Reductions in expenses weren’t sufficient to offset declines in sales as Hampshire Group Ltd. saw its first-quarter loss expand.
In the three months ended March 30, the New York-based sportswear marketer saw net losses grow to $5.4 million, or 72 cents a diluted share, from $5 million, or 74 cents, in the prior-year period. The reduction in loss per share was attributable to an increase in the number of shares outstanding.
Sales dropped 11.8 percent to $19.9 million from $22.6 million in the first quarter of 2012 as growth in sales from the new Levi’s tops business failed to compensate for declines at Rio Garment, the firm’s production facility in Honduras. With cost of goods sold down 13.1 percent to $16.3 million, gross margin improved to 18.2 percent of sales from 16.9 percent in the prior-year period. Selling, general and administrative costs were reduced 10.5 percent to $8.1 million.
During the quarter, the company recorded $700,000 in separation costs in connection with the January resignation of Heath Golden, Hampshire’s former chief executive officer. Golden was succeeded by Paul Buxbaum, who became a major shareholder in Hampshire when he was among those who sold Rio to Hampshire in 2011. Buxbaum is also chairman of Buxbaum Group, a California-based restructuring and liquidation specialist retained by Hampshire through May 16 to advise the company on matters involving organization, operations and expenses. Buxbaum Group is paid $75,000 a month for its services, while Paul Buxbaum receives no compensation for his services as ceo or director.
“The first-quarter results are unacceptable to me and to the board,” Buxbaum said, “and I am confident this company can and will perform better. We are embarking upon a new period for Hampshire, one noteworthy for change and focused on profitability, prudent allocation of resources and growth.”
Noting that insiders own nearly half the company, he said that “incentive plans for management will be aligned more directly with stock value. We are certain to implement more management and personnel changes as we attack costs, implement a new sourcing and merchandising strategy, eliminate unprofitable business and refocus the firm’s culture.”
Acknowledging that the full impact of changes being made at the firm won’t be realized until next year, he stated, “I am confident we will produce over time a healthy, growing and profitable business.”
Buxbaum didn’t return a phone call seeking elaboration on his plans.
In addition to Rio Garment and Levi’s tops, Hampshire’s businesses include Hampshire Brands Inc. and Scott James LLC.
According to the firm’s recent definitive proxy, Buxbaum and other directors and executive officers own 40.1 percent of the company’s shares.
Hampshire said that its chief financial officer, Maura McNerney Langley, had resigned, effective May 17, to pursue another employment opportunity.