HSN, Inc. Reports Third Quarter 2016 Results

HSNi Results for the Third Quarter 2016:
  • Company divested of its TravelSmith and Chasing Fireflies businesses
  • Net sales decreased 5%, or 3% excluding the impact of the divested businesses
  • Digital sales up 2% with sales penetration increasing 330 basis points to 53%
  • Diluted EPS was $0.38; Adjusted EPS was $0.52

ST. PETERSBURG, Fla., Nov. 07, 2016 (GLOBE NEWSWIRE) -- HSN, Inc. (NASDAQ:HSNI) reported results for the third quarter ended September 30, 2016 for HSN, Inc. ("HSNi" or "Company") and its two operating segments, HSN and Cornerstone.
 
Table 1
HSNi SUMMARY RESULTS AND KEY OPERATING METRICS (a)(In millions, except per share and average price point amounts)
      Q3 2016   Q3 2015    Change
Net Sales   $ 823.0     $ 864.9       (5 %)
               
GAAP results:            
  Operating Income   $ 36.9     $ 57.8       (36 %)
  Net Income   $ 20.2     $ 34.2       (41 %)
  Diluted EPS   $ 0.38     $ 0.64       (41 %)
               
Non-GAAP results: (b)            
  Adjusted EBITDA   $ 62.9     $ 78.1       (19 %)
  Adjusted Net Income   $ 27.2     $ 37.5       (27 %)
  Adjusted EPS   $ 0.52     $ 0.70       (26 %)
               
Average price point   $ 61.75     $ 63.95       (3 %)
Units shipped   14.9     15.1       (2 %)
Gross profit rate   34.0 %   35.4 %   (140 bps)
Return rate   15.3 %   15.7 %   40 bps
Digital sales penetration   52.7 %   49.4 %   330 bps
               
(a)  Includes the results of TravelSmith and Chasing Fireflies through the date of the divestiture on September 8, 2016.
(b)  See reconciliation of Non-GAAP to GAAP measures in Table 4.
 

Third Quarter 2016 Results vs Third Quarter 2015 Results
  • On September 8, 2016, Cornerstone completed the divestiture of TravelSmith and Chasing Fireflies, two of the apparel brands within its portfolio.  In the third quarter of 2016, Cornerstone recorded a loss on sale of $11.2 million.  
  • HSNi's net sales, which include the results of TravelSmith and Chasing Fireflies through the date of sale, decreased 4.8% to $823.0 million.  HSN's net sales decreased 3.5% to $569.7 million.  Cornerstone's net sales, which include the results of TravelSmith and Chasing Fireflies through the date of sale, decreased 7.6% to $253.4 million.  Excluding the results of TravelSmith and Chasing Fireflies from both periods, HSNi's and Cornerstone's net sales decreased 3.3% and 2.6%, respectively.  HSNi's digital sales grew 2% with penetration increasing 330 basis points to 52.7%.   
  • HSNi's operating income, which includes a loss of $11.2 million related to the divestiture of TravelSmith and Chasing Fireflies recorded within the Cornerstone segment, decreased 36% to $36.9 million.  HSN's operating income decreased 16% to $47.0 million.  Cornerstone's operating loss was $10.1 million compared to operating income of $1.6 million in the prior year. 
  • Net income was $20.2 million compared to $34.2 million in the prior year. 
  • HSNi's Adjusted EBITDA decreased 19% to $62.9 million.  HSN's Adjusted EBITDA decreased 14% to $58.0 million.  Cornerstone's Adjusted EBITDA was $4.9 million, a decrease of $6.1 million.  
  • Diluted EPS, which includes the loss related to the divestiture of TravelSmith and Chasing Fireflies of $0.13 per diluted share, was $0.38 compared to $0.64 in the prior year.  Adjusted EPS was $0.52 compared to $0.70 in the prior year. 
  • HSNi's board of directors approved a quarterly cash dividend of $0.35 per share payable December 20, 2016 to shareholders of record as of December 7, 2016.

"Similar to last quarter, our third quarter results reflect weaker performance in specific HSN merchandising categories; softness in the outdoor segment within the Cornerstone portfolio; and a difficult consumer environment. This was compounded by disruptive and distracting high-profile media events, particularly in August and September, that influenced our customers' buying patterns and television viewership behaviors," stated Mindy Grossman, CEO of HSN, Inc.

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