Hampshire Group Ltd. saw its third-quarter loss grow as the expiration of licenses with Geoffrey Beene and Joseph Abboud took a bite out of sales.
The New York-based company’s net loss expanded to $1.9 million, or 25 cents a diluted share, in the three months ended Sept. 28 from a loss of $1.5 million, or 20 cents, in the prior-year period. The loss attributable to continuing operations was 18 cents a share versus a loss of 4 cents in the 2012 quarter.
Revenues retreated 28.7 percent to $25 million from $35.1 million. The company said that $9 million of the $10.1 million in sales decline could be attributed to the expiration of licensing agreements for the Beene and Abboud brands. The drop was offset by a “slight increase” in net sales for the Rio Garment division.
Gross margins improved to 21.6 percent of sales from 19.9 percent as the firm’s sales mix shifted to higher-margin products.
While the cost of goods sold declined more than sales — dropping 30.3 percent to $19.6 million — the bottom-line deterioration reflected an 11.2 percent increase in selling, general and administrative costs, to $8.1 million. The company tied the higher expenses to increases in shipping costs at Rio Garment, which are not expected to recur. Hampshire also logged a one-time credit in the year-ago quarter reflecting a favorable ruling on a lease obligation at its New York offices.
“While the third quarter results remain poor and disappointing, the company continues to make significant progress towards the restructuring of the business as we reengineer most of the company’s operating procedures,” said Paul Buxbaum, chief executive officer. “We remain encouraged that the results of this work will begin to affect the company’s operating performance in 2014 and beyond.”
The company on Sept. 26 received $30 million in revolving credit and term loan financing from Salus Capital Partners with an option for up to an additional $20 million on the revolver. The facility replaces a prior arrangement with Wells Fargo.
The company sold its Scott James men’s sportswear unit to founder Scott Kuhlman in June. It has retained limited rights to the brand as licensee.
For the nine months, the net loss declined to $6.2 million, or 82 cents a diluted share, from a loss of $10.2 million, or $1.42, in the 2012 period. Revenues contracted 6.2 percent to $70.1 million from $74.7 million.