Despite a 3.1% dip in sales, Sport Supply Group reported third quarter earnings rose 3.9% to $3.5 million, or 27 cents a share, from $3.4 million, or 25 cents per share, as the company tightened its cost controls. Net sales for the third quarter ended March 31 decreased 3.1% to $63.8 million from the fiscal third quarter last year, which the company attributed to a decrease in catalog division sales.

Gross margin contracted a bit to 35.4% of sales, down 120 basis points from the prior year period. SG&A expenses of $16.0 million were down 10.0%, or $1.7 million, from the prior year. Operating profit gained 3.9% to $6.6 million. Operating margins of 10.3% were up 70 basis points from 9.6% the prior year. EBITDA of $7.3 million was essentially even with the prior year.

Company Chairman and CEO Adam Blumenfeld said in a conference call with analysts that the company’s Team Dealer platform, which is about 90% school and college related and 10% youth leagues and out-of-school sports clubs, is seeing “better demand on a slight basis than the Catalog platform is seeing, namely due to the commodity that they are selling and the personal relationships that they have… It's a uniform-intensive platform.”

The Team Dealer category reported net sales for the quarter of $21.3 million, of 33% of total net sales, down slightly from sales of $21.5 million recorded in fiscal Q3 last year, which was also 33% of the total net sales for that period.

Blumenfeld went on to say that RBI’s catalog group, which is comprised of schools and school districts, felt the brunt of the economic downturn with slightly negative sales year-to-date. The group reported net sales for the quarter of $42.5 million, making up the remaining 66% of total net sales. This is a 4.2% slide from last year’s catalog group sales of $44.3 million, which also made up 66% of total sales. “It is an equipment-intensive platform. We do not see the number of large orders, large being 25,000 or more, that we would see in an ordinary year,” Blumenfeld continued. Within the catalog platform, RBI’s B2C Internet activity is the company’s fastest-growing segment, growing at a $50,000 to $100,000 per week rate over the prior year, driven largely by improvements in technology.

Looking at categories, municipal or city business and out-of-school youth sport business showed weak sales numbers in the third quarter, while schools remained positive. The company’s redistribution network, cornerstoned by 60 team dealers, is up for the quarter and year.
Blumenfeld said the company intends to pay off its approximately $29 million of convertible debt over the next year.