HSNi 2Q growth aided by e-commerce
GDA Staff -- Gifts & Dec, August 3, 2011
St. Petersburg, Fla. - E-commerce sales gains were largely credited with helping drive strong second quarter results for HSNi and its two operating segments, HSN and Cornerstone.
Total corporate net income climbed 29% to $32 million for the second quarter, ended June 30, with sales up 8% over the prior year to $746.9 million.
The Cornerstone segment - which encompasses seven retail brands, including Frontgate, Ballard Designs and Garnet Hill - saw its net sales for the period increase 19% to $264.9 million. Cornerstone's e-commerce sales grew 22%, with penetration increasing 180 basis points to 57.2%.
As a result, Cornerstone's gross profit jumped 17% to $112.9 million. Gross profit margin fell 50 basis points to 42.6% primarily due to increased promotional activity and higher freight costs.
The HSN segment's sales rose 3% to $482.0 million, driven by an 11% increase in e-commerce sales. E-commerce sales penetration increased 220 basis points to 32.6%, up from 30.4% in the prior year.
HSN's gross profit rose 7% to $173.7 million. Gross profit margin improved 120 basis points to 36.0%, mainly due to lower outbound shipping costs, the timing of shipments of quarter-end clearance orders and improvements in supply chain management.
"The continued increase in the penetration of our e-commerce sales, the expansion of our mobile business, and the success of our new online gaming site, HSN Arcade, reflect our commitment to digital growth and leveraging our content across all of our platforms," said Mindy Grossman, HSNi ceo.
During the company's earnings call this morning, Grossman was asked about the impacts of raw material and other price increases on business.
"Both in top of bed and apparel, we are really looking at the impact of cotton prices on cost, etcetera. But we don't have any significant concerns at this point," she said.
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