Mindy’s Swan Song: HSN’s 1Q Sales Dip 3 Percent

The hits keep coming for home shopping, with HSN reporting on Wednesday that its sales slipped 3 percent, to $560.5 million, in the first quarter. And the channel put some of the blame on Leap Year.

“Excluding the benefit of having an additional day for leap year in the first quarter of 2016, HSN’s net sales decreased 2 percent,” the network said in its press release.

Mindy Grossman, HSN’s veteran CEO, was missing from the Wall Street conference call on the earnings. That’s because she’s leaving to join to head up Oprah Winfrey’s Weight Watcher’s International.

Last week HSN Inc., which includes not only the shopping channel but Cornerstone Brands Inc., announced that Grossman had resigned effective May 24. Until a successor is named, the board has established the Office of the Chief Executive consisting of Chief Financial Officer Rod Little, HSN President Bill Brand and Judy Schmeling, chief operating officer of HSNi and president of Cornerstone.

LIttle offered the canned statement:

We continue to focus on stabilization and ultimately growth regeneration in the business. The continued strength of digital sales, and mobile sales in particular, has been very encouraging. Digital sales, which now account for over half of our revenue, continued to grow both in absolute terms and as a proportion of total revenue. Mobile, which we see as our flagship, continues to be our fastest growing sales channel and significant source of new customer acquisition.

We remain committed to our strategies to improve our performance. Our key priorities are: acquiring and retaining customers via a robust and relevant product portfolio, optimizing our digital platforms, and improving our supply chain capabilities and efficiency, all to drive consistent shareholder value creation.

As we look to celebrate our 40th anniversary this summer, we thank Mindy Grossman for her vision, inspiration and leadership over the past decade.

HSN’s digital sales grew 3 percent with penetration increasing 290 basis points to 46.7 percent. Apparel, accessories, kitchen and home revenue increased, offset by decreases in other product categories. Shipping revenue declined main to the August 2016 changes in the network’s standard shipping rates and increased promotions.

The average price point increased 4 percent largely due to changes in product mix. Units shipped decreased 8 percent.

HSN’s gross profit decreased 4 percent to $191.1 million. Gross profit rate decreased 40 basis points to 34.1 percent primarily due to a decrease in shipping revenues and higher fulfillment costs, partially offset by an increase in product margins.

The increase in fulfillment costs was primarily the result of the ongoing implementation of HSN’s supply chain optimization which, among other things, includes expanding the automation capabilities in its Piney Flats, Tenn., distribution center.

HSNi’s net sales decreased 4% to $785.4 million. Excluding the results of TravelSmith and Chasing Fireflies, two Cornerstone brands divested last September, and an additional day for leap year within the HSN segment, HSNi’s net sales dropped 1 percent.


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