No need to worry about normal business hours when shopping with this retailer. Known to night owls and from-the-couch shoppers as Home Shopping Network, HSN Inc. (HSNi) sells more than 50,000 types of apparel and accessories, jewelry, electronics, housewares, health, beauty, and fitness products through its home shopping television network with 95 million US viewers, and through fast-growing HSN.com. Its Cornerstone Brands business is a catalog and Internet retailer whose brands include Garnet Hill, Ballard Designs, and TravelSmith. Overall, about 50% of HSNi's total sales come from home-related product sales, while nearly 30% comes from beauty and health product sales. In 2015, 50% of HSNi's total sales came from its e-commerce channels.
HSNi operates two main segments: HSN and Cornerstone. The HSN segment, which includes broadcast and online media activities, accounted for 69% of sales during 2015. The HSN segment also includes HSN.com, a transactional e-commerce site that sells merchandise offered on the HSN television networks, as well as select merchandise sold exclusively on HSN.com. The e-commerce site, which features more than 50,000 product videos available for sale, has grown to account for more than 40% of HSN's total sales (as of early 2016).
The Cornerstone Brands segment (31% of sales) sells through its catalogs, websites, and 14 retail stores. Cornerstone's home and apparel lifestyle brands include Ballard Designs, Chasing Fireflies, Frontgate, Garnet Hill, Grandin Road, Improvements, and TravelSmith. The segment's e-commerce channel accounted for 69% of its sales during 2015.
In 2015, HSNi had affiliation agreements with 87 broadcast television stations for leased carriage of the HSN television network with terms ranging from several weeks to several years. Subsidiary Ventana Television also owns 25 broadcast television stations that carry the HSN television networks on a full-time basis. HSN2 (launched in 2010) is a network that distributes taped programming on a limited distribution basis.
HSNi serves customers across the US from leased fulfillment centers in Fontana, California; Roanoke, Virginia; Ronkonkoma, New York; and Greeneville, Tennessee. It also has five outlet stores and various administrative offices and data centers across the US. Cornerstone leases fulfillment centers in West Chester, Ohio; Monroe, Ohio; and Phoenix.
Sales and Marketing
HSNi offers retail experiences on TV, online, via mobile devices, in catalogs, and in brick and mortar stores. Cornerstone distributes 330 million catalogs annually (as of 2016), operates eight separate digital sales sites and operates 14 retail and outlet stores.
HSNi has multi-year distribution and affiliation agreements with cable television, Telco and DBS operators, to carry HSN television networks, as well as to promote the networks by carrying related commercials and distributing related marketing materials to their respective subscriber bases. HSN’s larger pay television operators include Comcast, DirecTV, Echostar/DISH, and Time Warner Cable.
The company has been ramping up its advertising spend to support sales in recent years. It spent $288.5 million during 2015, up from $279.6 million and $268 million in 2014 and 2013, respectively.
HSNi's sales have risen more than 20% since 2011 thanks largely to sales growth from the home-related product category (which includes home, electronics, culinary, and similar home goods) and strong online channel sales growth.
The company's revenue climbed 3% to $3.7 billion during 2015 with sales growth across all categories except jewelry, with most of the growth continuing to come from HSN's rising Home-related product sales. Cornerstone's sales rose 3% thanks to increased home product and Garnet Hill-brand sales growth, though Chasing Fireflies and TravelSmith-brand sales declined. Digital sales from HSN.com and Cornerstone grew 7% for the year, and accounted for 50% of total sales, up from 48% in 2014.
Despite revenue growth in 2015, HSNi's net income dipped 2% to $169 million as its overhead, interest expenses, and sales and marketing costs rose during the year. The company's operating cash levels climbed 47% to $203 million for the year thanks to positive working capital changes, as HSNi used less cash toward building inventories and accounts receivables balances than in 2014.
Harnessing star power to sell products, HSNi regularly participates in joint marketing and promotional partnerships with major motion picture companies as well as well-known recording artists. HSNi also creates strategic alliances with world-class, consumer brands in an effort to reach new prospects through relevant brand integration and occasion-based event marketing.
In 2016, for example, HSNi partnered with DreamWorks Animation to begin offering Kung Fu Panda 3 inspired products.
In 2015, it inked a deal with Margaritaville Enterprises to offer Margaritaville inspired culinary, home, electronics, beauty, and apparel products. That year HSNi also launched the 'Modern Princess Collection by Coco Rocha' as part of a marketing collaboration with Walt Disney Studios for the Cinderella movie. The capsule collection, which features some of HSN's top designers and brands across fashion, footwear, jewelry, accessories, home and beauty, is part of a larger assortment of merchandise inspired by the movie.
In 2014, the company signed a multi-film marketing collaboration with Disney for three films, Maleficent, Cinderella, and The Hundred-Foot Journey; in 2013 it partnered with Disney on Oz The Great and Powerful. In 2013, the company and Univision teamed up to launch an integrated marketing partnership.
The HSN business, which generates more than two-thirds of the company's sales, boasts a flexible business model that enables the retailer to quickly change its merchandise mix to meet customer demand. Being able to react quickly allowed the company to weather the recession and remain profitable.