Lower sales and restructuring charges threw sweater and sportswear supplier Hampshire Group Ltd. to a third-quarter loss.
For the three months ended Sept. 26, Hampshire’s net loss was $572,000, or 10 cents per diluted share, compared with income of $2.7 million, or 42 cents, in the year-ago quarter.
Net sales in the quarter sank 37.2 percent to $50.9 million, from $81 million in the year-ago quarter. The decline was due principally to lower women’s sales and lower average selling prices due to larger customer allowances, with both factors reflective of the weak retail environment and key customers that filed for bankruptcy in 2008.
Undergoing a restructuring since 2008, Hampshire has reduced its employee head count by 50 percent, largely in its Asian sourcing operations. Restructuring charges in the third quarter were $800,000, consisting primarily of termination benefits for former employees. Restructuring charges for the first nine months of the fiscal year were $4.2 million. The company expects to incur another $200,000 in charges in the current fourth quarter.
“We have made significant progress in streamlining our cost structure and realigning our operations to better position the business for long-term success,” said Heath Golden, president and chief executive officer of Hampshire. “While the full impact of our actions will not be felt for a few quarters, the third quarter, while difficult, was in line with our expectations.”
The company said its restructuring activities resulted in cost savings of $3.1 million last year and its 2009 plan, upon completion, will produce $10 million in annualized savings.
Earlier this week the company renewed a key men’s Geoffrey Beene sweater license for another three years. Its other licensed labels include Dockers for men’s sweaters, JOE Joseph Abboud for men’s sportswear and Alexander Julian Colours for men’s tops. Its owned women’s lines include Designers Originals, Mercer Street Studio, Requirements and RQT, among others.
For the nine months, Hampshire Group’s net loss was $16.8 million, or $3.07 per diluted share, compared with a loss of $6.1 million, or 82 cents, in the year-ago period. Sales decreased 34.3 percent to $100.9 million, from $153.6 million a year ago.