Broder Bros. reported that sales for the fiscal third quarter ended Sept. 25 increased 9.2% to $210.7 million from $193.0 million a year ago. Net income was $6.0 million compared to a net loss of $1.4 million for Q3 2009.


EBITDA during the quarter, including certain restructuring charges, was $16.3 million compared to $6.0 million a year ago. Excluding the charges, EBITDA was $16.5 million compared to $7.0 million a year ago.

 

Management said the company’s unit volume growth was adversely impacted during the quarter due to supply chain issues at major suppliers, while some suppliers struggled to fulfill purchase orders due to factors including the scarcity of cotton that has resulted from the floods in Pakistan and the scarcity of sewing as a result of the earthquake in Haiti. The company's unit volume growth was stronger in the fleece and knit woven shirt categories than in the T-shirt category, where supply chain issues are more prevalent.  Management expects supply chain issues to continue to persist through 2010.


Gross margins for quarter expanded 350 basis points, an improvement management attributed to a 5% increase in unit volumes and strong sales products that had been acquired in prior quarters when their costs were lower.


Despite two cost increases announced by major suppliers during the third quarter 2010, management said demand remained relatively strong, adding that the strong demand for the products the company sells has allowed the company to increase its selling prices generally in line with the supplier cost increases.  A third price increase was announced by major suppliers in October 2010. 


The company again increased its selling prices in response to that announcement and will likely achieve higher gross margins during the fourth quarter 2010 relative to the fourth quarter 2009 as the company sells through inventory purchased at pre-price increase costs.