HSN Inc. reported that net sales for the first quarter dropped 3 percent while net income fell 15 percent.
Net income for the quarter came in at $28.6 million, or 54 cents a diluted share, down from $33.7 million, or 63 cents, a year ago. That beat the FactSet estimate for earnings of 52 cents a share.
“Our performance in the quarter reflected the impact of the volatile retail environment combined with the repositioning of our product portfolio,” said chief executive officer Mindy Grossman. “We continue to invest strategically in digital, data analytics and content while aggressively managing overall expenses in the business.
Net sales for the three months ended March 31 decreased 3 percent to $816 million from $841 million a year earlier. This missed the FactSet estimate for sales of $835 million. Sales grew in electronics, wellness and culinary, but fell elsewhere. Digital sales increased 3 percent with sales penetration of 52 percent.
“Digital-now representing over half our sales-remains a key area of strategic focus and we continue to pursue opportunities to optimize our distributed commerce platforms,” added Grossman.
Gross profit decreased 4 percent to $199.3 million and the gross profit rate dropped 10 basis points to 34.5 percent due to an increase in shipping promotions and changes in product mix.
Cornerstone’s net sales dropped by 1 percent to $238.4 million due to a drop in apparel sales and that was blamed on a decrease in catalogues.
The company did not give any forward guidance, but the board did approve a quarterly cash dividend. During the quarter HSN repurchased $8.7 million shares of stock. The stock has fallen 14 percent for the past year and was lately trading at $53.00.