BOUNDARYLESS RETAIL: leveraging content, community and commerce. Investor Presentation Fourth Quarter 2010

Transcription

1 BOUNDARYLESS RETAIL: leveraging content, community and commerce Investor Presentation Fourth Quarter 2010

2 SAFE HARBOR STATEMENT This presentation 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. 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. 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. HSNi s actual results could differ materially from those predicted. Factors that could cause or contribute to such differences include but are not limited to: the continued impact of the current macroeconomic environment on consumer confidence and spending levels; whether national economic stimulus initiatives 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; 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. 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 ). 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. In light of these risks and uncertainties, any forwardlooking statements may not prove to be accurate. All written or oral forward-looking statements that are made or attributable to us are expressly qualified in their entirety by this cautionary notice. 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. Such statements speak only to the date such statements are made and HSNi does not undertake to update any forward-looking statements. Historical results should not be considered as an indication of future performance. 2

3 THE FUTURE OF TRANSACTIONAL INNOVATION forefront of transactional innovation diversity of brands, products, channels of distribution extensive direct-to-consumer reach generate $3.0 billion in revenue with over $1.2 billion from e-commerce sales, or over 41% penetration experienced management team strong free cash flow 3

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5 REINVENTING AND RE-ENERGIZING RETAIL MULTI-CHANNEL RETAIL LEADER 5 TELEVISION 1 st network/33 years 96MM homes 24/7, 364 Only 2-network retailer with HSN2 ONLINE Top 10 trafficked e-commerce site 34% of sales from e-commerce INTERACTIVE EMERGING MEDIA HSN Shop by Remote proprietary technology in 30MM+ homes HSN HD in 25MM+ homes 1 st live HD streaming video tv, online, mobile HSN mobile ipad, iphone, Android, mobile website Video on Demand in 6MM homes STRONG INFRASTRUCTURE AND SERVICE Nearly 41MM products shipped annually 2 call centers with strong work-at-home agent network

6 PSYCHOLOGY OF ACQUISITION lifestyle, editorial programmed commerce leveraging content for commerce ability to shift in real time to changes in consumer demand storefront changing everyday aspirational accessibility curate vs. aggregate products UNIQUE AND DIFFERENTIATED BUSINESS MODEL proprietary products inspire vs. sell price/value: product that exceeds expectations personal shopping service great stories great storytellers 6

7 REACHING A CUSTOMER THAT DEFIES EXPECTATIONS large, loyal customer base 4.6MM customers 44% 12 month repeat rate best customers increased 7% in Q % female years old 46% in the highly valued age bracket 87% homeowners $65,000+ household income $521 annual spend - up 5.5% from prior year top markets New York, LA, Philadelphia, Chicago 7

8 LIFESTYLE EDITORIAL PROGRAMMED COMMERCE WHERE WE COMPETE TELEVISION SHOPPING ONLINE RETAILING BRICK & MORTAR CATALOG RETAILING TELEVISION ENTERTAINMENT 8

9 PRODUCT DIVERSITY AND SUPERIORITY 64K+ unique products 60-70% proprietary brands 18K new products introduced in 2010 FASHION 14% JEWELRY 15% HOME 54% HEALTH & BEAUTY 17% FY

10 HSN.COM OFFERS A UNIQUE AND DIFFERENTIATED WEB EXPERIENCE 334K unique users daily 4.3MM page views per day 2.4MM marketing s per day HSN.COM sales up 11% in 2010 and penetration up 150 bps over 16K video demonstrations of products available for sale resulting in 28MM views during 2010 multi-channel customers are more fully engaged and have a higher value of $1,302 per year Revenue Per Multi Buyer by Ordering Method $1,302 $676 $841 10

11 LEADER IN TRANSACTIONAL INNOVATION All of these represent industry or competitive firsts in the US SBR 1 st Launch in Time Warner Oceanic iphone Shopping App with Live HSN Video Feed Launch of HSN Shopping Podcasts Video Sales Presentation Available with Most Products on hsn.com SBR Launches Nationwide Shopping via Cable Video on Demand SBR 1 st to Launch Full Time In New Industry Standard (EBIF) Patents for itv & online video with product display Samsung Shop by Remote 1,000 s of Product Videos Available High Quality Live Stream on hsn.com TS and Order Status Text Alerts HSN Vision on Windows Media Center hsn.tv HD Smooth Streaming Android and Windows 7 Shopping apps with live HSN Video Feed Launch HSN ipad app 11

12 HSN GROWTH STRATEGIES grow our active customer base and lifetime value of every customer deliver consistent and sustainable gross profit growth total quality focus while operating efficiently 12

13 A STRONG LIFESTYLE PORTFOLIO home = 68% of sales apparel = 32% of sales 7 individual lifestyle brands with a common, leveraged operation 18 to 50 years of consumer equity unique and exclusive proprietary products e-commerce represents 57% of sales 13

14 GROWTH STRATEGIES focus on strategic brands to maximize value: Frontgate, Ballard Designs, Garnet Hill develop strategic partnerships implement brand awareness programs drive e-commerce ipad app mobile optimization digital catalog maximize operating leverage 14

15 FINANCIAL SUMMARY 15

16 BOUNDARYLESS RETAIL: leveraging content, community and commerce Investor Presentation Fourth Quarter 2010