Escalade, Inc.’s revenues for the third quarter dropped 32.8% to $40.8 million from $60.7 million in the prior year. A net loss of $1.4 million, or 11 cents per share, compared to net income of $3.1 million, or 24 cents, in the prior year.
For the first nine months of 2008, revenue dropped 20.0% to $115.8 million, compared to $144.7 million in the prior year. A net loss of $2.9 million, or 23 cents per share, was recorded for the first nine months of 2008, compared to net income of $6.7 million, or 51 cents per share in the prior year.
Sporting Goods segment revenue declined 39.8% in the third quarter and 26.2% in the first nine months of 2008 compared to the prior year. Sales to mass retail customers declined 47% for the third quarter. Escalade said these customers have reduced inventories and consequently bought less of the company’s products in response to the weakened U.S. economy and lower sell through on game room products. Sales to Sears Holdings were down 71% in the first nine months of 2008 and are expected to decline further in the fourth quarter of 2008. The company has ceased to supply table tennis and billiard tables to Sears Holdings. Sales to specialty retailers and dealers were down 19.4% in the third quarter and were down 8.5 % in the first nine months of 2008. On a full year basis, the company expects Sporting Goods revenue for 2008 to be approximately 25% lower in 2008 compared to the prior year.
Escalade’s sports brands include: Goalrilla, Goaliath, Silverback, Stiga, Mizerak, Murrey Billiards, Mosconi Billiards, The Black Widow, ChildLife Harvard Game, Murrey Game, Accudart, Bear Archery, Fred Bear, Jennings Archery, The Step and US Weight.
Office Products segment revenue decreased 7.8% in the third quarter and 5.2% for the first nine months of 2008 when compared to the prior year. Excluding the benefit of foreign currency exchange rates, Office Products revenue declined 8.8% in the third quarter and 9.2% for the first nine months of 2008 when compared to the prior year.
Approximately two-thirds of this decline is due to lower sales to U.S. office supply mass retailers which are negatively impacted by the economy. The remainder of the decline is due to the slowing European economy, including Germany, France, and Spain.
Year-to-date, sales to the U.S. specialty/machine dealer and government channels were relatively unchanged. Going into the fourth quarter, the backlog of future orders to these customers exceeds the backlog from last year for the same period. On a full year basis, the company expects Office Products revenue for 2008 to be slightly lower compared to the prior year.
“The entire company is focused on building innovative, high value brands, while aggressively lowering our cost of operations. Our decision to close the production facility in Evansville and consolidate manufacturing in Mexico will result in substantial savings in 2009,” said Robert J. Keller, president and CEO of Escalade, Inc. “We anticipate that the weak retail market will continue to impact global sales next year. However, we are confident that the measures we are taking to introduce new products, expand retail distribution, and reduce our cost structure will bolster operating results in the future.”
