Hampshire Group Ltd. reduced its net loss in the fourth quarter despite a decline in sales at its Rio Garment unit and the winding down of its Geoffrey Beene and Joe Joseph Abboud licensed businesses.
In the three months ended Dec. 31, the net loss was pared to $1.5 million, or 20 cents a diluted share, from a loss of $6.3 million, or 94 cents, in the prior-year period. The net loss for continuing operations fell to $1.6 million from a loss of $7.2 million. The 2011 figures included a $6.3 million pretax loss on a lease obligation stemming from a dispute with the landlord of its New York offices.
Sales in the quarter dropped 11.3 percent to $40.5 million from $45.7 million in the 2011 quarter as revenues declined at Rio, the Honduras manufacturer acquired in August 2011, and in the Abboud and Beene segments. Gross margin improved to 20.1 percent of sales from 18 percent in the prior-year quarter and registered a similar improvement for the full year.
Paul Buxbaum, one of the principals of Rio prior to its acquisition by Hampshire, succeeded Heath Golden as chief executive officer of the company in January and, according to a Securities and Exchange Commission filing earlier this month, added the title of president on March 12. Buxbaum also serves as chairman and ceo of Buxbaum Group, a California-based firm specializing in restructuring and liquidation services which has been retained to advise Hampshire on matters involving its organization, operations and expenses. The agreement with Buxbaum commenced on Jan. 16 and runs through May 16. Buxbaum Group will receive a fee of $75,000 a month, or a total of $300,000, for its services. According to the company’s annual report, filed with the SEC on March 18, Buxbaum will receive no direct compensation for his service as Hampshire’s ceo. Through the sale of Rio, Buxbaum became a major shareholder in Hampshire, with the most recent tally of his holdings listed at 1.77 million shares, representing a 23.8 percent stake.
“Previous management began the transition of our business,” Buxbaum said following the disclosure of quarterly and year-end results. “Throughout 2012, we completed the wind-down of two legacy licenses and focused our resources towards the Dockers and Panama Jack licenses as well as our Rio Garment business. As a result of this transition, we operate a very different business today than we have in recent years and must organize accordingly.”
In its annual report, Hampshire said that cost reductions made to date are expected to result in expense reductions of $2.2 million a year.
For the full year, Hampshire’s loss grew to $11.7 million, or $1.61 a share, from a loss of $10 million, or $1.67, in 2011. The loss for continuing operations dwindled to $12.5 million from $20.3 million during the prior year. Sales grew 36.5 percent to $117.6 million from $86.1 million. In 2011, Rio contributed $29.2 million to sales during slightly more than four months as part of Hampshire.