Hampshire Group Ltd. saw fourth-quarter losses deepen as isales fell and it accounted for a number of special items.
In the three months ended Dec. 31, the New York-based sportswear and knitwear firm’s net loss grew to $9.9 million, or $1.17 a diluted share, from a loss of $1.5 million, or 8 cents, in the final quarter of 2012. Eliminating $6.9 million in pretax, noncash charges for goodwill impairment and a loss on a lease obligation as well as interest, taxes, depreciation and amortization, adjusted ebitda fell to $644,000 from $1.8 million.
Revenues in the quarter fell 13 percent, to $35 million from $40.2 million, with reduced revenues from licensing agreements that expired late in 2012 offsetting gains in the company’s Rio Garment division and its remaining men’s branded operations.
“While the fourth quarter and full year 2013 results were disappointing, several one-time expenses during the quarter and year, as well as losses from discontinued operations, mask underlying progress in gross profit margins and expense reduction,” said Paul Buxbaum, chief executive officer. “We’ve accounted for several historic obligations more accurately with these accounting changes and we produced with the fourth quarter figures our first significant quarterly improvement in cost reductions.
“We expect a continued difficult 2014 sales environment,” he added. “However, we expect to see operating improvement in 2014.”
The company has delayed the filing of its annual report with the Securities and Exchange Commission as it seeks to amend certain terms of its credit facility, including the covenant covering its minimum consolidated ebitda requirement.
The company last month acquired rights to the James Campbell trademarks through an installment purchase and sale agreement with Rick Solomon Enterprises, Richard Solomon and Maverick J LLC. Hampshire doesn’t expect to realize “the full annual benefit” of the acquisition until next year but does anticipate to begin to realize savings from new sourcing arrangements beginning this year. James Campbell’s 2015 sales are expected to total about $8 million “with gross profit margin generation higher than our core license or manufacturing businesses,” Buxbaum said.
Last week, the company promoted David Price to chief operating officer. He joined the firm in 2012 as senior vice president of operations. He was previously associated with Buxbaum during a tenure as senior vice president of operations at Haggar and has also work in operations at companies include VF Corp.’s Wrangler unit.
For the full year, Hampshire’s net loss increased to $16 million, or $2.06, against a loss of $11.7 million, or $1.61, in 2012. Revenues declined 8.6 percent to $105.1 million from $114.9 million.
Buxbaum succeeded Heath Golden as ceo of Hampshire in January 2013. He was elected chairman in June shortly after the company sold the Scott James brand back to founder Scott Kuhlman.
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