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How does HSN plan to change course to reach 'distracted' shoppers?

 
After an up-and-down 2015, St. Petersburg-based HSN is looking for new ways to reach “distracted” shoppers. Here, host Robin Wall and celebrity chef Wolfgang Puck show off a cooked chicken that was prepared in the Wolfgang Puck Pressure Oven. [SCOTT KEELER | Times] 
After an up-and-down 2015, St. Petersburg-based HSN is looking for new ways to reach “distracted” shoppers. Here, host Robin Wall and celebrity chef Wolfgang Puck show off a cooked chicken that was prepared in the Wolfgang Puck Pressure Oven. [SCOTT KEELER | Times] 
Published Feb. 26, 2016

Listen to CEO Mindy Grossman and other executives at St. Petersburg's HSN and it is a great time for the all-things-shopping business.

HSN-affiliated Joy Mangano's home products empire of mops, pillows and hangers is in the international spotlight, fueled by the recent Joy movie and actor Jennifer Lawrence's Oscar nomination for her Mangano role.

Yet it is also a tough time to engage shoppers. HSN recently canned 70 people in a belt-tightening move. And, says Grossman, people are distracted, citing the noise of the presidential election, the whipsawing stock market, the oddly warm weather and a competitive retail market heavy on promotions.

"We are in the process of course-correcting," she says.

Never a good sign in retailing, HSN sales in the fourth quarter fell 2 percent from a year ago, though sales for all of 2015 were up 3 percent over 2014. The bottom-line number, net income, in the fourth quarter dropped 13 percent, and slipped 2 percent in 2015.

Grossman and other execs spoke in a teleconference with analysts this week after the release of earnings at HSN, one of Tampa Bay's major public corporations with close to $3.7 billion in sales last year. Here are five takeaways from that conversation.

1 Fast-changing technology and shopping culture continues to transform HSN, once simply dubbed a TV shopping business. HSN's digital business is soaring and, as Grossman notes, mobile sales are approaching 40 percent of the company's digital mix.

2 Themes of belt-tightening are pervasive in HSN's remarks. In addition to trimming 70 people — for perspective, don't forget HSN employs close to 6,900 — HSN execs spoke of ways to keep offering free or low-priced shipping to customers while trying to get more of its merchandise partners to share the expense.

3 Some major promotions and mix of products fell out of favor with consumers. HSN has pushed via direct TV promotion guitars pitched by country singer Keith Urban. Those sales are now flagging after some strong quarters earlier. Jewelry and kitchen products — cornerstone sales categories at HSN — also dipped while sales of HP, Samsung and Bose electronics, along with wellness items from Fitbit and home products improved. On average, though, HSN shoppers are spending less per order than they did in the past.

4 One big message Grossman delivered to analysts is HSN's renewed effort to keep its product mix fresh. It is pushing its American Dreams series featuring new products from aspiring entrepreneurs. Grossman says this helps not only "fill our pipeline with new products and ideas," but reinforces the company's "culture of innovation and brand building." HSN also is cutting sales deals with products tied to everything from the new DreamWorks' Kung Fu Panda 3 movie (in which HSN chef Ming Tsai has a role) and a premiere with personal finance adviser Suze Orman to partnering with mobile gamemaker Zynga and launching a Deal Hunter series with Good Morning America's "Deals and Steals" host Tory Johnson.

5 Is this enough? HSN's primary competitor, QVC, remains several times larger in market value. While shares of HSN peaked at just over $77 in January 2015, they have since dropped as low as $42 earlier this month. That's a sharp decline. What's promising is that HSN's stock has been rising lately and now hovers around $52 — largely in response to the actions HSN's Grossman says the company is taking to regain momentum.

"Transformation and even disruption are the new realities of retail in a world where consumers are gravitating to experiences, from travel to technology," Grossman says. "We continue to challenge ourselves to participate in this evolving landscape."

Contact Robert Trigaux at rtrigaux@tampabay.com. Follow @venturetampabay.