Net sales at Easton-Bell Sports Inc. rose 4.3% in the first quarter ended March 29 on the strength of its Bell action sports business. However, the company said margins in that business shrank because it was unable to pass along rising raw material and transportation costs fast enough.

In the Team Sports segment, net sales decreased $1.2 million, or 1.2%, to $100.8 million compared to the first fiscal quarter of 2007. Sales declined primarily due to lower sales of football and ice hockey equipment and reconditioning services, which was partially offset by increased sales of baseball and softball equipment and accessories.


Cost of sales as a percentage of net sales fell 150 basis points to 62.9% thanks primarily to higher prices and lower production costs. The company shuttered a plant in Van Nuys, CA. in the second quarter of 2007 and moved production of aluminum bats to Asia to cut costs. Gross margins rose 150 basis points to 37.1%, while operating margins rose 260 basis points to 15.2% of sales.


In the company’s Action Sports segment, net sales rose $8.7 million, or 12.0%, to $81.3 million, compared to the first fiscal quarter of 2007. The increase resulted from the growth in sales of cycling helmets and accessories, snow helmets, eyewear and fitness related products. Ski helmets were one of the hottest selling snow sports categories this past season, according to multiple industry reports.


Still, cost of sales rose 160 points because raw material, finished goods and freight costs rose more quickly than Easton-Bell’s selling prices. Gross margins fell 160 points to 29%, while operating margins rose 60 basis points to 9.1% of sales.