HSNi has home to thank for strong Q2
Staff Staff -- Furniture Today, August 1, 2013
St. Petersburg, FL - Home furnishings - including home design, household goods, and home brands - drove HSN Inc.'s encouraging performance in the second quarter.
The company's net sales grew 6% to $812.6 million, diluted earnings per share from continuing operations increased 30% to 79 cents, and its operating income was up 9% to $71.3 million.
HSNi did suffer a 20 basis point decrease in gross margin. Still, ceo Mindy Grossman described the quarter's financial performance as " strong" and credited "the uniqueness of our customer experiences, the power of our digital platforms and the quality of our brands and products."
The HSN segment - where home represents the largest slice, or 56%, of the total product offering - saw net sales grow by 5% to $526.2 million, including a 10% digital sales increase and a 160 basis point gain in penetration to 35.4%.
There, sales grew in home design, household, electronics and apparel & accessories, but declined in jewelry and culinary. The company noted net sales were favorably affected by lower return rates. The average price point decreased 4% while units shipped increased 7%, primarily due to higher clearance activity.
HSN's gross profit increased 3% to $187.5 million, while gross margin dipped 60 basis points to 35.6%, mainly because of an increase in shipping and handling promotions. Operating income was up 8% to $47.0 million.
At Cornerstone - where home comprises 73% of the offering versus apparel's 27% share - net sales were up 8% to $286.4 million, driven by sales growth in the home brands. Of that, digital sales grew 10%, with penetration increasing 120 basis points to 62.9%.
Gross profit for Cornerstone jumped 9% to $121.3 million; and gross margin increased 30 basis points to 42.4%, thanks largely to higher product margins.
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