Despite reporting a second-quarter sales increase of 5% and a digital sales increase of 9% — with mobile representing 15% of its total sales — HSN missed Wall Street expectations for its net income thanks to a 5% drop from $43.3 million a year earlier to $40.9 million for the quarter.
Overall net sales grew 5% over the prior year to $855.2 million.
Net sales at the company’s HSN brand increased 6% to $556.5 million, including 11% growth in digital sales. Sales in beauty, home design, health and culinary offset by lower sales in electronics and jewelry. Units shipped increased 4% and average price point increased 2%.
Meanwhile, net sales at the company’s Cornerstone brand increased 4% to $298.7 million, including 6% growth in digital sales. Sales grew in the home brands, partially offset by lower sales in the apparel brands. Digital sales grew 6% with penetration increasing 130 basis points to 64.2%.
"During the quarter, we saw a bifurcation within our business. HSN had strong results with sales up 6%, digital sales up 11% and Adjusted EBITDA up 10%. While Cornerstone maintained top line growth of 4%, margins were impacted by a highly promotional marketplace," CEO Mindy Grossman said. "Our customer file metrics at both HSN and within the Cornerstone portfolio were at record highs. We also returned $63 million to our shareholders through our capital return plan."