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Pummeled in 2016, HSN's Mindy Grossman looks for year of growth regeneration for shopping service

Rod Little, who started as HSN's new chief financial officer in January, participated in his first quaterly conference call with analysts on Wednesday with HSN CEO Mindy Grossman. [Handout photo]
Rod Little, who started as HSN's new chief financial officer in January, participated in his first quaterly conference call with analysts on Wednesday with HSN CEO Mindy Grossman. [Handout photo]
Published Feb. 22, 2017

ST. PETERSBURG — Like a lot of Americans, HSN CEO Mindy Grossman is happy to say goodbye to 2016. It was not the best of times for her home-shopping empire.

HSN on Wednesday reported the TV, digital and catalog retailing company's performance for all of 2016 and its fourth quarter, which ended Dec. 31.

Net income plummeted 30 percent in 2016 from the prior year to $118.7 million, while fourth-quarter net income dropped 27 percent to $43.5 million. Net sales slipped 3 percent to $3.6 billion in 2016 from a year earlier, while dipping 2 percent in the fourth quarter to $1.07 billion from same quarter of 2015.

Grossman cited the one-time distractions of last year — as she has noted consumer preoccupation with the Summer Olympics and the presidential race in earlier quarterly comments to analysts — as contributors to HSN's declining performance.

"Clearly, 2016 was a year of disruption in retail characterized by a distracting environment, cautious consumer spending and a heightened promotional climate," Grossman stated. "In addition to the disruptive retail climate, our overall fourth-quarter results were affected by certain underperforming product categories — particularly jewelry at HSN and areas within the home in the Cornerstone (catalog) portfolio, the standardization of our shipping and handling practices at HSN and implementation of our supply chain optimization initiative.

"We expect our hard work and learning from 2016 to position 2017 as a year of growth regeneration," she added.

HSN has seen a rapid shift in how shoppers interact with her company's offerings. Digital now represents 55 percent of HSN's business and, within the digital category, mobile transactions represent 45 percent. Grossman called mobile HSN's new "flagship" but also reminded analysts that HSN still reaches 90 million households via its shopping channels on traditional TV.

HSN has withstood "tremendous market challenges" over the past year "with our most loyal customer intact," Grossman told analysts on a conference call. She named a number of tests of innovative ways to connect with customers, including what role such interactive digital roles Amazon Echo (which connects to the voice-controlled intelligent personal assistant service Alexa), rival product Google Home and Chatbox might play.

Investors responded positively to HSN's performance, which beat Wall Street expectations of an even rougher quarter. Shares rose by more than 7.8 percent, closing at $40.85 a share and bumping HSN's stock to a new high so far in 2017. In early 2015, HSN shares traded above $75.

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