Home Shopping Network 2012 Annual Report Download - page 23

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Table of Contents
The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in
this annual report. Historical results and trends which might appear should not be taken as indicative of future operations. Our results of
operations and financial condition, as reflected in the accompanying statements and related notes, are subject to management’s evaluation and
interpretations of business conditions, changing market conditions and other factors.
Management Overview
HSNi offers innovative, differentiated retail experiences and markets and sells a wide range of third party and proprietary label
merchandise directly to consumers through (i) television home shopping programming broadcast on the HSN television networks; (ii) catalogs,
consisting primarily of the Cornerstone portfolio of leading print catalogs which includes Ballard Designs, Chasing Fireflies, Frontgate, Garnet
Hill, Grandin Road, Improvements and TravelSmith; (iii) websites, consisting primarily of HSN.com and the eight branded websites operated by
Cornerstone; (iv) retail and outlet stores; and (v) mobile devices. HSNi’
s television home shopping business, related digital commerce and outlet
operations are referred to herein as “HSN” and all catalog operations, including related digital commerce and retail and outlet stores, are
collectively referred to herein as “Cornerstone.”
Sources of Revenue
HSN revenue includes merchandise sales originating from the live television broadcasts of its programming 24 hours per day, seven days a
week; HSN2, a network that primarily distributes taped programming on a limited distribution basis; the HSN.com website; mobile handheld
devices; and through outlet stores. HSN also sells merchandise through its "Autoship" program under which customers receive scheduled
merchandise shipments according to a pre-determined calendar.
Cornerstone sells private label and third party merchandise through its assortment of catalogs, digital sites and retail and outlet stores.
Cornerstone consists of the brands of Ballard Designs, Chasing Fireflies, Frontgate, Garnet Hill, Grandin Road, Improvements and TravelSmith.
Products
HSNi sells a wide array of merchandise across its various channels of distribution. HSN merchandise categories primarily consist of
jewelry, fashion (apparel & accessories), beauty & wellness, and home & other (including housewares, home fashions, electronics, fitness and
other). HSN manages its product mix to provide a balance between satisfying existing customer demand, generating interest from potential
viewers and customers, providing new merchandise or values to its viewership and maximizing airtime and internet efficiency. Cornerstone
merchandise categories generally consist of home furnishings (including indoor/outdoor furniture, window treatments and other home-related
goods) and apparel & accessories.
HSNi management believes that merchandise diversification, combined with an interactive multi-
channel distribution strategy, appeals to a
broader segment of potential customers and is an important part of its overall business strategy. HSNi is continually developing new
merchandise offerings from existing, potential and future suppliers, to supplement its existing product lines.
19
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS