For the third quarter ended September 30, HSN, Inc. results included the impact of its divestiture of the Chasing Fireflies and TravelSmith apparel brands in its Cornerstone division.
The company posted net income of $20.2 million, or 38 cents per diluted share, versus $34.2 million, or 64 cents per diluted share, in the year-earlier period. Adjusted net income came in at $27.2 million, or 52 cents per share, down from $37.5 million, or 70 cents per share, in the year-earlier quarter. Adjusted earnings per diluted share fell short of a MarketBeat analyst average estimate of 56 cents.
Net sales were $823 million versus $864.9 million in the 2015 quarter. Operating income was $36.9 million versus $57.8 million in the quarter a year earlier.
HSN pointed out that the Cornerstone operation completed the divestiture of TravelSmith and Chasing Fireflies, two of the apparel brands within its portfolio. For the third quarter, Cornerstone recorded a loss on sale of $11.2 million.
Overall corporate HSN net sales, which included the results of TravelSmith and Chasing Fireflies through the date of sale, decreased 4.8% to $823 million while the namesake retail operation saw net sales slip 3.5% to $569.7 million. Cornerstone’s net sales slipped 7.6% to $253.4 million. Excluding the results of TravelSmith and Chasing Fireflies from both periods, HSN corporate and Cornerstone net sales decreased 3.3% and 2.6%, respectively, but it added that HSN overall digital sales grew 2%.
HSN corporate operating income, which includes a loss of $11.2 million related to the TravelSmith and Chasing Fireflies divestiture recorded within the Cornerstone segment, decreased 36% to $36.9 million. Operating income at the namesake retail operation decreased 16% to $47 million. Cornerstone’s operating loss was $10.1 million versus operating income of $1.6 million in the previous year.
“Similar to last quarter, our third quarter results reflect weaker performance in specific HSN merchandising categories, softness in the outdoor segment within the Cornerstone portfolio and a difficult consumer environment,” said Mindy Grossman, HSN CEO. “This was compounded by disruptive and distracting high-profile media events, particularly in August and September, that influenced our customers’ buying patterns and television viewership behaviors. We have strategic actions underway to improve HSNi’s performance and have made progress in certain areas. These include expanding our proprietary merchandising pipeline and unique destination programming, elevating our content, digital and data capabilities, extending our distributed commerce platforms including experiential retail, and the divestiture of businesses for a focused portfolio.”
HSN also named Carmen Bauza as its new evp/chief merchandising officer. She brings more than 30 years of experience to the company having previously worked for Walmart, Five Below and the Walt Disney Company. She officially joins the company November 28 and will report to Bill Brand, HSN president.