one spot? Mr. Knight realized he was blindsided by a lack of a plan. He regrouped, refocused, researched, refined and re-launched. Going back to basics, he soon was back on top. Go back to basics Ms. Grossman. I know you can do it. As a stock holder, you better.

  2. StefF Says:

    well, for one in jewelry sales, get rid of Carol Brodie….geezus gawd, her jewelry may be attractive……but HER!!! blech!

  3. Mally Says:

    Well said Donna, perhaps if the CEO at HSN was not so busy collecting awards, appearing on other shows and buffing up her resume for her next gig, business would be better and those poor souls who were recently let go would still have their jobs.

  4. Kristen G. Says:

    Wow, Donna–what a well-thought-out analysis of what’s NOT working at HSN…you should forward that to them if you haven’t already. Personally, I used to buy all my jewelry from HSN, but since I discovered the Liquidation Channel (bless you, Dan Dennis) they’ve gotten all my jewelry business. Maybe others have done the same…

  5. zelda1947 Says:

    Agree with all of the previous posts, and i would add that seeking out niche purveyors of apparel, jewelry and fragrances would create a great deal of new interest; the “regular” vendors are getting so tiresome. Diane Gilman every other week is just way too much, and lordy, does she ever get on my nerves. HSN gives here entirely too much airtime. Management needs to seriously re-think their vendor selections.

  6. AprilD Says:

    I also agree. All of the celebrity experts are a joke and their garments of poor quality. I have tried Iman and Giuliana. Totally awful design and quality. These people are not designers. Their only skill is in promoting themselves. I miss Terry Lewis, she was not a pro but she had more class than most of these celebrities. As for jewelry, I too buy all of my jewelry now from LC. Great quality and prices. They don’t spend money showcasing themselves with fancy sets and celebrities. The money they save is passed on to me, the consumer. This is how all the shopping channels were in the 1980s. Now there is absolutely no quality or value and very little convenience.

  7. DaveA Says:

    I have to agree with Donna as well. There’s a total lack of consistency with the types of products hosts present. Bill Green was doing Football Fan Shop one hour, the next he was showing how many different stitches the new Singer sewing machine can do. A few days later he was hocking Joan Boyce jewelry. They’ve really got to pull it together scheduling wise as well. I know that every Wed.@8 and Sun.@noon is ITKWD on QVC. I’m not saying anyone’s got to lay it on thick like David Venable (I really like him but the happy dance irks me) and please don’t attempt the yum-yum face, only David can pull it off. I love tuning into see all the different kitchen gadgets and cookbooks as well as the featured recipe. It’s nice to know there’s a certain time of the week when I know I can tune into see a variety of category specific items featured.

    Oftentimes what bothers me is that they’ll focus on a single Todd English green pan for like an hour then flash a whole bunch of other Todd English products like panini presses and electric skillets for a millisecond explaining that you can find it online. I’d like to see how they look and work on air, that’s why I tune in. Feature the pan for at the top of the hour for 15/20 min, show a few other things and get back to it to close the hour. It’s also very noticeable that some of the studio sets are too small.for what they’re trying to show. Every time Wolfgang Puck is on the host is pushed into a corner with a TV hanging inches over their head so they can make room for 20 pie makers.

    I agree that quality can be hit or miss, even within a brand. I bought a Colin Cowie beverage server/urn and it’s great. I bought some led battery powered garland from him and I had to open it up to properly tie and solder the wires back down in the battery pack. (It was past the return date) We bought Joy Mangano’s huggable hangers only to realize they’re cheap felt covered cardboard and many were broken in the box, while we bought one of her suit cases and it works great (the fabric is a dust magnet though).

  8. Mally Says:

    Really what has happened at all the home shopping companies is that they have taken their customers for granted. Unfortunately they are now run by second rate execs with huge egos who’s real claim to fame is compensating themselves at the expense of the customers and their employees. Forget loyalty, forget quality, these are things of the past. So these companies will eventually fail as consumers gravitate towards companies that provide stellar customer service, quality and stop treating their employees as expendable.

    • SUSAN Says:

      Hi Mally I think you nailed it on the head….especially with repetition of the same products over and over and over again….and not really knowing their customers….they seem to think that customers will fall over running to the phones or electronic devices to order stuff that has a psuedo celebrity showing them….which cant be further to the truth!!! All customers want is good quality, reasonable shipping, and uinique stuff we dont find in our local markets…..I can find excellent deals elsewhere these days and dont waste my valuable time watching boring and redundant programming…..HSN shows way too many electronics and these so called celebrities….QVC has 15 products in their mix…But at least HSN has reasonable shipping and promotions….QVC is concerned about moving forward internationally….Meanwhile I will shop AMAZON…and local stores like Home Goods, Target, and am finding great apparel deals at Dillards and Macys…….

  9. Donna Says:

    I forwarded this Blog and comments to Mindy Grossman yesterday. I awoke to her reply today…
    “Mindy Grossman
    As always I appreciate feedback. We adore the creative entrepreneur, the authority – that is always the underpinning of our business.
    Our business remains healthy and exciting and as you could tell from our dialogue we are making some great investments for the future ! Please continue to share your thoughts. , I truly do value them and take them to heart . Have a great weekend. Mindy”.

    Let’s see now what happens…

  10. AprilD Says:

    Apparently, she only listens to her own advice.

  11. Mally Says:

    See the thing is Mindy isn’t there for the long term, she might say she is but she and the fella at QVC are what you call “professional” CEOs , individuals that pad their resumes and move on to greener pastures. Their goal is simple what’s in for themselves. I urge you to read and study up on how much these individuals are compensated and the results they produce for the limited results they produce while at the same time employees down the food chain have to pay the price when the sales results are not there. Think again if this is just not corporate greed and individual greed in all its glory. For me I’ll support companies that truly care about their customers and their employees, they are out there, sometimes its the small guys that have the most integrity. Think about it.

    • SUSAN Says:

      I think she is getting rid of deadbeat vendors like Esteban and Emeril and moving forward which will have growing pains…but at least she has retail experience versus QVC and Mike George that doesnt have a clue and seems to be fixated on International markets and the only thing that is saving QVC is price increases and their outrageous shipping…but their units sold have been decreasing for 3 quarters and only slight bump in QVC USA was caused by their response to Christmas in July and Italy and China are saving their rear end….otherwise their response would be just as dismal..

  12. Queen Celeste Says:

    Great comments, Donna. I haven’t been shopping there as much, and I realize it’s because there is so little now that is unique. Bigger isn’t always better. I have no interest in electronics, celebrity chefs, pseudo celebrities, or lines that are in the marketplace. And the markup on jewelry and fashions is just too steep, especially for the declining quality. Finally, it was upsetting when great hosts (Rachel Huber for one) were let go. Hell, I still miss Charlene Lake and the glorious Hollywood Collection!

  13. SUSAN Says:


  14. Mally Says:

    Well if you review the history of Mike at QVC you will see he is nothing but a smooth talker, failure at Dell, failure at QVC, but a huge success at carrying the bags for his corporate masters at Liberty. They made him a very rich rich man. So who is to blame Mike, He has no special talent (certainly not a retailer) but talked himself into a good position and is able to keep the bosses happy… no need to change anything…

  15. Deb Says:

    I was banned from HSN earlier this year for too many returns as was my friend. I’m a shopper, I don’t buy to return, I buy to keep, but the quality of the clothing is very poor as are many other non apparel items. Every celebrity vendor clothing line is manufactured by Tiger J, not one vendor presents a well made garment. The jewelry is even worse. QVC has all of the “famous” jewelers. Judith Ripka, Robert Lee Morris, Dweck, ET al. I just bought a replacement Kindle Fire from QVC, great deal. The QVC hosts are also much easier to watch. I find the HSN hosts and celeb presenters very frantic in their presentations. Did you ever try to watch the Curations chick, Iman or Diane Gilman or that vitamin guru, Andrew who has back to back shows for days. What a snooze. Home shopping is a form of entertainment but hsn is no longer entertaining. Mute button!!!!

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