ST. PETERSBURG, Fla.-Lower margins and a tick-up in expenses put a damper on HSNi’s second-quarter net income, which declined 5.4 percent to $40.9 million.
Both of the company’s segments, HSN and Cornerstone, reported decreases in gross margin in the quarter, which ended on June 30. These came about due to shipping promotions at HSN and increased promotional activity at Cornerstone, which was a response to competitive market conditions. Overall company gross margin dropped 138 basis points to 36.6 percent.
Selling, general and administrative expenses rose 3.3 percent in dollars but fell 53 basis points as a percentage of sales, to 27.5 percent.
Net sales for the company as a whole totaled $855.2 million, up 5.2 percent. The HSN segment logged a sales increase of 6 percent, while Cornerstone’s sales were up 4 percent.
“Our focus during the second quarter remained on engaging our customers, emphasizing our unique content and proprietary products, and strengthening our digital platforms,” said Mindy Grossman, CEO of HSNi. Grossman added that digital sales increased 9 percent for the company as a whole and now represent 15 percent of its total sales.