Online sales grow slightly during a lackluster quarter for HSN Inc.

November 8, 2016 11:37 AM

Online sales are key to HSN Inc.’s future as total sales declined almost 5% this quarter, CEO Mindy Grossman said yesterday during the retailer’s third quarter earnings call with investors. 

“Digital remains an essential part of our strategy to optimize our content across the multiple distributed commerce platform,” Grossman said, according to a Seeking Alpha transcript. HSN Inc. does not break out e-commerce sales.

HSN Inc., No. 25 in the Internet Retailer 2016 Top 500 Guide, includes the online and TV retailer HSN, and the Cornerstone brands portfolio, which includes home furnishings retailers Garnet Hill, Frontgate, Ballard Designs, Improvements and Grandin Road. On Sept. 8, Cornerstone completed the divestiture of TravelSmith and Chasing Fireflies, two of the apparel brands within its portfolio.

Between HSN and Cornerstone, online sales accounted for 52.7% of HSN Inc. sales in Q3 ended Sept. 30, up from 49.4% in the same period last year. The percentage of mobile sales grew 17% in the quarter and accounted for 22% of HSN Inc.’s total sales and 42% of its digital sales.

While online sales increased, Grossman said, total sales (which include TV sales) declined 4.8% for HSN Inc. to $823.0 million from $864.9 million in Q3 2015. She cited weak performance in the retailer’s fitness category and a “difficult consumer environment” as the reasons for the decline.

In the HSN business alone, online sales accounted for 44.8% of sales, compared to 40.5% for Q3 last year. Online sales increased in all categories except fitness and infomercials, Grossman said. During the quarter, the retailer updated its filtering tool in certain categories such as cosmetics to improve product search, and it plans to expand that update across all of its products.

HSN’s mobile sales increased 21% and generated 52% of the retailer’s digital sales in Q3. HSN this quarter created a shoppable video and virtual reality experience in the HSN app in conjunction with tennis pro Serena Williams’ fall runway collection during New York Fashion Week. Average daily app installs increased 21% for HSN during the fashion week and a Facebook Live video, plus posts on Twitter and Instagram generated 34 million impressions during the event, Grossman said.

HSN is currently developing a new versions of its app, which will be more focused on a consumer’s profile, preference and usage, Grossman said.

For Cornerstone, digital sales accounted for 70.4% of sales, compared with 68.3% in the same period last year. Cornerstone also will continue to invest in digital commerce. For example, a recent digital feature allows a consumer to use an augmented reality app to place products from its Ballard Designs and Frontgate brands in her home.

HSN also announced today that Carmen Bauza becomes executive vice president and chief merchandising officer for HSN. Bauza previously held leadership roles at Wal-Mart Stores Inc. (No. 4 in the Top 500), L Brands Inc. (No. 28) and The Walt Disney Co. (Disney Store USA LLC is No. 78).

Also in the quarter HSN appointed Geoff Brownrigg as president of improvements. He has 30 years of experience in retail, Grossman said.

For the third quarter ended Sept. 30 HSN Inc. also reported:

  • Total HSN Inc. sales (HSN plus Cornerstone) of $823.0 million a 4.8% decrease from $864.9 million in Q3 2015.
  • Within that total, HSN net sales totaled $569.7 million, a 3.5% decrease from $590.6 million.
  • Cornerstone net sales totaled $253.3 million, a 7.7% decrease from $274.3 million.
  • Net income of $20.2 million, a 40.9% decrease compared with $34.2 million.

For the nine months ended Sept. 30, HSN Inc. reported:

  • Total HSN Inc. sales of $2.49 billion, a 3.9% decrease from $2.59 billion in the same period last year.
  • HSN net sales of $1.71 billion, a 2.8% decrease from $1.76 billion. 
  • Cornerstone net sales of $788.9 million, a 4.8% decrease from $829.0 million.
  • Net income of $75.2 million, a 31.3% decrease compared with $109.5 million.





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