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September 25, 2018

Florida's 350 Biggest Companies 2017

Gains and challenges: HSN searches for a new CEO amid sagging profits

Mike Vogel | 6/28/2017

Under CEO Mindy Grossman, HSN saw its fortunes rise and fall dramatically. After a stint as global vice president at Nike, she became CEO of HSN in 2006 and took the company public. Revenue grew from $2.9 billion to $3.7 billion in 2015. But in the last year of her tenure — she left the company in May to become president and CEO at Weight Watchers — HSN saw net income from operations fall 18%.

HSN came to prominence as the Home Shopping Network, but no longer sees itself as solely a TV infomercial sales company. Broadcasting from its studios in St. Petersburg, it moved aggressively under Grossman into online and mobile sales. It has highlighted exclusive, celebrity-branded products from Sheryl Crow, Lady Antebellum singer Hillary Scott, and others.

With 70% of its revenue coming from such exclusive products, HSN has been able to insulate itself from Amazon and that competitor’s superior scale, shipping costs, and speed. HSN also has sought to leverage the social media following of celebrities and partners such as Disney to attract new customers.

Historically, HSN’s loyal customers are a stable bunch, but the company has had trouble getting them to spend more. Meanwhile, HSN has drawn new eyeballs but has had trouble converting those who pop in for a purchase or two into regular customers for other HSN offerings. More recently, it’s become harder to attract newcomers as live TV viewership follows the national trend downward. It has to lower its costs to free up money to recruit new customers.

Grossman, at an investor conference early this year, blamed HSN’s troubles on internal missteps rather than secular forces. It didn’t help that HSN’s chief merchandise officer slot was vacant for 18 months while the company searched for the right person.

CFO Rod Little said at a conference in March that HSN products lacked the assortment, freshness, and newness to keep viewers buying. Consumer preferences have changed, too. Jewelry used to be as much as 18% of the business; now it’s 8%. Ahead, a shift to health and wellness, culinary and devices connecting to people’s health and wellness looks promising, he said. “When we get the product right, and the offering right, we have really big days,” Little said.

A week after Grossman announced her departure, HSN’s first quarter results showed another drop in profit and sales. Little, part of the executive team running HSN while the board finds Grossman’s replacement, was encouraged by growth in digital sales and mobile.

Tags: Retail & Sales, 350 Biggest Florida Companies

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