It was not happy time in St. Petersburg today when HSN released its third-quarter results.
The No. 2 home shopping network’s net sales rose only 2 percent, to $590.6 million, led by growth in electronics and culinary, “offset by home and jewelry,” the company said in a press release Wednesday.
Operating income was flat, at $56.2 million. Not good.
Digital sales increased 7 percent with penetration increasing 170 basis points to 40.5 percent. The return rate improved 80 basis points to 16.8 percent primarily due to changes in product mix. Units shipped increased 2 percent and average price point increased 1 percent.
Gross profit increased 1 percent to $204.5 million. Gross profit margin rate decreased 50 basis points to 34.6 percent primarily due to an increase in shipping promotions and changes in product mix. Operating expenses (excluding non-cash charges) increased 1 percent to $137.4 million.
HSN Inc. includes HSN, the home shopping channel that we just gave you the results for, and Cornerstone, a catalog company.
“We are not pleased with our third quarter results, which do not reflect the deliberate and strategic changes we have made over the past three years to strengthen our brands, create efficiencies and develop our talent to position ourselves for long-term growth,” HSN CEO Mindy Grossman said in a canned statement.
“While we believe that our opportunity to drive growth remains strong, certain product categories at HSN and specific brands within our Cornerstone portfolio weighed on our results in the quarter,” she said. “We have taken decisive actions to course correct and move the business forward while managing profitability.”
“Specifically, at HSN we have made changes in our merchandising organization to reignite our strategy of offering customers new and differentiated product in all categories,” Grossman said.
HSN INc.’s net sales, which include HSN and Cornerstone, increased 3 percent over the prior year to $864.9 million.
Cornerstone’s net sales increased 6 percent to $274.3 million, including 9 percent growth in digital sales.
“At Cornerstone, we are maximizing growth opportunities while rationalizing circulation and inventory to drive the business,” she said. “We continue to have strong digital performance at HSNi with digital sales growth of 8 percent and penetration of nearly 50 percent with mobile up 18 percent, now representing 37 percent of our total digital business.
“We remain confident that our fundamental strengths of customer focus and engagement, increasingly sophisticated digital platforms, and unique, immersive retail experiences and products position us well for long-term success in the evolving commerce landscape,” Grossman said.