HSN’s sluggish fourth quarter still beats analyst estimates
A disruptive retail climate and underperforming categories took their toll on HSN during the fourth quarter.
HSN’s net income was $43.5 million, or 82 cents per share,for the quarter, ended December 31, 2016, compared to $59.7 million for the same period last year. This exceeded analysts’ estimates of 74 cents per share.
The home shopping network operator’s net sales decreased 2% to $1.1 billion, however the company’s digital sales grew 4%, with penetration increasing 330 basis points to 55%.
For the full year, HSN’s net income was $118.7 million compared to $169.2 million in the prior year, and net sales decreased 3% to $3.6 billion.
Overall, the company’s digital sales grew 3%, with penetration increasing 310 basis points to 53% for the year.
"Clearly, 2016 was a year of disruption in retail characterized by a distracting environment, cautious consumer spending and a heightened promotional climate,” said Mindy Grossman, CEO of HSN. “While this impacted the performance of our business, we have been taking strategic actions to best position HSNi and take advantage of new opportunities, including building our brands with a continued emphasis on digital — now representing 55% of our business, with mobile 45% of digital.”
Besides a disruptive retail climate, the company’s overall fourth quarter results were affected by certain underperforming product categories, “particularly jewelry at HSN and areas within home in the Cornerstone portfolio, as well as the standardization of our shipping and handling practices at HSN and implementation of our supply chain optimization initiative,” she said. “Also, our year-ago comparisons were distorted by the divestiture of two businesses.”
Looking ahead, HSN is considering 2017 as "a year of growth regeneration.” This requires the company to put “a laser-focus on our proprietary product pipeline; drive customer acquisition, retention and spend; optimize digital platforms; leverage our distributed commerce capabilities; advance our supply chain initiatives and cultivate talent across the organization,” Grossman added. “We will be executing against these priorities while investing in operational execution for future efficiency and leverage.”
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