HSN, Inc. Reports Second Quarter 2014 Results Highlights: HSNi net sales increased 5% with digital sales up 9% HSNi Adjusted EBITDA decreased 4% while HSN increased 10% Diluted EPS was $0.76 compared to $0.79 in the prior year Completed 10 million share repurchase program ST. PETERSBURG, Fla., Aug. 7, 2014 (GLOBE NEWSWIRE) -- HSN, Inc. (Nasdaq:HSNI) reported results for the second quarter ended June 30, 2014 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) Q2 2014 Q2 2013 Change Net Sales $ 855.2 $ 812.6 5% Adjusted EBITDA (Non-GAAP) $ 82.1 $ 85.2 (4)% Operating Income (GAAP) $ 67.4 $ 71.3 (6)% Net Income (GAAP) $ 40.9 $ 43.3 (5)% Diluted EPS (GAAP) $ 0.76 $ 0.79 (4)% Average price point $ 65.15 $ 64.25 1% Units shipped 14.7 14.1 4% Gross margin 36.6 % 38.0 % (140 bps) Return rate 16.5 % 17.0 % 50 bps Digital sales penetration 46.6 % 45.1 % 150 bps (a) HSNis two operating segments, HSN and Cornerstone, are presented separately in Tables 2 and 3 of this release. See reconciliation of Non-GAAP to GAAP measures in Table 4. Second Quarter 2014 Results vs Second Quarter 2013 Results HSNis net sales grew 5% over the prior year to $855.2 million. HSNs net sales increased 6% to $556.5 million, including 11% growth in digital sales. Cornerstones net sales increased 4% to $298.7 million, including 6% growth in digital sales. HSNis Adjusted EBITDA decreased 4% to $82.1 million. HSNs Adjusted EBITDA increased 10% to $62.7 million. Cornerstones Adjusted EBITDA decreased to $19.4 million from $28.0 million in the prior year. GAAP operating income decreased 6% to $67.4 million. During the second quarter, HSNi repurchased approximately 0.9 million shares of its common stock at a cost of $49.5 million, or an average cost of $54.78 per share. In July 2014, HSNi completed its 10 million share repurchase program authorized in September 2011 at an aggregate cost of $451 million, representing an average cost of $45.10 per share. HSNis board of directors approved a quarterly cash dividend of $0.25 per share payable September 17, 2014 to shareholders of record as of September 3, 2014. Our focus during the second quarter remained on engaging our customers, emphasizing our unique content and proprietary products, and strengthening our digital platforms. HSNi sales increased 5% and digital sales grew 9% with mobile now representing 15% of our total sales. During the quarter, we saw a bifurcation within our business. HSN had strong results with sales up 6%, digital sales up 11% and Adjusted EBITDA up 10%. While Cornerstone maintained top line growth of 4%, margins were impacted by a highly promotional marketplace, said Mindy Grossman, CEO of HSN, Inc. Our customer file metrics at both HSN and within the Cornerstone portfolio were at record highs. We also returned $63 million to our shareholders through our capital return plan. Table 2 SEGMENT RESULTS ($ in millions) Three Months Ended June 30, Six Months Ended June 30, 2014 2013 Change 2014 2013 Change Net Sales HSN $ 556.5 $ 526.2 6% $ 1,101.0 $ 1,076.3 2% Cornerstone 298.7 286.4 4% 531.6 508.9 4% Total HSNi $ 855.2 $ 812.6 5% $ 1,632.6 $ 1,585.3 3% Gross Profit HSN $ 196.5 $ 187.5 5% $ 387.1 $ 379.8 2% Cornerstone 116.6 121.3 (4)% 201.8 209.1 (3)% Total HSNi $ 313.1 $ 308.8 1% $ 588.9 $ 588.9 —% Adjusted EBITDA (Non-GAAP measure) HSN $ 62.7 $ 57.1 10% $ 121.8 $ 116.1 5% Cornerstone 19.4 28.0 (31)% 20.1 35.9 (44)% Total HSNi $ 82.1 $ 85.2 (4)% $ 141.8 $ 152.0 (7)% Operating Income HSN $ 52.1 $ 47.0 11% $ 100.6 $ 95.6 5% Cornerstone (a) 15.3 24.3 (37)% 8.6 28.2 (70)% Total HSNi $ 67.4 $ 71.3 (6)% $ 109.2 $ 123.8 (12)% (a) Results for the six months ended June 30, 2014 include a $3.1 charge for the CPSC settlement. See reconciliation of Non-GAAP to GAAP measures in Table 4. Table 3 SEGMENT KEY OPERATING METRICS Three Months Ended June 30, Six Months Ended June 30, 2014 2013 Change 2014 2013 Change HSN: Average price point $ 57.62 $ 56.49 2% $ 57.00 $ 57.17 —% Units shipped (millions) 11.2 10.8 4% 22.4 21.9 2% Gross margin 35.3 % 35.6 % (30 bps) 35.2 % 35.3 % (10 bps) Return rate 18.7 % 19.2 % 50 bps 18.5 % 19.6 % 110 bps Digital sales penetration 37.2 % 35.4 % 180 bps 37.6 % 35.5 % 210 bps Cornerstone: Average price point $ 88.95 $ 89.03 —% $ 80.26 $ 80.64 —% Units shipped (millions) 3.5 3.3 5% 6.9 6.5 6% Gross margin 39.1 % 42.4 % (330 bps) 38.0 % 41.1 % (310 bps) Return rate 12.2 % 12.6 % 40 bps 12.9 % 13.1 % 20 bps Digital sales penetration 64.2 % 62.9 % 130 bps 65.7 % 64.7 % 100 bps Catalog circulation (millions) 83.5 79.1 6% 165.2 154.8 7% HSN Segment Results for the Second Quarter 2014 HSNs net sales were $556.5 million, an increase of 6% from the prior year. Digital sales grew 11% with penetration increasing 180 basis points to 37.2%. Sales grew in beauty, home design, health and culinary offset by lower sales in electronics and jewelry. Units shipped increased 4% and average price point increased 2%. Gross profit increased 5% to $196.5 million with gross margin decreasing 30 basis points to 35.3% primarily due to an increase in shipping promotions. Operating expense leverage (excluding non-cash charges) improved 80 basis points to 24.0%. Adjusted EBITDA increased 10% to $62.7 million. GAAP operating income increased 11% to $52.1 million.
Posted on: Thu, 07 Aug 2014 16:50:30 +0000