GSI Commerce reported revenues in the second quarter dipped 3.1% to $187.2 million from $193.2 million. The net loss was trimmed to $13.1 million, or 27 cents a share, from a loss of $20.3 million, or 43 cents, in the year-ago period. Results exceeded internal expectations as both e-commerce services and marketing services segments surpassed internal plans.
On a conference call with analysts, company CFO Michael Conn said that while the company has “continued to see a cautious consumer,” same-store sales growth was up in the low-single-digits in the quarter and running at a better rate than the first quarter. Also, half of the ten largest Web stores on its platform saw double-digit same-store sales growth in the quarter. Apparel and health & beauty were particularly strong categories.
Net revenues from product sales declined 15.0% to $91.2 million from $107.1 million last year, primarily due to Dick's Sporting Goods moving from an owned-inventory model to a non-inventory model. Weakness in owned electronics was the other main driver of the year-over-year decline in product sales. Excluding these factors, comparable-store product sales exceeded its plan for the quarter, with upside driven by professional sports leagues. Service fees grew 11% to $96 million despite the fact that GSIC no longer operates the web businesses of Linens 'n Things, Baby Center and Woolworth. Excluding those businesses in year-ago results, service fees climbed 17%.
The bottom line was aided by lower marketing expenses, partly because GSI no longer has royalty payments associated with the Dick's Sporting Goods deal, as well as an expansion of product margins for licensed and general sporting goods. The underlying operating margin was also helped by variable operating efficiencies, particularly in fulfillment and strong fixed expense leverage.
For the third quarter, GSI expects net revenues to range between $181 million and $186 million and the loss from operations to be in a range of $15.5 million to $17.5 million.