HSNi Profit Dives 3.8 Percent in Second Quarter
ST. PETERSBURG, Fla.-An uptick in expenses offset sales gains to reduce HSN Inc.'s second-quarter net income by 3.8 percent, to $30.7 million.
Operating expenses as a whole rose 7 percent in dollars and 15 basis points as a percentage of sales, to 29.7 percent. This included an 8.9 percent rise in selling and marketing expenses. HSNi also posted a loss from discontinued operations of $1.7 million, compared to a loss in this category last year of $590,000.
Net sales in the quarter, which ended on June 30, rose 6.4 percent to $767.2 million. HSNi's Cornerstone segment, comprising its catalogs and e-commerce sectors, provided the key boost with an 11 percent sales increase, with particular strength shown in the segment's home brands and in digital sales, which jumped 17 percent. The second quarter saw the repositioning of Cornerstone with the acquisition of Chasing Fireflies, a children's and family lifestyle apparel brand, and the divestiture of the Smith+Noble window-treatment business and The Territory Ahead, a casual apparel brand.
Sales in the HSN home-shopping segment rose 4 percent in the quarter. Digital sales, with an 8 percent increase, were the prime driver in this segment, helped along by sales in home-design, beauty and fashion products.
Mindy Grossman, HSNi CEO, said the second quarter brought "excellent progress" in the company's efforts to build its brand portfolio. "Our consistent execution enabled us to achieve sales growth of 6 percent, digital sales growth of 12 percent and customer file growth across the portfolio," Grossman said.