HSN, Inc. Reports First Quarter 2013 Results

Highlights for the First Quarter 2013:
  • Net sales increased 5%
  • Digital sales up 10% with sales penetration reaching nearly 45%
  • Diluted EPS from continuing operations increased 24% to $0.56 per share
  • Repurchased approximately 1.2 million shares of stock

ST. PETERSBURG, Fla., May 2, 2013 (GLOBE NEWSWIRE) -- HSN, Inc . (Nasdaq:HSNI) reported results for the first quarter ended March 31, 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)
   
   Q1 2013   Q1 2012   Change 
       
Net Sales  $ 772.7  $ 737.9 5%
Adjusted EBITDA (Non-GAAP)  $ 66.8  $ 66.3 1%
GAAP:      
Operating Income   $ 52.5  $ 51.3 2%
Income from continuing operations   $ 31.6  $ 27.3 16%
Diluted EPS from continuing operations   $ 0.56  $ 0.45 24%
HSNi:      
Average price point  $ 61.04  $ 64.96 (6%)
Units shipped (millions)  14.6  13.0 12%
Gross margin  36.3 %  36.2 % 10 bps
Return rate   18.3 %  18.0 % (30 bps)
Digital sales penetration   44.6 %  42.6 % 200 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.      

First Quarter 2013 Results vs First Quarter 2012 Results
  • HSNi's net sales grew 5% over the prior year to $772.7 million. HSN's net sales increased 2% to $550.1 million, including 4% growth in digital sales. Cornerstone's net sales increased 14% to $222.5 million, including 19% growth in digital sales.  
  • HSNi's Adjusted EBITDA increased 1% to $66.8 million. These results were driven by a 5% increase in net sales and a 10 basis point increase in gross margin, offset by a 6% increase in operating expenses (excluding non-cash charges). Operating income increased 2% to $52.5 million.   
  • GAAP diluted EPS from continuing operations increased 24% to $0.56 compared to $0.45 in the prior year.   
  • During the first quarter, HSNi repurchased approximately 1.2 million shares of its common stock at a cost of $65.3 million, or an average cost of $53.80 per share. From inception of the share repurchase program in September 2011 through May 1, 2013, HSNi repurchased a total of 8.2 million shares at a cost of $353.5 million, or an average cost of $43.03 per share.

"I'm pleased with HSNi's first quarter performance and the progress we made in creating a powerful and differentiated retail experience. Across HSNi, we continue to reach and engage customers through content-rich, immersive experiences on multiple digital platforms. These efforts contributed to sales growth of 5% and digital sales growth of 10%," said Mindy Grossman, CEO of HSN, Inc. "We also had EPS growth of 24% and returned value to shareholders through our share repurchase and cash dividend programs that included purchasing approximately 1.2 million shares during the quarter."
Table 2      
SEGMENT RESULTS
($ in millions)
       
  Three Months Ended March 31,
  2013 2012 Change
Net Sales      
HSN (a)  $ 550.1  $ 541.9 2%
Cornerstone   222.5  196.0 14%
Total HSNi  $ 772.7  $ 737.9 5%
Gross Profit       
HSN (a)  $ 192.4  $ 188.4 2%
Cornerstone  87.8  78.5 12%
Total HSNi   $ 280.1  $ 266.9 5%
Adjusted EBITDA (Non-GAAP measure)      
HSN (a)  $ 58.9  $ 57.3 3%
Cornerstone   7.9  8.9 (12%)
Total HSNi  $ 66.8  $ 66.3 1%
Operating Income       
HSN (a)  $ 48.6  $ 47.5 2%
Cornerstone  3.9  3.8 2%
Total HSNi  $ 52.5  $ 51.3 2%
       
(a) Results for the prior period 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 March 31,
  2013 2012  Change 
HSN:      
Average price point  $ 57.83  $ 63.28 (9%)
Units shipped (millions)  11.4  10.2 12%
Gross margin  35.0 %  34.8 % 20 bps
Return rate   20.0 %  19.3 % (70 bps)
Digital sales penetration   35.7 %  34.9 % 80 bps
Cornerstone:      
Average price point  $ 71.98  $ 70.62 2%
Units shipped (millions)  3.2  2.9 11%
Gross margin  39.5 %  40.1 % (60 bps)
Return rate   13.7 %  14.2 % 50 bps
Digital sales penetration   66.8 %  63.8 % 300 bps
Catalog circulation (millions)  75.7  68.5 11%

HSN Segment Results for the First Quarter 2013

HSN's net sales were $550.1 million, an increase of 2% from the prior year. Digital sales grew 4% with penetration increasing 80 basis points to 35.7%.  Digital sales were tempered by the launch of the digital site redesign across all HSN digital platforms that occurred early in the quarter. In addition, last year's results included one extra day versus the current year because of leap year. Sales grew in apparel & accessories, beauty and home design, offset by lower sales in jewelry and electronics.  The average price point decreased 9%, the units shipped increased 12% and the return rate increased 70 basis points to 20.0% primarily due to changes in product mix. 

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