Hampshire Group Ltd. reversed a year-ago loss with a more than $10 million fourth-quarter profit, helping the company reduce its full-year loss nearly 80 percent despite continuing double-digit declines in sales.
In the three months ended Dec. 31, the New York-based supplier of men’s and women’s sweaters and sportswear posted net income of $10.7 million, or $1.81 a diluted share, versus a year-ago loss of $23.8 million, or $4.35 a share. Included in the 2008 period was an $8.2 million pretax goodwill impairment loss, while the more recent quarter benefited from a $5.7 million tax refund and the release of a $5.1 million reserve no longer deemed necessary for a supplier dispute.
Sales declined 26.4 percent to $64.3 million from $87.3 million in the 2008 quarter as gross margin advanced to 26.7 percent of sales from 18.2 percent. Selling, general and administrative costs were cut 32.1 percent to $10.3 million from $15.2 million.
The company said sales declines were concentrated in the women’s business and also attributed to “lower average selling prices due to larger customer allowances, both reflective of the weak retail market and the impact of customers that filed for bankruptcy during 2008.”
Heath Golden, president and chief executive officer, told WWD that, having done better with cost reductions than anticipated, “now, in 2010, it’s a matter of focusing on the top line and building that back up.” The company will make its first shipments to Mexico in the fall with the Joe by Joseph Abboud collection, which it sells exclusively to J.C. Penney Co. Inc. in the U.S.
The company’s Hampshire Designers unit is back in all Dillard’s divisions and has expanded its footprint at Stage Stores. Additionally, the Hampshire Designers and Item Eyes units have collaborated to create Nouveaux, a sportswear and sweater line exclusively for Stein Mart.
“Within our existing businesses and brands, we think there can be some growth with existing accounts as we do better,” Golden said. “I think there are a number of stores where we’re underpenetrated.”
The primary objectives for 2010, he noted, are to be “cash-flow positive and EBITDA positive.” Hampshire’s EBITDA loss last year was $9.6 million, below the $10.9 million EBITDA loss in 2008.
The full-year net loss was cut to $6 million, or $1.11 a diluted share, from $29.9 million, or $4.34. Sales declined 31.4 percent to $165.2 million from $240.9 million.
Shares of Hampshire shed 10 cents, or 2.4 percent, to close at $4.05 on Tuesday, the first trading day after disclosure of the fourth-quarter results.
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