May 9, 2007, 12:00 AM

IAC exits the European home shopping market

IAC/InterActiveCorp is selling its European TV retailing and e-commerce business unit to concentrate on other opportunities, including HSN.com. IAC is selling Home Shopping Europe GmbH & Co. KG and HSE24, an affiliated TV station, to KarstadtQuelle AG.

IAC/InterActiveCorp is selling its European TV retailing and e-commerce business unit to concentrate on other opportunities, including HSN.com.

IAC, No. 26 in the Internet Retailer Top 500 Guide, is selling Home Shopping Europe GmbH & Co. KG and HSE24, an affiliated TV station, to KarstadtQuelle AG.

KarstadtQuelle, a European retail and tourism group, is acquiring Home Shopping Europe in a deal valued at $270 million. IAC will receive shares of KarstadtQuelle stock with an initial value of approximately $196 million.

“The sale of HSE24 to KarstadtQuelle allows us to strengthen our focus on our core domestic retail market and demonstrates IAC’s continuing commitment to redeploy its capital into strategic growth areas,” says Doug Lebda, president and chief operating officer of IAC.

IAC is overhauling its domestic retail business, which grew 2% to $787.6 million in the first quarter from $769.1 million in the first quarter a year ago. But IAC also is telling Wall Street that the process is taking longer than expected. “At Home Shopping, the turn in the business is taking longer than we would like, but there are continued signs of progress,” Lebda told analysts on the company’s recent first quarter earnings call.

IAC`s growth in U.S. retailing is being led in part by HSN.com and the company’s other niche e-commerce sites such as ShoeBuy.com. “We are beginning to see real traction on HSN.com and traffic is up over 30% from this time last year with the majority of the growth coming from better use of direct referrals on the air and e-mail traffic,” Lebda told analysts. “The site is becoming an even better contributor to the total sales mix of HSN and is approaching one-quarter of overall sales.”

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