Sport-Haley, Inc. remains on a search for a place to sell its Top-Flite branded apparel after Wal Mart stopped carrying the brand after in September 2006. The loss of that customer hurt sales, which paired with the loss of a major order for the Ben Hogan brand in the year-ago quarter, caused the year-over-year metric to decrease. The bad news for the company didnt end on the top line, however, as expenses increased and net income turned to a loss for the fiscal second quarter.
Net sales for the fiscal second quarter ended December 31, 2006, were $4.2 million, decreasing 5% from $4.4 million for the same period last year. Net sales of SPORT HALEY fashion apparel collections were $1.9 million, increasing 30% from $1.4 million during last year's quarter; but, net sales of Ben Hogan decreased 23% to $2.2 million in the quarter from last year's $2.8 million. The decreases in Ben Hogan sales were attributed by the company to a $913,000 sale to a major retailer in December 2005 that did not recur in 2006.
As a percentage of net sales, gross profit was flat at 37% for the quarter. SG&A expenses increased 790 basis points to 40.4% of net sales from 32.5% last year. When you have increases in expenses, flat margins, and decreased sales, its pretty tough to see any improvements on the bottom line, which is exactly what happened with Sport-Haley as the company posted a net loss $221,000 for the quarter after a net profit of $99,000 during last years quarter. In diluted earnings per share terms, this translates to a loss of 8 cents this quarter after a gain of 3 cents last year.
