Spy Inc. continued to grow sales and trim losses in the second quarter, but expects growth to taper off for the rest of the year as dealers postpone purchasing its snow goggles until they can sell through competitors’ products carried over from last winter.
“Based on our current visibility, we remain cautious given the impacts of last year's lack of snow,” said Michael Marckx, president and CEO. “We recognize that many of our retailers did not sell through other brands of snow goggles last year as they had hoped, and thus have fewer open-to-buy dollars, even though the SPY goggles performed well. We do not see anywhere close to the same level of growth this year compared to the growth we had last year.”
SPY reported total net sales increased by $500,000, or 5 percent, to $9.5 million in the second quarter ended June 30. Gross margin slipped to 50.2 percent, down 412 basis points from a year earlier as a result of a higher mix of lower margin sales to foreign distributors, deeper discounts on volume sales of Spy branded product to key retailers and rising air freight costs. Net loss reached $1.6 million, compared to a net loss of $3.0 million during the quarter ended June 30, 2011, due primarily to lower G&A expenses, offset by increased sales and marketing expenses incurred to promote the Spy brand. 2011 also included operating expenses of $2.0 million, substantially all related to SPY’s decision to halt purchases of licensed products.
Sales of core Spy brand products increased for the fifth consecutive quarter, growing by $1.1 million, or 13 percent, to $9.3 million, compared with core Spy brand sales of $8.2 million during the quarter ended June 30, 2011. Sales of the brand are up 17 percent through the first half, while sales of licensed product declined $600,000 to $400,000.
