Sport-Haley cut its net loss for the fiscal first quarter ended September 30 to only $426,000, or a loss of 16 cents per share, compared with a net loss of $1,276,000, or 52 cents per share last year. This improvement was achieved in spite of a considerable top-line decline caused by the discontinued Sport-Haley brand of men's fashion apparel, which accounted for over $1.0 million of the company’s net sales during the fiscal first quarter of 2004.

Because of this discontinued line, net sales during this seasonally slow quarter decreased by 28% to $4.0 million compared to $5.6 million last year. Net sales of Sport-Haley branded women’s apparel were said to be flat compared to last year, while sales of Ben Hogan men’s apparel showed a declined of 13.0% to $2.3 million compared to $2.7 million last year. This decline was said to be due to shipment timing pushing orders back into fiscal Q2. Gross margins increased by 80 basis points to 32.5% of sales in Q1, compared to 31.7% last year. Operating costs decreased 41.4% to $1.8 million compared to $3.1 million last year. As a percentage of net sales, SG&A expenses were 41% during the fiscal quarter compared to 51% last year.

Sport Haley is also looking to its recently announced joint venture with Explorer Gear USA to boost the top and bottom line. Explorer Gear will use Sport-Haley’s license with Callaway to manufacture and market Top-Flite branded apparel to Wal-Mart Stores. Callaway has given SPOR its consent to use the Top-Flite license in connection with the EG, subject to certain conditions.

Sport-Haley’s interim CEO, Donald W. Jewell said that he feels confident that the cost cutting steps the company has undertaken are moving in the right direction. However, Sport-Haley will continue to try and reduce expenses further while at the same time looking for opportunities to grow the top-line. Looking forward, Jewell also stated that he believes Sport-Haley will return to profitability during this fiscal year.