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HSN, Inc. Reports Second Quarter 2011 Results

For the Second Quarter 2011:

• HSNi net sales increased 8% with e-commerce sales up 16%
• HSNi gross profit margin improved 90 basis points to 38.4%
• HSNi Adjusted EBITDA grew 20% to $76.0 million
• Adjusted EPS increased 28% to $0.60

ST. PETERSBURG, Fla., Aug. 3, 2011 (GLOBE NEWSWIRE) -- HSN, Inc. (Nasdaq:HSNI) reported results for the second quarter ended June 30, 2011 for HSN, Inc. ("HSNi") and its two operating segments, HSN and Cornerstone.

Second Quarter 2011 Results vs Second Quarter 2010 Results

• HSNi's net sales grew 8% over the prior year to $746.9 million.听HSN's net sales increased 3% to $482.0 million, including 11% growth in e-commerce sales.听Cornerstone's net sales increased 19% to $264.9 million, including 22% growth in e-commerce sales.
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• HSNi's Adjusted EBITDA increased 20% to $76.0 million.听These results were driven by an 8% increase in net sales and a 90 basis point increase in gross profit margin, partially offset by an 8% increase in operating expenses (excluding non-cash charges).听Operating income increased 24% to $59.8 million.
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• Adjusted EPS increased 28% to $0.60 compared to $0.47 in the prior year.听GAAP diluted EPS increased 27% to $0.53 compared to $0.42 in the prior year.

"Our strong performance in the quarter demonstrates the success of our strategies around customer engagement, unique experiences, compelling products and digital expansion," said Mindy Grossman, CEO of HSN, Inc. "The听continued increase in the penetration of our e-commerce sales, the expansion of our mobile business, and the success of our new online gaming site, HSN Arcade, reflect our commitment听to digital growth and leveraging our听content across all of our platforms."

HSN Segment Results for the Second Quarter 2011

HSN's net sales increased 3% to $482.0 million driven by an 11% increase in e-commerce sales.听HSN's overall sales increase was led by growth in the electronics and culinary categories.听E-commerce sales penetration increased 220 basis points to 32.6%, up from 30.4% in the prior year.听

Gross profit increased 7% to $173.7 million.听Gross profit margin improved 120 basis points to 36.0% from 34.8%.听The margin increase was primarily attributable to lower outbound shipping costs, the timing of shipments of quarter-end clearance orders and improvements in supply chain management.

Adjusted EBITDA increased 15% to $51.6 million compared to $45.1 million in the prior year. The increase was due to the 7% increase in gross profit, partially offset by a 4% increase in operating expenses (excluding non-cash charges).听Operating income was $40.8 million compared to $34.5 million in the prior year.

Cornerstone Segment Results for the Second Quarter 2011

Net sales for Cornerstone increased 19% to $264.9 million primarily due to continued strength at Cornerstone's three largest brands, Frontgate, Ballard Designs and Garnet Hill.听E-commerce sales grew 22% with penetration increasing 180 basis points to 57.2%.

As a result of the sales growth, gross profit increased 17% to $112.9 million.听Gross profit margin decreased 50 basis points to 42.6% from 43.1%.听This decrease was primarily attributable to promotional activity to drive sales demand and higher inbound freight costs in the home brands, partially offset by leverage over fixed warehousing costs.听听听听听

Adjusted EBITDA increased 32% to $24.4 million.听The increase was primarily due to the growth in net sales, partially offset by the decrease in the gross profit margin and a 17% increase in selling and marketing costs, particularly catalog production and distribution costs.听Operating income was $19.0 million compared to $13.9 million in the prior year.

Liquidity and Capital Resources

As of June 30, 2011, HSNi had cash and cash equivalents of $337.4 million, down from $354.3 million at December 31, 2010.听Net cash used in operating activities for the six months ended June 30, 2011 was $3.3 million compared to $18.9 million generated in the prior year.听This decrease was primarily due to the timing of payments of trade payables.

OTHER INFORMATION

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

This press release may contain forward-looking statements relating to the future performance of HSNi, its operating segments and its consolidated subsidiaries that are based on current expectations, forecasts and assumptions. These statements relate to expectations concerning matters that are not historical fact.听These forward-looking statements are based largely on information currently available to our management and on our current expectations, assumptions, plans, estimates, judgments and projections about our business and our industry, and such statements involve inherent risks and uncertainties.听Although we believe our expectations are based on reasonable estimates and assumptions, they are not guarantees of performance and there are a number of known and unknown risks, uncertainties, contingencies and other factors (many of which are outside our control) that could cause actual results to differ materially from those expressed or implied by such forward-looking statements.听Factors that could cause or contribute to such differences include but are not limited to:听the continued impact of the current macroeconomic environment on consumer confidence and spending levels; whether national economic stimulus initiatives and measures to improve the economy will be successful in achieving their objectives within the expected timeframes; other changes in political, business and economic conditions, particularly those that affect consumer confidence, consumer spending or e-commerce growth; changes in our relationships with pay television operators, vendors, manufacturers and other third parties; changes in product delivery costs, particularly if we are unable to offset them; our ability to offer new or alternative products and services in a cost effective manner and consumer acceptance of these products and services; any technological or regulatory developments that could negatively impact the way we do business, including regulations regarding state and local sales and use taxes; HSNi's business prospects and strategy, including whether HSNi's initiatives will be effective; and the loss of any key member of our senior management team. 听More information about potential factors that could affect HSNi's business and financial results is included in our filings with the U.S. Securities and Exchange Commission ("SEC"). 听Other unknown or unpredictable factors that could also adversely affect HSNi's business, financial condition and results of operations may arise from time to time. 听In light of these risks and uncertainties, any forward-looking statements may not prove to be accurate.听All written or oral forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice.听Accordingly, you should not place undue reliance on any forward-looking statements, which only reflect the views of HSNi management as of the date of this press release.听Such statements speak only to the date such statements are made and HSNi does not undertake to update any forward-looking statements.听Historical results should not be considered as an indication of future performance.

Conference Call

Mindy Grossman, Chief Executive Officer, and Judy Schmeling, Executive Vice President and Chief Financial Officer, will hold a conference call on August 3, 2011 at 9:00 a.m., Eastern Time, to discuss these results.听Those interested in participating in the conference call should dial 877-307-0246 or 224-357-2394 at least five minutes prior to the call.听There will also be a simultaneous audio webcast available via HSNi's website at .

A replay of the conference call can be accessed until Wednesday, August 17, 2011, by dialing 800-642-1687 or 706-645-9291, plus the passcode 81664724 and will also be hosted on HSNi's website for a limited time.听

jvid视频 HSN, Inc.

HSN, Inc. (Nasdaq:HSNI) is a $3 billion interactive multi-channel retailer with strong direct-to-consumer expertise among its two operating segments, HSN and Cornerstone. HSNi offers innovative, differentiated retail experiences on TV, online, via mobile devices, in catalogs, and in brick and mortar stores. HSN, a leading interactive multi-channel retailer which offers a curated assortment of exclusive products combined with top brand names, now reaches approximately 96 million homes (24 hours a day, seven days a week, live 364 days a year). HSN.com is a top 10 trafficked e-commerce site that offers a differentiated e-commerce experience by leveraging content, community and commerce. In addition to its existing media platforms, HSN is the industry leader in transactional innovation, including services such as HSN Shop by Remote^庐, the only service of its kind in the U.S., the HSN Shopping App for mobile handheld devices and HSN on Demand^庐. Cornerstone comprises leading home and apparel lifestyle brands including 听Ballard Designs^庐, Frontgate^庐, Garnet Hill^庐, Improvements^庐, Smith + Noble^庐, The Territory Ahead^庐 and TravelSmith^庐. Cornerstone distributes more than 275 million catalogs annually, operates eight separate e-commerce sites and operates 19 retail and outlet stores.

The HSN, Inc. logo is available at

SEE IMPORTANT NOTES AT END OF THIS DOCUMENT

HSN, INC.'S PRINCIPLES OF FINANCIAL REPORTING

HSNi reports Adjusted EBITDA, Adjusted Net Income and Adjusted EPS, all of which are supplemental measures to GAAP. These measures are among the primary metrics by which we evaluate the performance of our businesses, on which our internal budgets are based and by which management is compensated. We believe that investors should have access to, and we are obligated to provide, the same set of tools that we use in analyzing our results. These non-GAAP measures should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. HSNi endeavors to compensate for the limitations of the non-GAAP measures presented by providing the comparable GAAP measures with equal or greater prominence and descriptions of the reconciling items, including quantifying such items, to derive the non-GAAP measures. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measures contained in this release and which we discuss below.

Definitions of Non-GAAP Measures

Adjusted EBITDA is defined as operating income excluding, if applicable: (1)听non-cash charges including: (a) stock-based compensation expense, (b)听amortization of intangibles, (c)听depreciation and gains and losses on asset dispositions, and (d)听goodwill, long-lived asset and intangible asset impairments; (2)听pro forma adjustments for significant acquisitions; and (3)听one-time items. Adjusted EBITDA is not a measure determined in accordance with GAAP, and should not be considered a substitute for operating income, net income or any other measure determined in accordance with GAAP. Adjusted EBITDA is used as a measurement of operating efficiency and overall financial performance and HSNi believes it to be a helpful measure for those evaluating companies in the retail and media industries.听Adjusted EBITDA measures the amount of income generated each period that could be used to service debt, pay taxes and fund capital expenditures. Adjusted EBITDA should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. Adjusted EBITDA has certain limitations in that it does not take into account the impact to HSNi's statement of operations of certain expenses, including stock-based compensation, amortization of intangibles, depreciation, gains and losses on asset dispositions, asset impairment charges, acquisition-related accounting and one-time items.

Adjusted Net Income generally captures all items on the statement of operations that have been, or ultimately will be, settled in cash and is defined as net income available to common shareholders excluding, net of tax effects, if applicable: (1)听stock-based compensation expense, (2)听amortization of intangible assets, (3) gains and losses on asset dispositions, (4) goodwill, long-lived asset and intangible asset impairments, (5)听pro forma adjustments for significant acquisitions, (6)听one-time items and (7) discontinued operations.听 We believe Adjusted Net Income is useful to investors because it represents HSNi's consolidated results taking into account charges which are not allocated to the operating businesses such as interest expense and taxes, but excluding the effects of identified non-cash expenses or one-time items.

Adjusted EPS is defined as Adjusted Net Income divided by diluted weighted average shares outstanding for Adjusted EPS purposes. We believe Adjusted EPS is useful to investors because it represents, on a per share basis, HSNi's consolidated results, taking into account charges which are not allocated to the operating businesses such as interest expense and taxes, but excluding the effects of identified non-cash expenses or one-time items. Adjusted Net Income and Adjusted EPS have the same limitations as Adjusted EBITDA.听Therefore, we think it is important to evaluate these measures along with our consolidated statement of operations.

CONTACT: Felise Glantz Kissell (Analysts/Investors)
         727-872-7529
         felise.kissell@hsn.net

         Brad Bohnert (Media)
         727-872-7515
         brad.bohnert@hsn.net

Released August 3, 2011