Heavy markdowns and close-out sales boosted revenues at Sport-Haley by 5.0% to $5.0 million during the companys second fiscal quarter, compared to $4.8 million last year. Gross profit margin fell nearly 30 full percentage points to 9.2% of sales compared to 39.0% of sales last year. This drastic reduction in margins was the result of the companys efforts to clean up inventory left over from Spring 2004. Fall 2004 inventories still need to be cleared out, but the company feels it is in much better shape with its spring 2005 products.
Net sales of Ben Hogan branded apparel for the fiscal quarter totaled $2.0 million, or 40% of total net sales, compared to $1.4 million in 2003, or 30% of total net sales. The company said that sales of its Haley branded apparel continued to decline.
SG&A expenses were approximately 50% of net sales for Q2 of 2005 as compared with 42% for 2004. These expenses were related to the death of former Chairman, Robert G. Tomlinson, and the subsequent departure of his son Kevin Tomlinson, who served as CEO.
“The death benefit, severance, and other compensation paid or accrued pursuant to employment agreements in place with our late chairman and our former CEO severely impacted the results of our operations for the six-month period,” stated Donald Jewell, Interim CEO. “Had we not incurred those expenses, our SG&A would have been comparable to last year.”
These factors caused the Sport Haley financial officers to pull out the red ink once again. The company posted a net loss of $2.0 million, or 77 cents per share, compared to a net income of $11,000, or zero cents per share last year.
>>> These guys should pay attention to Hogan. Ashworth, which handles apparel for Hogans parent Callaway, is well positioned to make it work…