Head NV reported sales for the first nine months of 2012 were up 5.3 percent compared to the first nine months of the prior year driven by Racquet Sports, especially in North America, and compounded by favorable exchange rate movements but offset by lower sales in Winter Sports. At constant currency the sales for the first nine months of 2012 were up 1.5 percent compared to the first nine months of 2011.
Winter Sports sales for the first nine months were behind the comparable period in 2011 by 7.9 percent. This change from a growth in the first six months to a decline in the third quarter was anticipated as we start to deliver for the 2012/13 season. Due to the very mild winter and late snow in both Europe and North America in 2011/12, sell through at retail was considerably down and some International retail chains therefore reduced pre-season orders by 20 percent to 25 percent marketwide. We have now collected our pre-season orders and whilst our declines are not as dramatic, we still anticipate around a 10 percent deterioration in sales for 2012 compared to the prior year, with skis and snowboards having suffered more than boots.
Racquet Sports sales for the first nine months increased by 14.8 percent compared to the first nine months of 2011. The increase was driven by higher volumes and improved product mix of both racquets and balls in North America and compounded by favorable exchange rates. Growth has been achieved by external market growth, our new product launches and the success of our ambassadors.
Our Diving sales for the first nine months of 2012 grew by 4.9 percent due to market growth in North America and Asia offset by softer sales in Europe, although we believe that we continue to outperform the market in Europe and take market share. Sportswear sales for the nine months improved by 14.9 percent due to higher sales of Summer Sportswear offset by lower Winter Sportswear sales.
Gross margins for the nine months ended Sept. 30 declined from 41.4 percent to 39.8 percent due to higher cost of sales driven in part by lower utilization of our Alpine production facilities, increased labor rates and further investment in our Sportswear Division. In addition, exchange rate movements, whilst improving our sales have also increased our cost of sales of our sourced products impacting our gross margins.
Adjusted operating loss for the nine months ended Sept. 30 increased by €2.0m. The increase in the loss was due to the higher sales being more than offset by lower gross margins and higher selling and marketing costs. For the nine months ended Sept. 30 interest and other financial costs (excluding Disagio costs) decreased by €2.7m due primarily to the restructuring of our debt in 2011 which has reduced our interest rates. The buy back and redemption of the Senior Secured Notes in 2011 resulted in the non-cash Disagio charge in that year.
As a result of the foregoing factors, for the nine months ended Sept. 30, 2012 we had a net loss of €5.1m compared to a net loss of €12.4m in the comparable 2011 period.
Net cash provided by operating activities improved by €10.9m in the first nine months mainly due to lower cash outflow for inventories and lower interest costs in 2012 compared to 2011.
Net debt decreased by €6.8m from 30th September 2011 ended Sept. 30 due mainly to lower working capital and financing costs.
We continue to expect to see a slow down in our sales in the fourth quarter of the year compared to the prior year due to lower Winter Sports sales and anticipate that this will cause operating results for 2012 to deteriorate compared to 2011.
