HSN, Inc. shares tumble 9 percent; CEO says election is distracting consumers
HSN, Inc. shares tumbled 9 percent Thursday, after the retailer reported a 4 percent drop in second-quarter sales and said it would sell off its TravelSmith and Chasing Fireflies businesses.
In an interview with CNBC, HSN, Inc. CEO Mindy Grossman said the upcoming presidential election is giving consumers a lot of pause when it comes to spending.
"There's this incredible uncertainty, distraction, negativity, I would even say in a small way, fear," Grossman said. "I think that's weighing in on retail, as the consumer has a lot of rationalization right now. When you think about the want side of retail versus the need side, I think [consumers] will wait for what they want, and we are seeing it across the segments."
HSN, Inc., which operates both the HSN TV network and Cornerstone's brands, which includes Ballard Designs, Frontgate, and Grandin Road, posted second-quarter net income of 50 cents a share, which includes an impairment charge of 24 cents. Stripping out the charge, the company earned 74 cents a share. Analysts surveyed by Thomson Reuters were expecting the multichannel retailer to make 71 cents per share.
However, total revenue in the latest period came in at $854.3 million, shy of $871 million consensus estimate, reported by Thomson Reuters. In the year-ago period, sales were $885.6 million.
Grossman said she thinks the election is weighing more heavily on consumer sentiment this time around.
"I have been [at HSN, Inc.] for 10 years, and the uncertainty is definitely more pronounced than I have seen in the past," she said.
So like other retailers, HSN, Inc. has to work harder to gain both new shoppers, and entice its current pool of consumers to buy now. To that end, the company said it plans to sell its TravelSmith and Chasing Fireflies businesses by the end of September, in a deal with an unnamed buyer. Terms of the sale weren't disclosed.
"We have to focus on what we can do," Grossman said. "It has to be about experience, it has to be about unique product, it has to be about delivering our content as broadly as we can, and that's been a huge effort on our part."
Grossman has long been focused on improving the experience of shopping. One new opportunity she's excited about is an upcoming partnership with Macy's for Halloween, which Grossman says for consumers will be more like entering a haunted house, than a store, and hopefully for HSN, Inc. will be more treat than trick.