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.
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%.”