HSN Inc. posted third-quarter results that missed Wall Street’s estimates for the period.
The company, best known for its home shopping business, reported a 41.1 percent decline in net income for the third-quarter ended Sept. 30 to $20.2 million, or 38 cents a diluted share, from $34.2 million, or 64 cents, a year ago. On an adjusted basis, diluted EPS was 52 cents versus 70 cents a year ago. Net sales slipped 4.8 percent to $823.0 million from $864.9 million. The company said digital sales rose 2 percent, with sales penetration rising to 330 basis points to 53 percent.
HSNi missed Wall Street’s consensus for both adjusted EPS of 56 cents and revenues of $836.0 million. Investors sent shares of HSNi down 9.9 percent to $32.45 in late-morning trading.
In the quarter, the company through its Cornerstone division sold its TravelSmith and Chasing Fireflies businesses. Cornerstone recorded a loss on the sale of $11.2 million. The company said its HSN business posted a 3.5 percent decline in net sales to $569.7 million. The company said digital sales at HSN rose 6.7 percent, with penetration increasing 430 basis points to 44.8 percent. Sales grew in apparel, accessories and wellness, offset by decreases in other product categories.
Mindy Grossman, chief executive officer, said, “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. This was compounded by disruptive and distracting high-profile media events, particularly in august and September, which influenced our customers’ buying patterns and television viewership behaviors.”
Grossman said strategies to improve HSNi’s performance include expanding its proprietary merchandising pipeline, as well as the “divestiture of businesses for a focused portfolio.”
In a conference call to Wall Street analysts, Grossman said, “Digital remains an essential part of our strategy to optimize our content through multiple distributed commerce platforms.” She added that mobile grew 17 percent, reflecting “22 percent of our total business and 42 percent of digital sales.” Grossman also said the company is accelerating its content generation and optimizing its digital assortment and platform to complement the traditional brand experience of our live content.”
Grossman noted that while view attention shifted to the high-profile media events that include the Olympics and the Presidential election campaigns, digital sales grew in the quarter. The company is taking special actions to reinvigorate its customer pipeline, which includes marketing efforts across Google, Facebook and Yahoo.
Separately, the company said that Carmen Bauza has been named executive vice president and chief merchandising officer for HSN. Bauza, who joins the firm on Nov. 28, will report to Bill Brand, president of HSN.
Bauza has more than 30 years experience in retail and merchandising, most recently as senior vice president at Wal-Mart for their consumables, health and wellness merchandising division. Past leadership positions include L Brands, Five Below Inc. and Walt Disney Co.