Sales declined 2.2 percent to €13.3 million ($18 mm) at its Winter Sports Division, inched up 0.1 percent to €42.3 million ($56 mm) at Racquet Sports, rose 2.2 percent to €13.0 million ($17 mm) at its Diving Division and fell 13.1 and 16.5 percent at its much smaller Sportswear and Licensing divisions.
Winter Sports sales for the period were behind the comparable period in 2012. Head noted that the first quarter is not a key delivery period for the division and consists mainly of close out sales and some deliveries of bindings under contract manufacturing agreements for
the next season.
During 2012/13, weather conditions were generally good across Europe and Japan although snow arrived late in the US, where the season was below average. In Europe visitor numbers were up but retail equipment sales did not grow inline. The lower closing retail inventory at the end of the current season due to lower pre-season ordering in 2012/13 has however mitigated the impact on our preseason bookings for 2013/14.
The cooler weather in Europe has had the inverse impact on the racquet sports market which, we believe, had a slower start to the year both in Europe and in the US. Overall reported sales for the first quarter were broadly flat, but at constant currency would have been up slightly at 1.2 percent driven by stronger ball sales offset by weaker racquet sales.
Whilst the diving market remains tough in Italy and Southern Europe, Asia and North America have continued to develop favorably in 2013. This market growth and our strong product lines in computers and regulators resulted in sales growth for our Diving Division of 2.2 percent during the three months to March 31 compared to the comparable period in 2012.
Sportswear sales for the first quarter 2013 declined by 13.1 percent compared to the first quarter in 2012 due to lower sales of tennis wear in part as a result of the cool weather in Europe and the resulting slow start to the tennis season.
Adjusted operating loss for the period increased by €2.2m due mainly to lower gross margins as a result of mix and higher advertising and departmental selling costs and foreign exchange losses in the period compared to foreign exchange gains in the comparable 2012 period.
Non-cash ESOP costs increased as a result of the company’s higher share price in March 2013 compared to December 2012 which increases the liability for Head’s cash-settled stock option plans.
Overall for the three months ended March 31, 2013, Head reported a net loss of €6.1 million ($8.0 mm), compared to a net loss of €2.2 million in the comparable 2012 period.
Net cash provided by operating activities decreased by €12.9 million in the first quarter of 2013 compared to 2012 due to the lower profitability in the period and reduced cash inflow from accounts receivable. Net debt decreased by €6.1 million from March 31, 2012 to March 31 2013 due mainly to lower working capital balances at the end of the first quarter 2013 compared to the first quarter 2012.
Source Head N.V through SportsOneSource
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