Digital sales soar at HSN, but profit dips

The CEO of HSN says that for the first time ever, more than half of sales at HSN came from digital channels.

But onine sales did not make up for heavy discounting, and the companyposted profit and revenue declines.The company reported that for the fourth quarter ended Dec. 31, net sales decreased 2% and adjusted EBITDA decreased 3%.Adjusted EPS was $1.15 compared to $1.22 in the prior year.

“Our fourth quarter results materialized as we expected given the highly promotional retail environment, our significant comps from a year earlier, and the deliberate actions we are taking to reposition certain merchandise categories and brands to position HSNi for strong long-term growth,” stated Mindy Grossman, CEO of HSN, Inc. “We have made progress in certain key areas, including optimizing our sophisticated digital platforms. For the first time, HSNi’s digital penetration exceeded half our sales at 52%, with digital reaching nearly $2 billion in annual sales. Additionally, mobile now represents nearly 40% of total digital sales."

HSNi’s net sales decreased 2% to $1.1 billion. HSN's net sales decreased 2% to $778.7 million. Cornerstone’s net sales decreased less than 1% to $319.5 million. HSNi's digital sales grew 1% with penetration increasing 140bps to 51.7%.

HSNi’s Adjusted EBITDA decreased 3% to $116.1 million. HSN's Adjusted EBITDA increased 1% to $101.4 million. Cornerstone's Adjusted EBITDA decreased $4.2 million to $14.7 million. HSNi's operating income decreased 10% to $98.5 million.

Full year net sales increased 3% and adjusted EBITDA increased 4%.Full year adjusted EPS was $3.28 compared to $3.23 in the prior year.

“Recognizing the continued volatility in the retail environment, we remain focused on execution, working cross-functionally across the organization to drive growth,” added Grossman. “We will continue to extend our reach to leverage our vast content across traditional and alternative platforms, curate differentiated products and experiences, build communities with customers and provide a frictionless and seamless commerce experience.”