HSN had a tough first quarter, with sales slipping a tad. Retail this year has generally been a bust, folks.
The No. 2 home shopping network reported Thursday that net sales were $544.5 million, a drop of 1 percent from the prior year.
HSN Inc., which includes the network and the Cornerstone unit combined, saw its net sales rise 1 percent, to $777.4 million. Cornerstone’s net sales increased 5 percent to $232.9 million.
“Similar to the overall retail sector, our results were impacted in the first quarter partially due to severe weather across the country, and softness in women’s apparel, particularly at Garnet Hill (part of Cornerstone),” HSN Inc. CEO Mindy Grossman said in a prepared statement.
“At HSNi, we are seeing improved performance, as demand strengthened throughout March. I believe our opportunity to drive growth remains intact and we are pleased with the areas of strength that we demonstrated during the quarter, including an increase in digital penetration of 220 basis points to 47 percent, mobile growth of 44 percent and reaching our highest customer levels to date.”
The home shopping network’s digital sales grew 5 percent, with penetration increasing 220 basis points to 37.9 percent. Sales increased in home design, offset by lower sales in electronics, jewelry and health.
The return rate decreased 170 basis points to 18.3 percent, primarily due to changes in product mix. The units shipped increased 1 percent while the average price point decreased 3 percent.
The gross margin was 35 percent, consistent with the prior year. The gross margin was favorably impacted by product mix and less clearance sales, offset by lower net shipping margins.
Operating expenses as a percentage of net sales (excluding non-cash charges) decreased 20 basis points to 24.1 percent of net sales.
Adjusted EBITDA was $59.1 million compared to $58.9 million in the prior year. Operating income was $48.6 million, consistent with the prior year.