Sport-Haley, Inc. finally got its financial statements pulled together for the fourth quarter and fiscal year ended June 30, pointing to a continued increase in its Ben Hogan apparel business in the premium price market as the primary driver for the company’s sales increase.

Net sales for the fourth quarter increased 8.3% to $6.4 million from $5.9 million in the year-ago period. Net sales of Ben Hogan apparel increased 54.3% to $2.6 million, or 41% of total sales, in Q4 versus $1.7 million, or 29% of total sales, in Q4 last year. Haley apparel sales declined 9.5% for the quarter.

In fiscal 2004 sales of HALEY apparel to domestic and international golf course professional shops, country clubs, resorts and corporate, special event and retail customers accounted for approximately 65% of Sport-Haley's net sales. Sales of Ben Hogan apparel to elite golf professional shops, upscale resorts and exclusive department stores, corporate, special event and retail customers accounted for approximately 35% of Sport-Haley's net sales. No single customer accounted for 5% or more of net sales.

Since January 1997, Sport-Haley reported in its 10-K that roughly 30% of gross sales in fiscal 2004 were generated through promotional programs for golf pro shop operators. International sales, which are generated through distributors in the U.K., Caribbean Islands, Mexico, Japan, certain regions of Southeast Asia and the Philippines and to U.S. military bases overseas, represented less than 2% of net sales in fiscal 2004.

Approximately 90% of the company's independent wholesale sales representatives sell both the HALEY and Ben Hogan apparel lines.

The company said the ability to control inventory was significantly impacted by problems associated with the implementation of new software during the last half of the 2004 fiscal year.

The decreases in gross margin was attributed to the effects of a build up in excess and obsolete finished goods inventories, a problem for which management said they were “extremely concerned.” A “significant portion” of the inventory position is comprised of women’s apparel, an issue management sees as troublesome due to the limited options for disposing of the women’s product.

Management expects to reduce finished goods inventories to approximately $6.0 million by December 31, 2004, and to further reduce them to approximately $5.0 million by June 30, 2005, which would result in a 40% decrease.

The company said they continue to “experience a large number of sales returns due to refused shipments,” which were approximately 5% of net sales fiscal 2004.

The net loss for the fiscal quarter expanded ten-fold to $1.7 million, or 53 cents per diluted share, versus a loss of $146,000, or six cents per diluted share, in the year-ago period. Management expects that net losses may continue into at least the fiscal 2005 first quarter.

The company has decided to discontinue fashion collection offerings under the HALEY RESERVE label and to delay the anticipated product launch under the Top-Flite label until an undetermined future date. The decision was reached jointly by Sport-Haley executives and Callaway Golf Company's management.

>>> Wanna’ bet Ashworth is waiting in the wings for the Top-Flite deal???