Sport-Haley said it is “disappointed” with sales of its Haley branded product, especially with the decrease seen in the men’s apparel segment, but appear to be quite happy with the gains seen in the Ben Hogan brand apparel licensed through the Top-Flite Golf Company, which was acquired late last year by Callaway Golf Company.

SPOR may be nervous about the future of its Hogan license, so much so that it is pouring heavy resources into the initial launch of the new Top-Flite brand apparel collection that is also under license with the company. Callaway currently licenses its apparel business to Ashworth.

Total net sales for the fiscal third quarter ended March 31 declined 2.5% to $5.4 million from net sales of $5.5 million in the year-ago period. The company said that much of the decline in sales was attributable to a shift in policy regarding salesman samples that were invoiced in the year-ago period but not this year. The potential policy shift would see reps essentially getting free samples they could return.

Hogan sales increased 19.9% to $1.6 million from $1.3 million in fiscal Q3 last year. Sales of non-Hogan product decreased 9.8% to $3.8 million. Hogan was 30% of sales in Q3 this year versus 24% of sales in the year-ago period. Company president and CEO Kevin Tomlinson said that he sees “continued increases of Ben Hogan apparel sales” based on Fall ’04 bookings. He was also upbeat about the prospects of the Haley women’s apparel line based on the early bookings read. The company said it “continues to be frustrated” with its inability to increase or maintain sales revenues of the men’s Haley apparel products.

Gross margins narrowed for the quarter to approximately 39.0% of sales from 41.6% of sales in Q3 last year, due primarily to “a buildup in closeout inventories that must be sold at reduced prices”. Net income, which was impacted by an inventory write-down, severance expenses for the former CEO, and deferred tax expenses, jumped almost 800% to a loss of $693,000 from a net loss of $79,000 for the same fiscal quarter last year. Excluding like charges in both years, the net loss would have been reduced 36.8% to $24,000.

Tomlinson said the write-down was necessary as the company moves to “liquidate a significant amount” of excess inventories prior to the end of the current calendar year.
Management said it expects to introduce the initial lines of Top-Flite apparel near the end of calendar year 2004.

>>> Ahhh… The joys of being a public company… We wonder how much the costs of reporting as such impacts these guys…