Sport-Haley, Inc. reported a loss of $1.28 million, or a loss of 52 cents per share, for its first fiscal quarter ended September 30, 2004, compared with a loss of $161,000, or a loss of 7 cents per share, in the first quarter of the previous fiscal year.
Net sales increased approximately 29%, or $1,258,000, to $5,570,000 in the fiscal quarter ended September 30, 2004 from $4,312,000 in the same period in the prior fiscal year. Gross profit increased approximately 8%, or $130,000, to $1,770,000 from $1,640,000, while selling, general and administrative expenses increased approximately 57%, or $1,112,000, from $1,945,000 in the comparable prior fiscal year period to $3,057,000 in the first fiscal quarter. The net loss of $1,276,000 reflected a difference of approximately $1,115,000, or 693%, from the prior fiscal year’s first quarter loss of $161,000.
Commenting on the results of operations, Donald W. Jewell, Interim Chief Executive Officer, stated, “Were really pleased with the comparative increase in sales this quarter. Unfortunately, for a number of reasons, we were not able to push the increase in sales through to the bottom line. The results for the comparative quarters would have been similar except for two separate items. As we disclosed last quarter, subsequent to the death of our former chairman, Robert G. Tomlinson, pursuant to a settlement agreement, we paid his estate the lump sum amount of $650,000, which we recorded this quarter as a selling, general and administrative expense. The Company also set a goal in October this year to attempt to arrange for the disposal of a majority of our obsolete inventories by December 31, 2004. This goal caused us to accelerate our disposition plans and to revise our analysis regarding the valuation of obsolete inventories, and we recorded a write-down of finished goods inventories of $543,000 that is included in our cost of goods sold for this quarter.”
“We anticipate that our losses will continue at least into the next quarter,” continued Mr. Jewell. “In October, our Board of Directors relieved Kevin M. Tomlinson of his duties as our Chief Executive Officer and President. Under the terms of his employment agreement, Mr. Tomlinson is entitled to receive severance and other compensation, which we expect to record as selling, general and administrative expense in our second quarter. We estimate the severance and other compensation will be approximately $480,000 to $550,000.”
Mr. Jewell continued, “My immediate goal is to return this company to profitability. Therefore, in the next couple of months, we plan to thoroughly analyze our operations, including our selling, general and administrative expenses, to determine how we can operate more efficiently.”
Unaudited Financial Information
Three Months Ended
Statements of Income Data:
Net sales $ 5,570,000 $ 4,312,000
Loss from operations (1,287,000) (305,000)
Net loss (1,276,000) (161,000)
Basic earnings (loss) per common share $ (0.52) $ (0.07)