HSN Inc. posted mixed fourth-quarter earnings, beating Wall Street’s earnings-per-share estimates, but missing on revenue expectations.
For the three months ended Dec. 31, net income fell 12.6 percent to $59.7 million, or $1.12 a diluted share, from $68.3 million, or $1.28, a year ago. Total net sales slipped 1.8 percent to $1.10 billion from $1.12 billion. On an adjusted basis, EPS was $1.15, which beat Yahoo’s analyst consensus of $1.02, but the company was just shy of revenue expectations of $1.11 billion.
Mindy Grossman, chief executive officer, said in a call to Wall Street analysts that “digital sales exceeded half our business at 52 percent, with digital reaching nearly $2 billion in annual sales. Additionally, mobile now represents nearly 40 percent of our total digital business.”
As for the home shopping network channel, Grossman said “HSN’s 12-month customer files grew 2 percent in the quarter, with best customer growth of 3 percent.”
On the call, executives noted that late in the quarter, the company consolidated resources in certain areas to maximize operational efficiencies. That resulted in the loss of 70 positions and $2 million in severance-related costs. The company said the actions are expected to reduce annual operating expenses by $9 million going forward.
Grossman said the company has been intensifying its strategies in the beauty category. In apparel and accessories, our “buy now-wear now strategy contributed to the category’s most recent success. Our spring fashion series which just launched emphasizes layer now, lighten later, providing us with more flexibility to manage unpredictable weather patterns while still offering new fresh items and colors into our assortment,” she said.
Other brands within the HSNi portfolio include catalogue businesses Cornerstone, Grandin Road, Ballard Designs, Frontgate, Garnet Hill, TravelSmith and Chasing Fireflies.
Judy Schmeling, chief operating officer and chief financial officer, said on the call that certain catalogue brands had higher promotional activity, and operating expenses rose primarily from circulation while the company “didn’t gain sufficient top-line sales to leverage our catalogue costs.”
Schmeling also noted that while overall growth in inventory was less than 2014, there’s still some excess inventory in certain brands and categories that could impact margins as the company clears out the merchandise.
Shares of HSNi rose 7.5 percent to close at $52.03 in Nasdaq trading.