Axil Brands, Inc., the emerging global consumer products company for AXIL hearing protection and enhancement products and other personal care products, reported net sales increased 5.4 percent to $7.3 million in the fiscal third quarter ended February 28, compared to $6.9 million in the prior-year Q3 period. The company reported that growth was primarily driven by continued demand for its hearing enhancement and protective equipment products, partially offset by lower sales in the hair and skin care segment, which were impacted by the absence of a significant distributor order fulfilled in the prior-year period.
Gross profit increased 1.5 percent to $5.0 million in Q3, and gross margin declined 260 basis points to 69.1 percent of net sales, as compared to 71.7 percent for the prior-year Q3 period. Gross profit as a percentage of sales reportedly decreased primarily due to higher customs duties (increased tariffs).
Operating expenses increased 10.1 percent year-over-year to $4.8 million in the fiscal third quarter. Operating expenses as a percentage of net revenues were 66.2 percent, compared to 63.3 percent for the prior-year Q3 period. Operating expenses reportedly increased primarily due to higher sales and marketing expenses of approximately $400,000, reflecting increased investment in retail sales promotional initiatives and efforts to enhance overall brand awareness.
Income from operations for the fiscal third quarter was $214,239, compared to $583,109 for the prior-year Q3 period. The $368,870 decrease in income from operations is primarily due to higher sales and marketing costs.
Net income was $203,046 for the fiscal third quarter, compared to $576,662 in the prior-year period.
Adjusted EBITDA decreased 47.1 percent to $470,794 for Q3 from $890,546 for the prior-year Q3 period. Adjusted EBITDA as a percentage of sales, net for the fiscal third quarter and 2025, was reportedly 6.5 percent and 12.9 percent, respectively. The company said Adjusted EBITDA decreased primarily due to an approximately $400,000 increase in retail sales and marketing expenses, reflecting continued investment in our channel diversification strategy and broader brand-building initiatives aimed at driving long-term revenue growth.
“Seasonal order patterns coupled with incremental spending required in connection with our retail distribution expansion temporarily compressed our margins and bottom line in the fiscal third quarter of 2026,” company management explained in an earnings release. That said, they said they are on track for a strong finish to the year and expect an “increased investment in marketing and customer experience to drive long-term revenue expansion, deepen brand awareness, and strengthen our competitive position now and for the future.”
Image courtesy Axil Brands, Inc.
