Ashworth, Inc. updated its guidance for revenues and earnings for the fiscal year ended October 31, 2006 based upon preliminary information for the fourth quarter, subject to year-end audit.
Consolidated revenues for fiscal 2006 are expected to be approximately 2% to 3% below the level previously anticipated which was at the lower end of $210 to $220 million. The volume decrease was attributed to lower than expected fourth quarter at-once higher gross margin sales in the company's Domestic Golf Channel and Gekko subsidiary. The company said it also experienced greater than expected markdowns in its Retail and other channels.
The fourth quarter shortfall in higher margin revenues — together with greater than expected markdowns, lower than expected capacity utilization in its U.S. Embroidery and Distribution Center, and approximately $1.1 million of expense associated with the previously-announced resignation of the company's former Chairman and CEO and other organizational changes — has resulted in an expected fourth quarter loss of approximately 20 cents to 25 cents per diluted share. For fiscal year 2006, therefore, the company expects a profit of approximately 12 cents to 17 cents per diluted share. Included in expected fiscal year 2006 results are special expenses related to the 2006 proxy contest, strategic alternatives process, implementation of FAS 123R and associated stock option expenses, Sarbanes-Oxley 404 compliance costs, and the $1.1 million described above, which, in the aggregate, equate to approximately 13 cents per diluted share on an after-tax basis.
