Hampshire Group Ltd.’s acquisition of Rio Garment helped elevate its third-quarter sales as costs related to the deal contributed to a loss in the period.

For the three months ended Oct. 1, the New York-based firm registered a net loss of $1.8 million, or 30 cents a diluted share, versus net income of $3.3 million, or 59 cents, in the year-ago period. Sales rose 22.5 percent to $33.5 million from $27.3 million in the third quarter of 2010, with the bulk of the increase coming from the inclusion of $5.4 million in Rio revenues recorded between Aug. 25, the date of its acquisition, and the end of the quarter.

Hampshire’s cost of goods sold rose 31.6 percent, to $27.9 million, while selling, general and administrative costs rose 77.8 percent, to $8.7 million. Increases were attributable to higher costs for labor, materials and transportation and acquisition-related expenses, as well as residual overhead costs previously absorbed by Hampshire’s women’s wear operations, which were divested during the third quarter of 2010 and are now classified as discontinued operations.

Gross margin fell to 16.8 percent of sales from 22.6 percent.

“We are on track with the integration process and are already co-marketing Hampshire’s and Rio’s product offerings in an effort to take advantage of the significant cross-selling opportunities we see across both businesses,” said Heath Golden, president and chief executive officer of Hampshire. “Now, with the transformative transactions to our business complete, we have the visibility to address cost reductions where appropriate and position ourselves to leverage our strategic initiatives to drive growth in the business.”

Hampshire noted that Rio, with distribution primarily in specialty stores, sells more units at lower price points and is less seasonal in nature than Hampshire’s men’s wear businesses, which log the bulk of their volume in the third and fourth quarters. The company noted that the Hampshire portion of the business sold fewer units at slightly higher prices compared with a year ago, leaving its net sales “comparable” to those in the third quarter of 2010.

Excluding discontinued operations, cash and cash equivalents more than tripled in the quarter, to $5.3 million from $1.6 million a year ago.

For the nine months, Hampshire’s net loss shrank to $3.7 million, or 64 cents a diluted share, from a loss of $9.6 million, or $1.72, in the first three quarters of last year. Net sales were up 25.6 percent to $40.5 million from $32.2 million.

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