Cost-cutting efforts and strength from the team dealer business boosted fiscal fourth quarter earnings growth for Sport Supply Group, Inc., but top line revenues slipped 2.3% to $59.7 million for the period ended June 30 from $61.1 million in the year-ago quarter.  Sales from the company’s team dealer division increased $2.4 million but were offset by the catalog division, which saw revenues fall $3.6 million.


SG&A expenses improved by 5% and net income improved to $2.3 million, or 19 cents per diluted share, from $1.8 million, or 15 cents per diluted share, in the year-ago period.


Tightened SG&A costs were generated by expense reductions in personnel-related costs and professional and legal fees. Additionally, SSG settled a tax assessment for unpaid sales taxes and reduced a previously established reserve by $870,000 in the matter.


Gross margins eroded 30 basis points to 35.9% of net sales from 36.2% of sales while operating profit margins surged 70 basis points to 7.2% of sales from 6.5% of sales in fiscal Q4 last year.
Regarding the weakness in the catalog division, company Chairman and CEO Adam Blumenfield said he could foresee the eventual phasing out of the business as online sales continue to cut into catalog sales. “It may mean that the catalog, over time, gets thinner and you spend less money on paper distributing it,” Bluemenfield said. Blumenfield added that about 50% of catalog orders are currently processed online, and he believes that the trend will continue.


For outlook, Blumenfield said the company projects full year EPS to be between 89 cents and 97 cents with mid-single-digit top line growth.


Blumenfield said he expects to see gross margins slowly improve during the 2009 back half as industry trends “smooth out.”
Sport Supply group closed three transactions in the fourth quarter, including Webster’s Team Sports (Florida), Gus Doerner Team Sports (Indiana) and Har-Bell Athletics (Missouri). In a press release, the company said it continues to “review a number of interesting joint venture, business development, internal growth and external expansion opportunities.”