SRI Sports Limited, parent company to Srixon, Cleveland and Dunlop tennis in Japan, posted modest sales growth for 2007, but decreased margins led to a lower net income compared to 2006. The company has brighter hopes for 2008 as the new driver rules come into effect for its home country of Japan, while the newly acquired Cleveland Golf will begin to add its sales mix to the numbers in the U.S. market.
The company reported that net sales increased 1.7% for the fiscal year ending December 31, 2007 to ¥59.15 billion ($502.8 mm) from ¥58.15 billion ($500.1 mm) the year before.
Sales of golf merchandise increased 2.2% to ¥47.26 billion ($401.7 mm) from ¥46.24 billion ($397.7 mm) last year, while tennis sales grew 8.4% to ¥6.60 billion ($56.1 mm) from ¥6.09 billion ($52.3 mm). The golf and tennis increases were offset slightly by a 2.9% decrease in the company licensed business to ¥478.0 million ($4.1 mm) from ¥492.0 million ($4.2 mm) for 2006.
Sales to North America were ¥2.42 billion ($20.6 mm), while sales to the rest of the world were ¥4.21 billion ($35.8 mm). Within Japan, sales totaled ¥52.52 billion ($446.4 mm). The company did not give year-ago comparisons for geographic sales as Japan accounted for more than 90% of net sales in 2006.
Gross margins for the company decreased 120 basis points to 49.5% of net sales from 50.8% for 2006. That decline lead to a 9.3% decrease in net income to ¥3.07 billion ($26.1 mm) from ¥3.38 billion ($29.1 mm) last year.
Looking ahead, the company expects strong sales growth as Cleveland Golfs results begin to be included. Net sales for 2008 should increase 30.2% to ¥77.00 billion ($714.4 mm). The company anticipates operating profit growing 15.3% to ¥6.60 billion ($61.2 mm) with net income growing 4.3% to ¥3.20 billion ($29.7 mm).
