SHARE:
Retail
TV Chopping
 Mindy Grossman hasn’t been able to change HSN fortunes. |
Fifteen months after IAC/InterActive Corp. hired former Nike executive Mindy Grossman to pull the HSN out of a sales slump, the St. Petersburg company is still disappointing investors with flat sales and high merchandise return rates.
During the first quarter of 2007, the once celebrated cash cow of Barry Diller’s internet conglomerate reported a 1% decline in sales and a 12% drop in overall operating profit. In a conference call with analysts, IAC Executive Vice President and CFO Tom McInerney attributed HSN’s performance in part to “some strategic decisions and calculated risk-taking to test new merchandise lines” as well as “some operational mistakes as our new team learned the nuances of the TV shopping business.”
While McInerney warned that the situation won’t improve overnight, HSN executives are moving aggressively to cut costs. The company recently pulled the plug on a secondary shopping channel called “America’s Store” and jettisoned Home Shopping Europe, a German-language home shopping network in Germany, Switzerland and Austria. The company also eliminated 60 jobs at its headquarters.
Meanwhile, to attract customers, the network is increasing the amount of airtime it devotes to products that cost less than $50. HSN also recently unveiled a 6,000-sq.-ft. outdoor set to display its outdoor lifestyle products and revamped its annual spring fashion week production. One bright spot: Internet traffic on HSN.com is up more than 30% from one year ago, contributing to one-quarter of overall sales.
Denise Garcia, vice president of Internet Equity Research for A.G. Edwards in New York, says the future for television shopping is difficult to predict because the industry is still trying to figure out exactly who its customers are. “There’s a formula that works very well for brick-and-mortar stores, and that formula is still being determined for the HSNs of the world.”
Fierce Competition: HSN’s main competitor, Pennsylvania-based QVC, is the nation’s top television shopping network. |
||
HSN* |
QVC |
|
| Homes reached | 89.8 million | 91.2 million |
| Average sale | $59.49 | $46.04 |
| Internet sales (as percent of total retailing) |
30% | 22% |
| Revenue | $787.6 million | $1.68 billion |
| Operating cash flow | $45.2 million | $374 million |
| *Figures cover IAC retailing unit, which includes HSN, Shoebuy, a catalog business and an international operation. Source: Liberty Media Corp. and InteractiveCorp., first-quarter results. |
||
