Private equity firm Apollo Global Management will take Rackspace private in the all-cash deal.
Web technology upgrades continue, but hamper sales.
Online sales were down in the second quarter and first half of 2012 for XO Group Inc., which the online retailer of products for weddings and pregnancy attributes in part to ongoing e-commerce technology upgrades.
For the quarter ended June 30, XO Group, No. 393 in the 2012 Internet Retailer Top 500 reported:
- Web sales of $6.9 million, down by about 14.8% from $8.1 million in the second quarter of 2011.
- Total revenue of $35.4 million, up by 2.0% from $34.7 million.
- Net income for the quarter was $3.1 million, a 6.9% increase from net income of $2.9 million in the prior year quarter.
E-commerce represented 19.5% of sales in the second quarter, compared with 23.3% in the same period last year.
Gross margins have improved, driven by a recovery from last year's “difficult implementation of new back-office warehouse systems,” the company says. “Upgrades to the customer-facing platform at the end of 2011 are expected to contribute to revenue growth in the long term but are negatively impacting revenue in the short term.”
New web features, developed in-house, include a virtual cookbook tool to collect recipes from a bride's friends and family, a Wedding Dress LookBook app for the Kindle Fire, and local premium offers on m.theknot.com, the company’s mobile site.
“Over the last several months, our product development team has been very busy as we constantly strive towards enhancing the user experience of our sites, imagining new and useful sponsorship opportunities for our advertisers, and ultimately driving growth for XO Group across business lines,” says CEO David Liu.
For the first six months XO Group reported:
- Online sales of $12.5 million, down by 9.4% from $13.8 million in the same period last year.
- Total revenue of $65.2 million, a 4.7% increase from $62.3 million in the first half of 2011.
- Net income of $3.5 million, an increase of about59% from $2.2 million in net income in the same period last year.
E-commerce represented 19.2% of sales in the period, compared with 22.2% in the first half of 2011.