Escalade Sports saw second quarter net sales decline 3.7% to $28.6 million from $29.7 million in the year-ago period. Operating income was down 8.0% for the period, resulting in a 10.3% operating margin. Net income in the Sporting Goods unit of Escalade, Inc. was down 6.6% for the period to $1.6 million, compared to net income of $1.7 million in Q2 last year.
Roughly half of the sales decline for the period was due to Escalade Sports largest customer, Sears, discontinuing the sale of an arcade style gaming product first sold by the retailer in 2004. The product represented about $7 million in sales to Sears last year. The balance of the sales decline was attributed to an “aggressive inventory control and pricing adjustment program” initiated by Sears, which increased the retail pricing on the products.
ESCA said they expect their Sears sales volume to be down $14 million to $18 million compared to last year. The decline in sales to Sears will be partially offset by gains in other customers and the addition of residential playground system sales related to the Child Life acquisition in Q1 this year. Still, the company expects that total sales for the Sporting Goods segment in 2005 will be “down somewhat” compared to last year.
