Escalade Inc. said it will cease supplying table tennis and billiard tables to Sears Holdings in the second half of 2008.
The company remarked on its decision while reporting that first quarter revenues in its sporting goods segment dropped 14.6% to $17.5 million from $20.5 million for the year-ago quarter. The segment showed a net loss of $1.07 million in the period versus earnings of $43,000 a year ago. An operating loss of $1.3 million compared with operating earnings of $522,000 a year earlier.
Approximately 74% of the sporting goods segments sales decline relates to the company's mass-market retail customers who it reports are experiencing lower than expected sell-through on game room products. General market demand for game room products has been declining for several years and this decline has been accelerated in 2008 by worsening economic conditions in the U.S. In response, several of the company's mass-market retail customers have initiated efforts to reduce their inventories and consequently buy less of the Escalade's products.
Sales to Escalade's largest mass-market retail customer, Sears Holdings, were down 60%. The table tennis and billiard tables business Escalade plans to stop selling to Sears comprised 50% of total sales to the retailer in fiscal 2007. Sales to specialty retailers and dealers were down 9% in Q1 due principally to delayed production and shipment of archery bows.
Based on first quarter results and early product placement information, Escalade currently expects sporting goods sales for 2008 to be approximately 12% lower in 2008.
Overall, Escalade reported a net loss of $848,000, or 7 cents a share, versus a net profit of $1.1 million, or 8 cents a share, a year ago. Revenues dropped to $29.2 million from $33.5 million a year ago. Sales were down 11% in its other major segment, office products.
