Escalade Sports Sees Q2 Sales Fall on Weak Retail Sell-Through

Sporting Goods segment revenue declined 14% in the second quarter and in the first half of 2008 compared to the prior year. During this period, sales to mass retail customers declined 23%. These customers are experiencing lower sell through on game room products due to consumer uncertainty associated with the weak U.S. economy. In response, several of the company’s retail customers have reduced inventories and consequently bought less of the company’s products.

 

Sales to Sears Holdings were down 66% in the first half of 2008 and are expected to decline further in the second half of 2008 because the company has ceased to supply table tennis and billiard tables to Sears Holdings. These product lines comprised 50% of total sales to Sears Holdings in fiscal 2007. Sales to specialty retailers and dealers were relatively unchanged in the first half of 2008 and are expected to be similar in the second half compared to the same period in 2007.

 

Based on first half results and product placement information, ESCA expects Sporting Goods revenue for 2008 to be approximately 20% lower in 2008 compared to the prior year.

 

“We continue to experience the challenges of a weak retail market. Faced with these conditions, our distributors and retailers are applying caution through reduced inventory levels and lower promotional spending,” said Robert J. Keller, president and CEO of Escalade, Inc. “We are focused on building our core businesses and growing market share in key categories. More than ever, consumers want the superior quality and product innovation recognized in our flagship brands, including Stiga, Goalrilla, Woodplay, Bear Archery and Intimus. We also anticipate recent advances in the distribution of our product line to major retailers and specialty dealers will have a positive impact on our second half results.”