Sport-Haley Narrows Fiscal Q1 Loss…

Sport-Haley, Inc. saw the addition of the Top Flite business help add to its top line in the company’s fiscal first quarter, while its established Ben Hogan and Sport Haley brands both saw slight downturns. Nevertheless, the company was able to trim its quarterly loss.

Net sales for the quarter totaled $4.7 million, an increase of 17% from net sales of $4.1 million for the comparable period in the prior fiscal year. The comparative increase was attributed to sales of branded apparel. Net sales of Sport Haley apparel collections were $1.3 million, down slightly from $1.5 million last year. Net sales of Ben Hogan apparel collections were $2.0 million, down from $2.3 million last year, while net sales of Top-Flite branded apparel were $1.2 million for the quarter, comprised of $1.0 million in sales to Wal-Mart and sales of $185,000 to other markets for the disposition of the company’s remaining branded apparel inventories.

Gross margin for the Sport Haley and Ben Hogan lines was 34% for Q1, up 100 basis points from 33% in the year-ago period. Gross margin for Top-Flite branded apparel was 25%, a “substantial improvement” from recent prior periods. As a percentage of net sales, SG&A expenses with regard to the fashion apparel segment rose 200 basis points to 45% from 43% in the year-ago period. SG&A expenses in the branded apparel segment were 12% for the quarter.

The company managed to fight off the expenses increase with its margin and sales improvements, but only enough to slim the quarterly net loss, not enough to flip it to a profit. Net loss for the quarter was $397,000, shrinking 25% from a net loss of $528,000 for the same period in the prior fiscal year. In diluted share terms, the loss was 14 cents in this year’s quarter, while 20 cents for the year-ago.

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Teresa Hartford

Teresa Hartford Group Publisher & Creative Director | SGB Media teresa@sgbonline.com | 704.651.5741

Sport-Haley Narrows Fiscal Q1 Loss

Sport-Haley, Inc. net sales for the three months ended September 30, 2006 were $4.7 million, an increase of $662,000, or 17%, from net sales of $4.1 million for the comparable period in the prior fiscal year. The comparative increase was primarily due to sales of branded apparel during the three months ended September 30, 2006.

Net sales of SPORT HALEY® apparel collections were $1.3 million comparedt to $1.5 million last year. Net sales of Ben Hogan® apparel collections were $2.0 million compared to $2.3 million last year. Net sales of Top-Flite® branded apparel were $1.2 million for the three months ended September 30, 2006, comprised of sales to Wal-Mart of $1.0 million and sales of $185,000 to other markets for the disposition of our remaining branded apparel inventories.

Gross margin with respect to net sales of SPORT HALEY® and Ben Hogan® fashion golf apparel was 34% for the three months ended September 30, 2006, and was 33% for the three months ended September 30, 2005, respectively. Gross margin with respect to net sales of Top-Flite® branded apparel for the three months ended September 30, 2006, was 25%, a substantial improvement from the margins attained on net sales of branded golf apparel in recent prior periods.

As a percentage of net sales, selling, general and administrative expenses with regard to the fashion apparel segment were approximately 45% and 43% for the three-month periods ended September 30, 2006 and 2005, respectively. As a percentage of net sales, selling, general and administrative expenses with regard to the branded apparel segment were 12% for the three months ended September 30, 2006.

Net loss for the three months ended September 30, 2006, was $397,000, a difference of $131,000, or 25%, as compared with the net loss of $528,000 for the same period in the prior fiscal year. Both the basic and diluted losses per share were 14 cents for the quarter ended September 30, 2006. Both the basic and diluted losses per share were 20 cents for the same quarter in the prior fiscal year.

 
                              SPORT-HALEY, INC.
                       Unaudited Financial Information

                                               Three Months Ended
                                                   September 30,
                                           --------------------------
                                               2006           2005
                                           -----------    -----------
Statements of Income Data:

Net sales                                   $4,673,000     $4,011,000

Gross profit                                 1,502,000      1,305,000

Total other operating costs                  1,931,000      1,887,000

Loss from operations                          (429,000)      (582,000)

Net loss                                      (397,000)      (528,000)

Basic loss per common share                     ($0.14)        ($0.20)

Basic average weighted shares outstanding    2,770,000      2,685,000

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