Second-quarter net sales at Harry and David Holdings rose 8%, to $362.4 million for the 13 weeks ended Dec. 24. But net income fell to $49.1 million from $69.6 million a year earlier, due largely to a higher tax rate. Pretax income was $81.3 million, down slightly from $87.4 million for the previous second quarter, due to increased operating costs, higher interest expense, and costs associated with a planned initial public offering that has been put on hold.
Net sales for the direct marketing division, which includes the Harry and David food gifts catalogs and Website, the catalog and Web business of horticultural mailer Jackson & Perkins, and outbound telemarketing sales, rose 7%, to $257.9 million. The company credited increased catalog circulation, direct mail advertising, and Web advertising for the increase.
Net sales for Harry and David stores rose 2%, to $66.5 million, despite 14 fewer stores being in operation. Net sales for Jackson & Perkins increased 6%, to $26.0 million, due largely to higher catalog response rates combined with increased promotional activity and Internet advertising.