HSN in effect “ran the table” during the third quarter, posting a net sales increase of 6% to $751.2 million, a gross profit improvement of 1% (100 basis points), and an adjusted EBITDA increase of 29%, all when compared to the prior year period.  If you want to look for worrisome signs in a rather rosy earnings release, you would probably have to look outside the cozy confines of the Cornerstone and HSN businesses to the wider economic environment in which they operate.  That and their return rates were up by 30 basis points, so no one’s perfect.  Here is HSN CEO Mindy Grossman’s summation of the company’s Q3 performance:

HSNi delivered another quarter of strong sales, EBITDA and EPS growth year-over-year. We achieved these results while executing on a number of significant initiatives, including new launches, events and expansion of our digital efforts.  The performance of both HSN and Cornerstone in the quarter, as well as our recently announced capital return plan, reflect our focus on driving shareholder value and our confidence in HSNi’s long-term growth potential.

Multi-platform accessibility and digital sales loomed large during the earnings conference call.  The company more than doubled its 2010 mobile revenues in the first three quarters of this year and expects to exceed $50 million in mobile sales by year end.  Although Ms. Grossman acknowledged that some of that growth represents TV or web shoppers who simply used their phones as checkout devices, the company sees mobile as a source of continued growth.

The increase in ways HSN reaches customers is helping the retailer improve its two-way communication with them.  HSN has redesigned its web home and category pages, expanded its product assortment on them and added customer-preference functionality to its platforms so that users can select their own personalized experiences.  A promotion over the summer invited shoppers to “like” HSN products on the retailer’s own web pages and on Facebook, too, of course.  Then, they could shop a “More to Like” online store to experience, essentially, a “customer-curated” selection of goods.  Not coincidentally, HSN’s Facebook fans more than doubled in the past three months.

Whatever the sales platform, though, the company promises to achieve two distinct but complimentary goals — first to offer shoppers a seamless experience however they access HSN and, second, to make the best use of each kind of device (or even make and model of device).  The retailer has observed iPad users behaving very differently from mobile phone users and so will continue to offer specialized apps to cater to each group.

Another focus for the company is leveraging its partnerships with celebrities, publishers, film studios and other companies in the pursuit of programming that combines, “entertainment, storytelling and shopping.”  The Bon Appétit-branded cooking line, the premiere of Queen Latifa on the network and multi-platform promotional tie-ins with movies like The Help are all examples of this.

Since its launch last spring, HSN Arcade has deepened the company’s connection with customers by offering them gaming, sweepstakes and contest opportunities.  And today the company announced an update to its popular Cooking Dash App for the iPhone and iPod touch that adds a new restaurant venue called “HSN Cooks with Emeril.”  More on this in a subsequent post.

During this morning’s call, Ms. Grossman recounted highlights from the third quarter, including the company’s most successful birthday event ever and the 11th anniversary of their partnership with the prolific Joy Mangano, as well as promotional plans for the Holiday shopping period.  A recording of the call will be available on HSN.com during the coming weeks.   HSN Inc. Earnings Press Release  Nov. 2, 2011