Spy Inc.s strategy of shedding licenses to focus on its eponymous action sports eyewear brand appears to be yielding results. The company reported sales of Spy-branded eyewear grew year-over-year for the eighth consecutive quarter to reach $9.0 million, up 14 percent from the first quarter of 2012.
Total company net sales increased by 11 percent, or $900,000, to $9.0 million compared to the first quarter of 2012, due to rapidly declining revenues from discontinued licensed brand products. Licensed products generated just $50,000 in the first quarter, compared with sales of $300,000 a year earlier and will generate no future sales.
Profitability also benefited. Gross margin increased 450 basis points to 51.1 percent, generating an additional $800,000 in gross profit. Total operating expenses SG&A expenses declined by $1.4 million to 50.8 percent of sales, compared to 73.1 percent of sales a year earlier. The huge drop was attributed to restructuring in the third quarter of last year that reduced expenses by $1.4 million. That caused results from operations to swing by $2.2 million to a profit of $29,000.
Spy reported a net loss of $700,000, compared to a net loss of $2.6 million in the first quarter of 2012, primarily due to the reduction in the loss from operations, which was partially offset by higher interest expense due to the higher debt.
President and CEO Michael Marckx said he expects the Spy Happy Lens, which he described as the most innovative product ever launched by the company, will continue to propel growth during the balance of the year. Moving forward, our Happy Lens Collection is expanding to include a growing list of new styles and will be featured in our Rx and Performance Collections, which will further leverage this innovation in new ways, he said.
