Sport Supply Group, Inc. reported record sales of $73.6 million and a diluted EPS of 35 cents for its first quarter ended Sept. 30, 2008, despite an increasingly troubled economy. Net sales grew 4.6% from $70.4 million to $73.6 million while net income grew 23.6% from $4.1 million to $5.1 million. These numbers were affected by the company buying back $5.5 million of its convertible bonds during the quarter at low prices, and an additional $7 million in bonds since the quarter end.

Chairman and CEO Adam Blumenfeld discussed the impact of recent economic conditions during a Nov. 4 earnings conference call. “In the period… what we saw was a lack of large orders. And so kind of a natural response to fear in the market. We saw a lack of large $20,000, $30,000, $40,000, $50,000 CapEx orders.”

“…We did not see the Federal Government spend like it normally spends at the end of September and that also kind of feeds into that lack of large orders,” he continued. “And we saw some weakness at the city level, park and recreation departments not spending to the tune that they were budgeted to. But by contrast, we saw relative strength in elementary sales, up almost 25%, and in school sales in general up 6% to 7%. So some of the weakness we saw on the city and federal side was balanced out by some strength on the school side.”

RBI now estimates annualized net revenue growth in FY09 will be in the low-to-mid single-digits, and slightly modified its FY09 diluted EPS range of 85 cents to 95 cents to 82 cents to 92 cents. The midpoint of this range implies a mid-teens growth rate when compared to FY08 EPS of 76 cents.

Despite the positive first quarter, Blumenfeld stated that the company isn’t immune from the troubling economy, and has been preparing itself for a difficult 2009 by doing some internal restructuring. “[Sport Supply Group has been] realigning and combining our outbound selling teams… We have rapidly moved forward on the completion of our outsourcing efforts of certain manufacturing operations in Dallas and in California. We've completed the outsourcing of Florida screen-printing.”