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HSN, Inc. Reports Second Quarter 2013 Results

Highlights for the Second Quarter 2013:

  • Diluted EPS From Continuing Operations Increased 30% to $0.79 Per Share
  • Net Sales Increased 6% With Digital Sales Up 10%
  • Adjusted EBITDA Increased 7%

ST. PETERSBURG, Fla., Aug. 1, 2013 (GLOBE NEWSWIRE) -- HSN, Inc . (Nasdaq:HSNI) reported results for the second quarter ended June 30, 2013 for HSN, Inc. ("HSNi" or "Company") and its two operating segments, HSN and Cornerstone.

Table 1
SUMMARY RESULTS AND KEY OPERATING METRICS (a)
($ in millions, except per share and average price point amounts)
       
   Q2 2013   Q2 2012   Change 
       
Net Sales  $ 812.6  $ 767.2 6%
Adjusted EBITDA (Non-GAAP)  $ 85.2  $ 79.6 7%
GAAP:      
Operating Income   $ 71.3  $ 65.3 9%
Income from continuing operations   $ 43.3  $ 35.6 22%
Diluted EPS from continuing operations   $ 0.79  $ 0.61 30%
HSNi:      
Average price point  $ 64.25  $ 64.54 (0%)
Units shipped (millions)  14.2  13.5 5%
Gross margin  38.0%  38.2% (20 bps)
Return rate   17.0%  17.8% 80 bps
Digital sales penetration   45.1%  43.4% 170 bps
       
(a)  HSNi's two operating segments, HSN and Cornerstone, are presented separately in Tables 2 and 3 of this release.
       
See reconciliation of Non-GAAP to GAAP measures in Table 4.

Second Quarter 2013 Results vs Second Quarter 2012 Results

  • HSNi's net sales grew 6% over the prior year to $812.6 million. HSN's net sales increased 5% to $526.2 million, including 10% growth in digital sales. Cornerstone's net sales increased 8% to $286.4 million, including 10% growth in digital sales.  
  • HSNi's Adjusted EBITDA increased 7% to $85.2 million. These results were driven by a 6% increase in net sales offset by a 20 basis point decrease in gross margin and a 5% increase in operating expenses (excluding non-cash charges). Operating income increased 9% to $71.3 million.   
  • Diluted EPS from continuing operations increased 30% to $0.79 compared to $0.61 in the prior year.  
  • During the second quarter, HSNi repurchased approximately 0.9 million shares of its common stock at a cost of $49.8 million, or an average cost of $52.95 per share. From inception of the share repurchase program in September 2011 through July 31, 2013, HSNi repurchased a total of 8.4 million shares at an aggregate cost of $365.5 million, representing an average cost of $43.31 per share.

"Our strong financial performance during the second quarter is a result of the uniqueness of our customer experiences, the power of our digital platforms and the quality of our brands and products," said Mindy Grossman, CEO of HSN, Inc. "Sales for the quarter were up 6%, digital sales increased 10% and EPS grew 30%. In addition, we continued returning value to shareholders through our share repurchase and cash dividend programs."

Table 2
SEGMENT RESULTS
($ in millions)
             
  Three Months Ended June 30, (a) Six Months Ended June 30, (b)
  2013 2012 Change 2013 2012 Change
Net Sales            
HSN  $ 526.2  $ 501.9 5%  $ 1,076.3  $ 1,043.9 3%
Cornerstone  286.4  265.3 8%  508.9  461.2 10%
Total HSNi  $ 812.6  $ 767.2 6%  $ 1,585.3  $ 1,505.1 5%
Gross Profit            
HSN  $ 187.5  $ 181.7 3%  $ 379.8  $ 370.1 3%
Cornerstone  121.3  111.7 9%  209.1  190.3 10%
Total HSNi  $ 308.8  $ 293.4 5%  $ 588.9  $ 560.4 5%
Adjusted EBITDA (Non-GAAP measure)            
HSN  $ 57.1  $ 52.7 8%  $ 116.1  $ 110.0 5%
Cornerstone  28.0  26.9 4%  35.9  35.8 0%
Total HSNi  $ 85.2  $ 79.6 7%  $ 152.0  $ 145.9 4%
Operating Income            
HSN  $ 47.0  $ 43.3 8%  $ 95.6  $ 90.8 5%
Cornerstone  24.3  22.0 10%  28.2  25.8 9%
Total HSNi  $ 71.3  $ 65.3 9%  $ 123.8  $ 116.6 6%
             
(a)  Chasing Fireflies was acquired on April 1, 2012; therefore, the acquisition had no impact on the comparability of periods for the three months ended June 30.
(b)  HSN's results for the six months ended June 30, 2012 included one extra day versus the current period because of leap year.
             
See reconciliation of Non-GAAP to GAAP measures in Table 4.
 
 
Table 3
SEGMENT KEY OPERATING METRICS
             
  Three Months Ended June 30, Six Months Ended June 30,
  2013 2012  Change  2013 2012  Change 
HSN:            
Average price point  $ 56.49  $ 58.64 (4%)  $ 57.17  $ 60.95 (6%)
Units shipped (millions)  10.9  10.2 7%  22.3  20.4 10%
Gross margin  35.6%  36.2% (60 bps)  35.3%  35.5% (20 bps)
Return rate  19.1%  19.9% 80 bps  19.6%  19.6% 0 bps
Digital sales penetration  35.4%  33.8% 160 bps  35.5%  34.4% 110 bps
Cornerstone:            
Average price point  $ 89.03  $ 81.73 9%  $ 80.64  $ 76.59 5%
Units shipped (millions)  3.3  3.3 0%  6.5  6.2 5%
Gross margin  42.4%  42.1% 30 bps  41.1%  41.3% (20 bps)
Return rate  12.6%  13.3% 70 bps  13.1%  13.7% 60 bps
Digital sales penetration  62.9%  61.7% 120 bps 64.7% 62.6% 210 bps
Catalog circulation (millions)  79.1  77.2 2%  154.8  145.8 6%

HSN Segment Results for the Second Quarter 2013

HSN's net sales were $526.2 million, an increase of 5% from the prior year. Digital sales grew 10% with penetration increasing 160 basis points to 35.4%.  Sales grew in home design, household, electronics and apparel & accessories, offset by lower sales in jewelry and culinary. Net sales were favorably affected by lower return rates. The average price point decreased 4% while units shipped increased 7% primarily due to an increase in clearance activity.   

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