Spy Inc. reported third quarter sales were $11.0 million in 2014, an increase of 8.1 percent or $0.8 million more than in the third quarter of 2013. The increase in net sales was primarily driven by strong goggle sales and continued growth in prescription frames. Gross profit as a percentage of net sales was 49.2 percent for the three months ended September 30, 2014, compared to 48.5 percent for the three months ended September 30, 2013.
First nine month sales were $28.4 million in 2014, a decrease of 2.7 percent or $0.8 million less than in the first nine months of 2013. Sales included lower closeout sales of $1.2 million in 2014, compared to $2.0 million in 2013. The decrease in net sales was primarily driven by an overall decline in the consumer market coupled with several key retailers currently holding lower levels of inventory and fewer closeout sales of sunglasses. Gross profit as a percentage of net sales was 51.9 percent for the nine months ended September 30, 2014, compared to 50.8 percent for the nine months ended September 30, 2013.
“In third quarter, we were happy to get back into our positive sales trend with growth in the quarter in four of our five major categories; RX, moto goggles, snow goggles and sunglasses,” said Michael Marckx, president and CEO. “In addition, the continued margin expansion is a direct result of the strategic product sourcing initiatives and our brand’s more premium positioning. We achieved a solid operating profit margin along with a very successful launch of our new snow goggle line, including the launch of our proprietary Happy Lens in the snow category, which positions us well for the final quarter of 2014. In Q4, we will focus on fulfilling snow goggle orders, further expanding our Happy Lens offering, driving our sales growth, improving our product margins and launching our 2015 product line.”
Income from operations increased by $0.1 million to $0.6 million in the third quarter of 2014, compared to income from operations of approximately $0.5 million in the third quarter of 2013. The $0.1 million increase was partially due to the increase in sales and a 70 basis point improvement in gross profit as a percent of sales. Additionally, total operating expenses in the third quarter of 2014 were higher by $0.3 million, compared to the third quarter of 2013.
Income from operations remained constant and was $0.8 million and $0.8 million for the nine months ended in 2014 and 2013. Although sales decreased it was offset with a 110 basis point improvement in gross profit as a percent of sales. Additionally, total operating expenses in the first nine months of 2014 were lower by $0.1 million, compared to the same period in 2013. Cash flow used in operating activities was less than $0.1 million in the first nine months of 2014.
The company incurred a net loss of less than $0.1 million and $0.3 million during the third quarter of 2014 and 2013, respectively.
The company incurred a net loss of $1.5 million and $1.6 million during the first nine months of 2014 and 2013, respectively.
