In spite of a 23.2% increase in overall revenues during the first quarter, Everlast Inc. posted a net loss of $93,000 compared to a net income of $188,000 in Q1 last year. While the company did take a $72,000 write-down for discontinued operations, eroding gross margins, and climbing marketing and selling expenses were the main drivers behind the loss. EVST reported a diluted loss per share of 2 cents versus diluted earnings per share of 4 cents last year.
Net sales of apparel and sporting goods increased 16% to $9.1 million compared with $7.9 million in the first quarter of fiscal 2004. Net licensing revenues jumped 49.3% to $3.1 million compared with $2.1 million in the prior period. Gross margin fell 340 basis points to 38.3%, but operating expenses declined 170 basis points to 34.2% of sales. The companys operating margin dropped to 4.1% versus 5.7% last year with a $22,000 loss from continued operations.