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HSN sales up 4% but TV network sales stagnate

Sales at HSN Inc. rose a respectable 4 percent during the Christmas holiday quarter but were flat at the St. Petersburg e-commerce company's TV shopping business.

Overall, the quarter ending on Dec. 31 "was positive," said Mindy Grossman, chief executive officer. "But the final weeks (of the holidays) did not live up to our (sales) expectations."

In her first public statement on the subject, Grossman also put to rest last week's reports that she was being courted to take over as chief executive of troubled Avon Products Inc. The Tampa Bay Times had reported earlier that she spiked the speculation in a letter sent to 250 managers.

"Let me address the elephant in the room here," she volunteered in an earnings call with analysts. "I am not going anywhere (because HSN) is more than a job to me."

Excluding one-time charges, HSN beat analysts' earnings forecast with a 16 percent gain in net income to $54.2 million, or 89 cents a share, up from $46.1 million, or 77 cents a share, a year earlier.

Wall Street reacted. By late morning, HSN was trading at $37.49, up $1.13, before closing at $36.98, up 58 cents.

But while sales leapt 13 percent at the company's Cornerstone mail order catalogs, they only increased by $2.4 million to $639.2 million at the TV shopping business in St. Petersburg that accounted for two-thirds of the company's $3.2 billion in annual sales in 2011.

The weaker holiday performance dragged the network's full-year sales gain down to 2 percent.

The blame went to weakening demand and slumping prices for TVs and computers, as customers shifted their buying to less expensive tablets and mobile phones.

On the plus side, sales of culinary, home and beauty products were hits, and the network ended the year with 2 percent more regular shoppers on its customer lists. Meanwhile, sales at HSN.com, which accounts for more than a third of the network's business, rose 9 percent.

Going forward, HSN will try to use 24-hour beauty broadcasts filled with demonstrations of cosmetics, skin care and related products to prospect for new customers.

New celebrity tie-ins include the network's first HSN Live music series with Lionel Ritchie singing to promote his duets album with country music stars like Willie Nelson and Kenny Rogers. This month Mario Lopez pitched his workout video and former Real Housewives of New York star Jill Zarin debuted her Skweez Couture shapewear line.

Other developments of note:

• HSN.com shoppers buying from wireless phones or tablets tripled to $60 million in the last quarter.

• HSN stepped up its stock repurchase activity by buying and retiring 800,000 shares while maintaining its 12.5 cents a share quarterly dividend.

• After airing joint marketing/product deals with Hollywood film premiers of Eat Pray Love, Footloose and Katherine Heigl's One for the Money, HSN has another, unidentified movie promotion in the works for June.

Mark Albright can be reached at [email protected] or (727) 893-8252.

HSN sales up 4% but TV network sales stagnate 02/23/12 [Last modified: Thursday, February 23, 2012 10:39pm]
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