Escalade, Inc. net sales for the second quarter increased 2.7% to $48.9 million from $47.6 million last year. However, higher selling and marketing costs, primarily in the Sporting Goods business, resulted in a 56.5% decrease in net income to $1.0 million from $2.3 million last year. Earnings per share for the second quarter were down to 8 cents per share from 17 cents per share last year.
Net sales in the Sporting Goods business increased 16.1% in the second quarter to $33.2 million. Management attributed the increase in sporting goods sales primarily to its acquisitions of Woodplay and Carolina Archery Products, both of which were completed in 2006, as well as to growth in existing product lines.
While the company anticipates increased product placement of its sporting goods product for the 2006 holiday shopping season, management believes that total 2006 sales to mass market retailers will be approximately flat compared to 2005.
ESCAs year-to-date gains in Sporting Goods revenues have been offset by higher sales and marketing costs, start-up costs associated with the new manufacturing plant built in Reynosa, Mexico, and interest costs associated with the recent acquisitions, resulting in lower profits from the Sporting Goods business compared to last year.
Net income from Sporting Goods was down 56.3% to $0.7 million for the second quarter from $1.6 million for the same period last year. Management considered approximately $1.0 million of the increased selling and marketing costs to be non-recurring.
Going forward, management expects “incremental gains” in revenues and profits over 2005.
