August 13, 2014, 12:56 PM

HSN.com grows web sales by 11% in Q1

HSN Inc.’s Cornerstone brand booked a 6% increase in e-commerce revenue.

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HSN.com, the flagship e-commerce site under TV, web and mobile retailer HSN Inc.’s umbrella, grew web sales by 11% in the second quarter.

TV, web and mobile retailer HSN Inc. grew overall web sales in the second quarter, led by HSN.com, its flagship e-commerce site.

For the second quarter ended June 30, HSN, No. 26 in the 2014 Internet Retailer Top 500 Guide, reported:

  • Online sales accounted for 46.6% of total sales. Based on that metric, web sales were $399.0 million, up by 8.9% from $366.5 million in the second quarter of 2013. E-commerce sales include HSN’s Cornerstone home and apparel brands. Web sales for HSN.com were $207.0 million, up by 11.1% from $186.3 million.
  • Online sales for Cornerstone Brands, a collection of apparel and home furnishings brands that sell via catalog and the web, were $191.8 million, a 6.5% increase from $180.1 million.
  • Total sales, including HSN and Cornerstone, were $855.2 million, a 5.2% increase from $812.6 million.
  • Total sales for HSN of $556.5 million, up by 5.8% from $526.2 million.
  • Total sales for Cornerstone of $298.7 million, an increase of 4.3% from $286.4 million.
  • Average ticket was $65.15, up by 1.4% from $64.25.
  • Net income was $40.9 million down by 5.5% from $43.3 million in the same period last year.
“HSN had strong results with sales up 6%, digital sales up 11% and adjusted EBITDA up 10%,” says Mindy Grossman, CEO of HSN Inc. “While Cornerstone maintained top-line growth of 4%, margins were impacted by a highly promotional marketplace.”

Wells Fargo Equity Research analyst Matt Nemer cited a number of positives in HSN’s Q2 earnings. “HSN’s digital sales accelerated to up 11% vs. up 5% in Q1, which was driven by an improvement in the digital experience and strong web traffic,” Nemer wrote in an Aug. 7 report. HSN Inc. “is implementing a number of best practices to gain scale and efficiencies. While still in early innings, we think this could become a tailwind for operating income growth,” he said.

However, Cornerstone sales suffered, Nemer said. “Cornerstone sales and more so margins were negatively impacted by a highly promotional environment for home (particularly in outdoor) as retailers fought to make up for a slow start to the season. Garnet Hill was also weak and HSN Inc. is in the process of repositioning the brand.”

Garnet Hill offers women’s apparel, shoes and accessories, along with home décor.

For the first six months of 2014, HSN reported:

  • E-commerce sales of $763.3 million, up by 35.6% from $562.8 million in the prior year period.
  • Web sales for HSN were $414.0 million, up by 8.3% from $382.1 million
  • Online sales for Cornerstone were $349.3 million, up by 6.1%from $329.3 million.
  • Total sales for HSN of $1.10 billion, up by 2% from $1.08 billion.
  • Total sales for Cornerstone of $531.6 million, up by 4.5%% from $508.9 million.
  • Total sales were $1.63 billion, up by 2.5% from $1.59 billion in the first six months of 2013.
  • Net income of $65.1 million, down by 13.0% from $74.8 million in the same period last year.

E-commerce represented 69.4% of sales in the first six months of fiscal 2014, compared with 52.2% last year.

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