HSN, Inc. reported that net sales increased 5% and digital sales, a focus for the company this year, rose 9% for its second quarter ended June 30 for HSN Inc. (HSNi) and its two operating segments, HSN and Cornerstone. HSNi also reported that net income had dropped 5% to $40.9 million, or 76 cents per share, from $43.3 million, or 79 cents per share, in the same quarter last year.
“Our focus during the second quarter remained on engaging our customers, emphasizing our unique content and proprietary products, and strengthening our digital platforms,” CEO Mindy Grossman said. Mobile sales rose, she noted, representing 15% of total sales this quarter.
For HSN, net sales grew 6% to $556.5 million from $526.2 million in the same quarter last year. For Cornerstone, net sales grew 4% to $298.7 million from $286.4 million in the same quarter last year. Net sales for the company as a whole were $855.2 million.
Gross margin in the quarter decreased for both segments, however, due to promotional activity from Cornerstone, and shipping promotions at HSN, the company cited. Gross margin for the company dropped 140 bps to 36.6% from 38% in the same quarter last year. Operating income for HSN rose 11% to $52.1 million compared to $47 million in the same quarter last year, whereas they fell 37% for Cornerstone to $15.3 million this quarter compared to $24.3 million in the same quarter last year.
“During the quarter, we saw a bifurcation within our business,” Grossman continued.
Adjusted EBITDA also decreased $8.6 million to $19.4 million for Cornerstone, whereas it rose 10% to $62.7 million at HSN.