Sport Supply Group, Inc. reported net income of 4 cents per diluted share for the fiscal second-quarter ended December 31, 2007. The record second quarter profit compared to a loss of 9 cents for the year-ago quarter. After posting the net gain, the company increased its earnings guidance for FY08 from a range of 60 cents to 70 cents to a range of 65 cents to 73 cents per diluted share.


For the quarter, revenues increased approximately 10% to $54 million from $49 million for last year's second quarter. Gross margins improved 40 bps to 35.6% vs. 35.2% last year as operating profit jumped 1,210% to $1.6 million from $125,000 last year. Inventories were down 21% to $31.8 million from $40.1 million at 12/31/06.


Regarding the quarter and year-to-date results, Adam Blumenfeld, chairman and CEO, stated: “We are extremely pleased with the strong Quarterly and Year-to-date results released today, and accordingly have increased our FY08 earnings guidance to a range of $0.65 – $0.73 per share. The combination of strong top line growth, continued gross margin expansion, and SG&A growth slowing to a 2% increase over the prior year’s comparative period all helped produce the most profitable second quarter in the Company’s history. To generate nearly 10% top line growth and significant operating profit of $1.6 Million in what is traditionally our slowest operating period of the year is testament to the successful integration work our employees achieved over the last 18 months. It speaks to the powerful and scalable business platform we believe we have built to service the institutional markets.”

“We are equally as pleased with our balance sheet, where on-hand cash grew by more than $6 million in the Quarter to $10.0 Million in the midst of our seasonal inventory build to prepare for spring, highlighting continued strong cash flow generation by the Company. Despite the seasonal inventory build, consolidated inventories remain 21% lower than the year ago period – an $8.3 million year over year reduction – a byproduct of the SKU rationalization project undertaken in FY07, better merchandising and faster inventory turns.”


Regarding future plans, Mr. Blumenfeld continued: “Over the last 18 months we have worked hard to simplify our business platform and prepare for significant, profitable growth opportunities. With the integration phase largely complete, the Company finds itself in ‘Optimization and Growth’ mode. We have initiated a number of internal campaigns to help penetrate deeper into both existing and new markets in FY09. As well, given the strength of our balance sheet and fragmentation of the sporting goods marketplace, we continue to evaluate a number of joint-venture, corporate development, and acquisition-related opportunities as a means of further enhancing our critical mass and profitability. We think the Company is well positioned both financially and strategically to take advantage of organic and acquired expansion opportunities.”