Home steals the show at HSNi
Retail Editor 4 -- Home Textiles Today, November 7, 2013
St. Petersburg, Fla. - Home goods, including textiles, were among multi-channel retailer HSNi's strongest performing categories during the company's third quarter.
"Home drove Cornerstone [in the quarter], led by Frontgate, Grandin Road and Ballard Designs," said cfo and coo Judy Schmeling during HSNi's earnings conference call Wednesday. "The outdoor business was exceptionally strong for both Frontgate and Ballard, and Grandin Road had particular success in seasonal décor, which included a unique Halloween product assortment."
For the quarter ended September 30, the company's Cornerstone segment reported an 8% rise in net sales to $260.3 million. The company attributed the increase to growth in the home brands.
The HSN segment's net sales were essentially flat, $538.6 million compared to $537.4 million in the prior year. Sales grew in home design and household, offset by lower sales in jewelry, apparel and accessories, and culinary. The average price point decreased 5% while units shipped increased 3%.
For the total company, results were favorable. HSNi's
net income soared by 140% to $42 million versus $18 million a year ago. Those results included $18 million of bond redemption costs and an $8 million sales tax settlement last year as well as $4 million in tax benefits recognized in the current quarter. Excluding these items, HSNi's adjusted net income increased 13% to $38 million from the year ago's $34 million.
Earnings per share from continuing operations increased 148% to $0.77 compared to $0.31 in the prior year. Adjusted EPS was up 19% to $0.70.
HSNi's total sales grew 3% to $798.9 million.
During the quarter, HSNi streamlined its overhead, eliminated about 60 positions at HSN.
Year to date, HSNi reported a 57% leap in net income to $116.9 million from $74.6 million in the prior year, EPS of $2.12 versus $1.37 last year, and a 4.4% increase in net sales to $2.38 billion.
Mindy Grossman, ceo and director of HSNi, said mobile now represents 12% of the company's total business. At HSN, digital sales grew 7%, with digital penetration up 220 basis points to 37%, and a double-digit increase in unique visitor traffic over the prior year.
"Our mobile performance was strong during the quarter, with mobile sales up 50% compared to last year," Grossman said. "By mid-September, we had eclipsed total mobile sales for all of 2012, with mobile penetration reaching nearly 12%. Mobile is also a large part of our customer acquisition effort, with 22% of mobile purchasers in 2013 new to HSN."
In the Cornerstone division, digital sales grew 10% and penetration increased 100 basis points to 67%.
"Our mobile business grew 70%, with mobile penetration now over 12% [at Cornerstone," she noted. "Frontgate and Grandin Road launched two additional digital Lookbooks optimized for both iPad and desktop. These Lookbooks strongly convey the inspirational emotion of the Frontgate collections, and allowed customers to share the photos on their social networks, create favorites lists and make purchases. Grandin Road launched the new Buy the Scene feature that gives customers the ability to more easily decorate their home by purchasing a complete motif."
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