Spy Inc. reported sales slowed by more than half to 3 percent in the third quarter, its first with no revenues from licensed brands, which it began phasing out as part of a turnaround plan launched in 2011.
Third quarter sales reached $10.2 million in the quarter ended Sept. 30, up 3 percent, or $300,000, from the third quarter of 2012, despite the absence of licensing income, which generated $100, 000 in the third quarter of 2012.
In the third quarter, income from operations improved by $1.7 million to $500,000 compared with a loss from operations of approximately $1.2 million in the third quarter of 2012. The $1.7 million improvement was partially due to the increase in sales combined with a 500 basis point improvement in gross profit as a percent of sales, which generated $600,000 in additional gross profits. Additionally, total operating expenses in the third quarter of 2013 were lower by $1.1 million, compared to the third quarter of 2012, primarily a result of restructuring undertaken in the third quarter of 2012.
Cash flow provided by operating activities reached $1.4 million in the quarter, compared to negative $300,000 a year earlier.
“We are very happy to have achieved our 10th consecutive quarter of year-over-year growth of Spy brand products, with strong Spy brand year-to-date sales growth of 8 percent in 2013 over of the same period in 2012,” said President and CEO Michael Marckx, who refocused the company on its Spy brand when he took the helm in late 2011. “We believe our solid year-to-date results position us well for the fourth quarter of 2013 and into 2014.”
Year-to-date sales of Spy prescription sunglasses and goggle were up 110 and 13 percent respectively. Marckx noted that Spy brand sales through the first nine months of 2013 were up 19 percent compared with the same period in 2011, when the company began winding down its licensed brands operation to focus exclusively on building the brand.