Despite a solid sales increase and gains in the gross margin line, The Hockey Company swung to a loss in the first quarter, due primarily to extraordinary expenses and foreign exchange losses on long-term debt.
The company posted a net loss of $4.4 million, or 36 cents per share, in the first quarter versus net income of $1.0 million, or 14 cents per share, in the year-ago period. Gross margin improved 110 basis points to 45.3% of sales compared with 44.2% in Q1 2003.
Net sales for the period increased 12.7% to $42.6 million, compared with $37.8 million in Q1 last year. Currency-neutral sales increased approximately 3.7%, with $3.4 million of the net sales gain from FX rate benefits.
The foreign exchange loss on long-term debt amounted to approximately $900,000 on an after-tax basis for the period. Before tax items affecting the EBITDA line include about $1.3 million associated with Reeboks offer to acquire the company, an environmental remediation reserve, and restructuring charges resulting from certain Canadian plant closures.
The company pointed to “very strong demand” in composite hockey sticks, especially the new CCM Vector 120 one-piece stick, and in Licensed Apparel, especially NHL replica jerseys, which helped improve gross margins level. Other product categories were flat to LY.
