HSN had another tough quarter this year.
Net sales for the third quarter were $569.7 million, a decrease of 3.5 percent from the prior year. That’s the second quarter in a row that revenue has dipped.
Digital sales grew 6.7 percent, with penetration increasing 430 basis points to 44.8 percent. Revenue for apparel and accessories and wellness rose, offset by decreases in other product categories and in shipping revenues, the network reported on Monday.
A decrease in shipping revenue was primarily due to increased promotions and changes in the standard shipping rates, which became effective in August.
The average price point decreased 5 percent, largely due to an increase in clearance activity and changes in product mix. Units shipped increased 1 percent.
Gross profit for the network decreased 7 percent to $190 million.
The gross profit rate decreased 130 basis points to 33.3 percent, primarily due to a decrease in shipping revenue and, to a lesser extent, increased clearance activity.
Operating expenses decreased 4 percent to $143 million, largely due to decreases in employee-related costs, primarily incentive compensation, and bad debt expense. Operating expenses (excluding non-cash charges) decreased 4 percent to $131.9 million.
HSN’s parent is HSN Inc., which also includes the Cornerstone unit. That unit divested two businesses in the third quarter, TravelSmith and Chasing Fireflies.
HSN INc.’s sales, HSN and Cornerstone, saw their overall sales dip 5 percent to $823 million, or 3 percent excluding the impact of the divested businesses
“Similar to last quarter, our third-quarter results reflect weaker performance in specific HSN merchandising categories; softness in the outdoor segment within the Cornerstone portfolio; and a difficult consumer environment,” HSN CEO Mindy Grossman said in a canned statement.
“This was compounded by disruptive and distracting high-profile media events, particularly in August and September, that influenced our customers’ buying patterns and television viewership behaviors.”
“We have strategic actions under way to improve HSNi’s performance and have made progress in certain areas,” Grossman said. “These include expanding our proprietary merchandising pipeline and unique destination programming; elevating our content, digital and data capabilities; extending our distributed commerce platforms including experiential retail; and the divestiture of businesses for a focused portfolio.
“While our near-term outlook remains cautious, and it will take time to fully realize the benefits of our initiatives, I am confident in our ability to execute on our plans while proactively managing our overall expenses to drive HSNi’s long-term performance and value creation for our shareholders.”