In a conference call discussing Cutter & Buck’s third quarter, the company welcomed its new CEO Ernie Johnson and its new president, Kaia Akre. Both are replacing the recently retired CEO and president, Tom Wyatt. It was handshakes all around as the new members were greeted with a 29% sales jump and a switch from a net loss last year to a net profit this time around.

The third quarter revenue increase reflected both sales of discontinued styles and positive trends in year-over-year Spring product placements, according to Ernie Johnson, CEO of Cutter & Buck. “In the first two months of the quarter, sales increases in our two largest channels, golf and corporate, were driven primarily by the continued selling of our discontinued styles at discounted prices. This not only increased sales, albeit at a lower margin, but also reduced the amount of inventory we ultimately liquidated in January and February. Beginning in January, sales increases in these channels were attributable to our new Classics and Spring fashion product,” continued Johnson. The company has about $800,000 worth of discontinued inventory that will need to be liquidated during the fourth quarter, but expects margins to rebound moving forward.

Third quarter sales in the corporate channel increased 15.7% over the previous year. This increase was due largely to the sales of discontinued Classics styles and the introduction of the new Classics line. The new line includes a larger assortment of technical fabrications and women's companion styles than previous lines.

Cutter & Buck, Inc.
Fiscal Third Quarter Results
(in $ millions) 2006 2005 Change
Total Sales $31.2  $24.2  +29.0%
Golf $5.0  $4.4  +14.5%
Corporate $14.5  $12.6  +15.7%
Specialty Retail $5.9  $4.1  +43.3%
Consumer Direct $2.4  $0.8  +219%
International $0.8  $0.9  -12.1%
Other $2.7  $1.6  +70.7%
Gross Margin % 44.1% 45.2% -110 bps
SG&A % 40.3% 45.4% -510 bps
Net Income $0.5  ($0.4) vs. loss
Diluted EPS (4¢) vs. loss
Inventories* $27.8  $28.9  -4.1%
Acct Rec*  $18.6 $12.7 +46.1%