HSNi reports 'accelerated sales growth' at Cornerstone brands Ballard Designs, Garnet Hill, Frontgate
GDA Staff -- Gifts & Dec, February 23, 2011
ST. PETERSBURG, Fla. -- Cornerstone catalog brands Ballard Designs, Garnet Hill and Frontgate helped push HSNi ahead 9% for the fourth quarter ended December 31, 2010. HSNi reported results for the fourth quarter and year for HSN, Inc. and its two operating segments, HSN and Cornerstone.
"Following an impressive performance in the fourth quarter of 2009, HSNi grew net sales by 9% in the fourth quarter of 2010 led by strength in electronics, fashion and wellness at HSN and accelerated sales growth at the three largest Cornerstone brands - Frontgate, Ballard Designs and Garnet Hill. Our strategic efforts to create a multichannel experience resulted in e-commerce sales growth of 15% for the company," said Mindy Grossman, CEO of HSN, Inc.
For the quarter, HSNi's reported net sales of $915.2 million. Net sales for operating segment HSN increased 4% to $636.8 million, which included 9% sales growth at HSN.com.
Cornerstone's fourth quarter net sales increased 23% to $278.4 million with internet sales penetration reaching 58.6%. The company attributes the growth to the effective execution of strategic merchandising and marketing initiatives, an investment in catalog circulation at Frontgate, Ballard Designs and Garnet Hill, and an overall increase in demand for luxury products.
Cornerstone's gross profit for the quarter increased 16% to $110.7 million. Gross profit margin declined 240 basis points to 39.8% from 42.2% in the prior year. The margin decline was primarily attributable to higher inbound and outbound freight costs for larger package deliveries as well as promotional activity to drive additional demand. Operating income was $13.2 million compared to $9.7 million in the prior year due to the growth in net sales, partially offset by the decrease in the gross profit margin, increased catalog production and distribution costs, and increased stock-based compensation for performance-based awards.
Rounding out Cornerstone's home and apparel lifestyle brands are Improvements, Smith + Noble, The Territory Ahead and TravelSmith. Cornerstone distributes more than 275 million catalogs annually, operates seven separate e-commerce sites and operates 20 retail and outlet stores.
For the year, HSNi's annual net sales grew 9% over the prior year to $3.0 billion, and operating income increased 26% to $196.1 million.
"In 2011, we are focused on giving customers even more reasons to deepen their engagement with our brands at HSNi," Grossman said. "We continue to strengthen our merchandise portfolio at HSN and are developing strategic partnerships to create compelling special events and experiences. At Cornerstone, we will continue to grow our customer base while driving further e-commerce penetration across the portfolio."
Cornerstone is in 40th position on Home Accents Today's 2010 list of the Top 50 Home Accent Retailers by sales volume.
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