HSNi posts loss, cuts 250 jobs; shares fall

(Reuters) - Home Shopping Network operator HSN Inc HSNI.O cut about 250 jobs during the fourth quarter, and canceled merit increases for 2009 to contain costs.

HSNi, which had about 5,500 full-time employees as of December 31, 2007, also reported a loss of $2.15 billion, or $38.29 a share, versus a profit of $56.5 million, or $1 a share, in the year-ago quarter.

The latest fourth quarter includes non-cash impairment charges of $2.4 billion related to the write-down of goodwill and intangible assets. The company also recorded $2.4 million in severance charges.

Net sales fell 11 percent to $778.5 million, hurt partly by a 14 percent fall in shipped units.

Sales were slightly worse in November and December, CEO Mindy Grossman said in a conference call with analysts.

Demand for high-ticket items like fashion and jewelry continued to fall in the quarter, while categories like electronics, wellness and fitness did better, she said.

The company, which has two operating segments, HSN and Cornerstone Brands, raised shipping prices during the quarter to offset rising shipping and handling costs and fuel charges, Chief Financial Officer Judy Schmeling said.

Sales at its HSN segment dropped 4 percent to $545.9 million, while Cornerstone Brands sales fell 25 percent to $232.6 million.

About 60 to 65 percent of Cornerstone’s business is related to the home segment, according to Grossman.

The company, which was founded in 1977 and was a subsidiary of Barry Diller's IAC/InterActiveCorp IACI.O until August 2008, has majorly reduced its matching contributions to the 401(k) pension plan, re-negotiated some print, paper and freight contracts.

It has also made some overhead reductions in travel, outside fees and other costs.

The company is looking to lower inventory and also boost its e-commerce business to reduce dependence on catalog circulation, Grossman said.

Shares of the St. Petersburg, Florida-based company fell to a low of $3.33 before paring some losses and to trade down 6 cents at $3.79 Tuesday afternoon on Nasdaq.

Reporting by Nivedita Bhattacharjee in Bangalore; Editing by Amitha Rajan and Anne Pallivathuckal