It looks like HSN enjoyed a good first quarter, with net sales rising 10 percent to $600.5 million, the home shopping network reported Wednesday.
But, dang it, there was sales growth in all divisions except our favorite category, jewelry. Hope that doesn’t mean that HSN will start limiting its offerings of shiny baubles!
The results include sales associated with a direct-response television marketing campaign that started during the fourth quarter and contributed to 2 percent of this growth. We don’t know anything about this direct-response campaign.
HSN’s digital sales increased 18 percent with penetration increasing 280 basis points to 40.7 percent. The return rate improved 60 basis points to 17.7 percent, mostly due to changes in product mix. Units shipped increased 8 percent and average price point increased 2 percent.
Gross profit increased 9 percent to $207.5 million. Gross margin decreased 40 basis points to 34.6 percent primarily due to an increase in inventory reserves.
Operating expense leverage (excluding non-cash charges) improved 60 basis points to 23.5 percent.
HSN Inc.’s net sales, which include the shopping channel and the Cornerstone unit, were up 8 percent over the prior year to $841.9 million. Cornerstone’s net sales increased 4 percent to $241.4 million, including 5 percent growth in digital sales.
HSNi’s adjusted EBITDA increased 22 percent to $73.2 million, while its adjusted EBITDA increased 12 percent to $66.2 million. Cornerstone’s adjusted EBITDA increased $6.3 million to $7 million primarily due to strong performance at Garnet Hill. HSNi’s operating income increased 36 percent to $57 million.
Adjusted earnings per share increased 26 percent to 63 cents compared to 50 cents in the prior year.
“Our performance in the quarter reinforces the experiential power of our content and our ability to create engagement across our platforms,” HSN Inc. CEO Mindy Grossman said.
“HSNi had net sales growth of 8 percent and Adjusted EBITDA growth of 22 percent,” she said. “These results demonstrate the continued execution of our strategy to drive commerce by creating personal connections with our customers and offering unique and compelling products. Once again, accelerated performance in digital was a key factor in our strong growth momentum with digital up 12 percent, representing half of our total business. Mobile sales grew 31 percent for the quarter, with penetration at 18 percent of total sales.”