March 4, 2009, 12:00 AM

Web sales at HSN rise 4% in ‘08 to over $1 billion, as total sales fall 3%

Web sales rose 4% last year to $1.01 billion at HSN Inc., as the Internet’s share of total sales climbed to 35.9% from 33.3%, the online, TV and catalog retailer says.

Mark Brohan

Research Director

Web sales at HSN Inc. rose 4% last year to $1.01 billion from $969 million in 2007, the company reports. Total sales fell 3% to $2.82 billion from $2.91 billion. The Internet’s share of total sales climbed to 35.9% from 33.3%, the online, TV and catalog retailer says.

HSN’s two web divisions-HSN.com and Cornerstone Brands-posted wildly different experiences in 2008. Sales at general merchandise HSN.com grew 16% for the year to $555.76 million from $478.83 million. Web sales at Cornerstone Brands, which operates seven e-commerce sites, declined 6.7% to $456.75 million from $489.52 million in 2007. Cornerstone consists of home furnishings and apparel brands Garnet Hill, Smith+Noble, TravelSmith, Territory Ahead, Improvements, FrontGate and others.

2008 sales via HSN’s cable TV channel were flat at $1.40 billion versus $1.41 billion a year earlier. Cornerstone Brands store and catalog sales declined 22% to $410 million from $526 million a year earlier. It operates 25 retail stores and distributes 324 million catalogs annually.

For the fourth quarter, HSN.com sales rose 3.8% year over year to $161.59 million from $155.72 million. Cornerstone Brands’ Q4 web sales plummeted 19.4% to of $128.63 million from $159.39 million.

HSN Inc. reported a 2008 GAAP net loss of $2.39 billion, compared to prior-year net income of $164.8 million. GAAP net loss for the fourth quarter was $2.15 billion, compared to year-earlier net income of $56.5 million.

CEO Mindy Grossman, in a March 3 conference call with analysts, said the company expects to gain market share and efficiency as it continues to invest in operations, including a stronger focus on the web. “We’re focusing on improving our web platform to enable us to grow our e-commerce penetration and reduce the size and frequency of catalog mailings,” she said.

Grossman says the company also expects Cornerstone’s performance to improve. “We are aggressively focused on improving Cornerstone`s profitability through a reduction in operating expenses and capital utilization, in addition to growing e-commerce penetration to reduce catalog circulation reliance,” she said. HSN is No. 25 in the Internet Retailer Top 500 Guide.

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