What was once The Home Shopping Network is now HSN Inc. The company markets and sells a wide range of third party and proprietary private label merchandise directly to consumers. HSN Inc today consists of both HSN, which includes the HSN television networks, digital platforms and mobile, and Cornerstone, which includes a portfolio of catalogs, digital platforms and mobile.
HSN, Inc. operates as an interactive multi-channel retailer in the United States. It operates through two segments, HSN and Cornerstone. The HSN segment offers jewelry, apparel and accessories, beauty and health, and home products, as well as household, home design, electronics, culinary, and other products through television home shopping programming broadcast on the HSN television networks, the HSN.com Website, mobile applications, and outlet stores. The Cornerstone segment provides home furnishings, including indoor/outdoor furniture, home décor, tabletops, textiles, and other home related goods under the Frontgate, Ballard Designs, Grandin Road, and Improvements brands; and apparels under the Garnet Hill, TravelSmith, and Chasing Fireflies brands. As of February 26, 2015, this segment operated 7 digital sales sites; distributed approximately 325 million catalogs; and operated 11 retail and outlet stores. The company markets and sells a range of third party and private label merchandise directly to consumers. HSN, Inc. was founded in 1981 and is headquartered in St. Petersburg, Florida.
(Summary) (Company) (Daily Chart)
| 1 August 2015 Price $73.51 1yr Target $78.10 Analysts 10 Dividend $1.40 Payout Ratio 41.05% 1yr Cap Gain 6.24% Yield 1.90% 1yr Tot Return 8.14% EPS (ttm) $3.41 EPS next yr $4.06 | Market Cap $3.86 Bil 1yr EarnGR -00.62% 3yr EarnGR 16.56% 5yr EarnGR 20.71% 1yr DivGR 26.58% 3yr DivGR 98.61% 5yr DivGR --- Beta 0.87 P/E 21.56 PEG 1.63 Debt/Equity 7.28 ROA 13.70% ROE 41.30% |
Background
HSNi’s predecessor company (The Home Shopping Network) began broadcasting television home shopping programming from its studios in St. Petersburg, Florida in 1981 and, by 1985, was broadcasting this programming through a national network of cable and local television stations 24 hours a day, seven days a week. The company continued to broaden its national distribution network through a combination of cable, satellite and broadcast systems and, as of December 31, 2014, the HSN television networks reached approximately 95.0 million residential homes in the United States.
The company began conducting business online in 1994 and formally launched HSN.com, the online shopping portal for the HSN television network, in 1999.
The company acquired Improvements, a catalog featuring thousands of innovative home, patio and outdoor products, in June 2001, and significantly grew its catalog business through the acquisition of Cornerstone Brands, Inc., with its portfolio of leading print catalogs and related websites, in April 2005.
HSNi was incorporated in Delaware in May 2008 in connection with the spin-off of several businesses previously owned by IAC/InterActiveCorp, or IAC. HSNi was formed to hold HSN and Cornerstone, the businesses that previously comprised most of IAC’s retailing segment. The spin-off from IAC (the "Spin-off") occurred on August 20, 2008 and, in connection with the Spin-off, HSNi's shares began trading on the NASDAQ Global Select Market under the symbol "HSNI."
In early 2012, the Company initiated efforts to strengthen its portfolio of aspirational home and apparel lifestyle catalog brands. This resulted in the acquisition of Chasing Fireflies, LLC, a leading direct-to-consumer premium children's and family's lifestyle brand, in April 2012. This was followed by the divestitures of Smith+Noble, a brand specializing in window treatments, in May 2012 and The Territory Ahead, a brand specializing in casual apparel for men and women, in July 2012.
HSNi’s predecessor company (The Home Shopping Network) began broadcasting television home shopping programming from its studios in St. Petersburg, Florida in 1981 and, by 1985, was broadcasting this programming through a national network of cable and local television stations 24 hours a day, seven days a week. The company continued to broaden its national distribution network through a combination of cable, satellite and broadcast systems and, as of December 31, 2014, the HSN television networks reached approximately 95.0 million residential homes in the United States.
The company began conducting business online in 1994 and formally launched HSN.com, the online shopping portal for the HSN television network, in 1999.
The company acquired Improvements, a catalog featuring thousands of innovative home, patio and outdoor products, in June 2001, and significantly grew its catalog business through the acquisition of Cornerstone Brands, Inc., with its portfolio of leading print catalogs and related websites, in April 2005.
HSNi was incorporated in Delaware in May 2008 in connection with the spin-off of several businesses previously owned by IAC/InterActiveCorp, or IAC. HSNi was formed to hold HSN and Cornerstone, the businesses that previously comprised most of IAC’s retailing segment. The spin-off from IAC (the "Spin-off") occurred on August 20, 2008 and, in connection with the Spin-off, HSNi's shares began trading on the NASDAQ Global Select Market under the symbol "HSNI."
In early 2012, the Company initiated efforts to strengthen its portfolio of aspirational home and apparel lifestyle catalog brands. This resulted in the acquisition of Chasing Fireflies, LLC, a leading direct-to-consumer premium children's and family's lifestyle brand, in April 2012. This was followed by the divestitures of Smith+Noble, a brand specializing in window treatments, in May 2012 and The Territory Ahead, a brand specializing in casual apparel for men and women, in July 2012.
Today
HSN Inc conducts its business through it two main subsidiaries - HSN and Cornerstone.
1. HSN includes the HSN television networks and other direct-response television marketing; its related website, HSN.com; its mobile applications and a limited number of outlet stores. The HSN television network broadcasts live, customer interactive home shopping programming 24 hours a day, seven days a week. HSN2, which debuted in August 2010, is a network that primarily distributes taped programming on a limited distribution basis. HSN’s programming is intended to promote sales and customer loyalty through a combination of product quality, value and selection, coupled with product information, entertainment and interactive experiences. Programming is divided into separately televised segments, most of which have hosts who present and convey information regarding featured products, sometimes with the assistance of a celebrity, industry expert, representative from the product vendor or someone retained to aid in the sale of the products. HSN also produces entertainment such as live concerts to entertain and engage with customers and promote certain products. HSN.com is a business-to-consumer digital commerce site that sells all of the merchandise offered on the HSN television networks, together with complementary products and select merchandise sold exclusively on HSN.com. HSN provides seamless experiences across all digital platforms and optimizes each unique platform by delivering exclusive content both at HSN.com and on mobile phones and tablets, including the iPad, iPhone and Android and Windows devices. The HSN strategy is to create immersive experiences, offer differentiated products and leverage technology to build seamless relationships with its customers across all of its platforms. HSN fosters social communities as part of the HSN experience to encourage customers to share their product finds, thoughts and reviews with their friends via Facebook, Twitter, Pinterest and Instagram.
As of December 31, 2014 and 2013, the HSN television networks reached approximately 95.0 million homes of the approximately 113.8 million and 115.6 million homes, respectively, in the United States with a television set. Television households reached by the HSN television networks as of December 31, 2014 and 2013 primarily include approximately 64.3 million and 64.1 million households capable of receiving cable and/or telephone company ("Telco") transmissions, respectively, and approximately 30.7 million and 30.9 million direct broadcast satellite system, or DBS, households, respectively.
HSN 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. HSN.com provides customers with additional content to support and enhance HSN television programming. For example, HSN.com provides users with an online program guide, value-added video of product demonstrations, live streaming video of the HSN television network, customer-generated product reviews and additional information about HSN show hosts and guest personalities. HSN.com offers customers a content-rich experience that houses more than 50,000 product and how-to videos.
2. Cornerstone consists of a portfolio of aspirational home and apparel brands, prominent in the direct marketing and retail space, including catalog distribution and related websites. Although there is some overlap in the product offerings, the home brands are comprised of Frontgate, Ballard Designs, Grandin Road and Improvements. The apparel brands are comprised of Garnet Hill, TravelSmith and Chasing Fireflies. There are also 11 retail and outlet stores located throughout the United States.
Frontgate features premium, high quality, luxury bed, bath, kitchen, outdoor, patio, garden and pool furnishings and accessories. Ballard Designs features bed, bath, dining, outdoor and office furnishings and accessories, as well as rugs, shelving and architectural accents for the home. Grandin Road offers an affordable style assortment of products ranging from occasional furniture, accessories, holiday décor and outdoor furniture and Improvements features thousands of innovative home, patio and outdoor products.
Garnet Hill offers apparel and accessories for women and children as well as bed and bath furnishings and soft goods. TravelSmith offers travel wear for men and women and related accessories. Chasing Fireflies is a leading children's and family lifestyle brand offering keepsake-quality apparel, costumes, gifts and accessories.
The Cornerstone brands generally incorporate on-site photography and real-life settings, coupled with related editorial content describing the merchandise and depicting situations in which it may be used. Branded catalogs are designed and produced in-house, which enables each individual brand to control the production process and reduces the amount of lead time required to produce a given catalog.
New editions of full-color catalogs are mailed to customers several times each year, with a total annual circulation in 2014 of approximately 325 million catalogs. The timing and frequency of catalog circulation varies by brand and depends upon a number of factors, including the timing of the introduction of new products, marketing campaigns and promotions and inventory levels, among other factors.
Cornerstone also operates websites for each of its featured brands, such as Frontgate.com, BallardDesigns.com, Chasing- Fireflies.com, GarnetHill.com, GrandinRoad.com, TravelSmith.com and Improvementscatalog.com. These websites serve as additional storefronts for products featured in related print catalogs, as well as provide customers with additional content and product assortments to support and enhance their shopping experience. Additional content provided by these websites, which differs across the various websites, includes decorating tips, measuring information, online design centers, gift registries and travel centers, as well as a feature that allows customers to browse the related catalog online. In addition, a growing number of customers use mobile devices to shop the Cornerstone brands.
HSN Inc conducts its business through it two main subsidiaries - HSN and Cornerstone.
1. HSN includes the HSN television networks and other direct-response television marketing; its related website, HSN.com; its mobile applications and a limited number of outlet stores. The HSN television network broadcasts live, customer interactive home shopping programming 24 hours a day, seven days a week. HSN2, which debuted in August 2010, is a network that primarily distributes taped programming on a limited distribution basis. HSN’s programming is intended to promote sales and customer loyalty through a combination of product quality, value and selection, coupled with product information, entertainment and interactive experiences. Programming is divided into separately televised segments, most of which have hosts who present and convey information regarding featured products, sometimes with the assistance of a celebrity, industry expert, representative from the product vendor or someone retained to aid in the sale of the products. HSN also produces entertainment such as live concerts to entertain and engage with customers and promote certain products. HSN.com is a business-to-consumer digital commerce site that sells all of the merchandise offered on the HSN television networks, together with complementary products and select merchandise sold exclusively on HSN.com. HSN provides seamless experiences across all digital platforms and optimizes each unique platform by delivering exclusive content both at HSN.com and on mobile phones and tablets, including the iPad, iPhone and Android and Windows devices. The HSN strategy is to create immersive experiences, offer differentiated products and leverage technology to build seamless relationships with its customers across all of its platforms. HSN fosters social communities as part of the HSN experience to encourage customers to share their product finds, thoughts and reviews with their friends via Facebook, Twitter, Pinterest and Instagram.
As of December 31, 2014 and 2013, the HSN television networks reached approximately 95.0 million homes of the approximately 113.8 million and 115.6 million homes, respectively, in the United States with a television set. Television households reached by the HSN television networks as of December 31, 2014 and 2013 primarily include approximately 64.3 million and 64.1 million households capable of receiving cable and/or telephone company ("Telco") transmissions, respectively, and approximately 30.7 million and 30.9 million direct broadcast satellite system, or DBS, households, respectively.
HSN 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. HSN.com provides customers with additional content to support and enhance HSN television programming. For example, HSN.com provides users with an online program guide, value-added video of product demonstrations, live streaming video of the HSN television network, customer-generated product reviews and additional information about HSN show hosts and guest personalities. HSN.com offers customers a content-rich experience that houses more than 50,000 product and how-to videos.
2. Cornerstone consists of a portfolio of aspirational home and apparel brands, prominent in the direct marketing and retail space, including catalog distribution and related websites. Although there is some overlap in the product offerings, the home brands are comprised of Frontgate, Ballard Designs, Grandin Road and Improvements. The apparel brands are comprised of Garnet Hill, TravelSmith and Chasing Fireflies. There are also 11 retail and outlet stores located throughout the United States.
Frontgate features premium, high quality, luxury bed, bath, kitchen, outdoor, patio, garden and pool furnishings and accessories. Ballard Designs features bed, bath, dining, outdoor and office furnishings and accessories, as well as rugs, shelving and architectural accents for the home. Grandin Road offers an affordable style assortment of products ranging from occasional furniture, accessories, holiday décor and outdoor furniture and Improvements features thousands of innovative home, patio and outdoor products.
Garnet Hill offers apparel and accessories for women and children as well as bed and bath furnishings and soft goods. TravelSmith offers travel wear for men and women and related accessories. Chasing Fireflies is a leading children's and family lifestyle brand offering keepsake-quality apparel, costumes, gifts and accessories.
The Cornerstone brands generally incorporate on-site photography and real-life settings, coupled with related editorial content describing the merchandise and depicting situations in which it may be used. Branded catalogs are designed and produced in-house, which enables each individual brand to control the production process and reduces the amount of lead time required to produce a given catalog.
New editions of full-color catalogs are mailed to customers several times each year, with a total annual circulation in 2014 of approximately 325 million catalogs. The timing and frequency of catalog circulation varies by brand and depends upon a number of factors, including the timing of the introduction of new products, marketing campaigns and promotions and inventory levels, among other factors.
Cornerstone also operates websites for each of its featured brands, such as Frontgate.com, BallardDesigns.com, Chasing- Fireflies.com, GarnetHill.com, GrandinRoad.com, TravelSmith.com and Improvementscatalog.com. These websites serve as additional storefronts for products featured in related print catalogs, as well as provide customers with additional content and product assortments to support and enhance their shopping experience. Additional content provided by these websites, which differs across the various websites, includes decorating tips, measuring information, online design centers, gift registries and travel centers, as well as a feature that allows customers to browse the related catalog online. In addition, a growing number of customers use mobile devices to shop the Cornerstone brands.
My Perspective
Click to Enlarge It doesn't take a sophisticated technical analyst to look at the chart on the right and quickly see that investors that bought stock in HSN Inc are a lot more wealthy today than they were just a couple of years ago. And a slightly longer chart (7 years) can be seen below that shows that an investment of just $10,000 in August of 2008 would be worth $82,502.99 today.
Notice in the fundamentals above that the numbers are starting to slow so that's something I'll need to keep an eye on, but this company has a nice track record and a nice chart. I don't think things are going to change going forward and I think management's strategy of moving across digital platforms and creating content that makes their websites "sticky" is going to pay off extremely well. I also think management is smart. I expect this company to continue to grow and expand.
I intend to initiate a position in this company in the next few weeks. With all the momentum indicators a little on the high side, I'll be looking for a pullback in the price before buying these shares (although I don't expect too much of a pullback). With a dividend of $1.40 I'd really like to see the stock fall below $70 to allow the yield to exceed 2%, but that may or may not happen. And if it doesn't, I'll try to get the best entry available.
Notice in the fundamentals above that the numbers are starting to slow so that's something I'll need to keep an eye on, but this company has a nice track record and a nice chart. I don't think things are going to change going forward and I think management's strategy of moving across digital platforms and creating content that makes their websites "sticky" is going to pay off extremely well. I also think management is smart. I expect this company to continue to grow and expand.
I intend to initiate a position in this company in the next few weeks. With all the momentum indicators a little on the high side, I'll be looking for a pullback in the price before buying these shares (although I don't expect too much of a pullback). With a dividend of $1.40 I'd really like to see the stock fall below $70 to allow the yield to exceed 2%, but that may or may not happen. And if it doesn't, I'll try to get the best entry available.
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