07/11/2013

Business news : Spy Inc. Sales Growth Slows in Third Quarter

Spy Inc. reported year-over-year sales of its Spy branded sunglasses, prescription eyewear and other products grew 3 percent to $10.2 million in the the third quarter, or less than half the rate reported for the second quarter.

Third quarter sales of Spy  brand products were $10.2 million in 2013, an increase of 3 percent or $0.3 million greater than in the third quarter of 2012. Total company net sales increased by 3 percent or $0.3 million, to $10.2 million compared to $9.9 million in the third quarter of 2012. There were no licensed brand sales in the third quarter of 2013, compared with $0.1 million in the third quarter of 2012.

“We achieved our third consecutive quarter of operating profit and had positive cash flow from operations,” said Michael Marckx, president and CEO. “We believe our solid year-to-date results position us well for the fourth quarter of 2013 and into 2014."

Income from operations improved by $1.7 million to $0.5, compared to a loss from operations of approximately $1.2 million in the third quarter of 2012. The $1.7 million improvement was partially due to the increase in sales combined with a 500 basis point improvement in gross profit as a percent of sales, which generated $0.6 million in additional gross profit contribution. Additionally, total operating expenses in the third quarter of 2013 were lower by $1.1 million, compared to the third quarter of 2012, primarily a result of the restructure actions taken in the third quarter of 2012.

Cash flow provided by operating activities was $1.4 million in the third quarter of 2013, compared to negative $0.3 million in the third quarter of 2012, or an improvement of more than $1.7 million.

Sales still up 8 percent year-to-date

Sales of its Spy branded products reached $29.1 million during the nine months ended Sept. 30, 2013, an increase of 8 percent or $2.0 million greater than in of the same period in 2012.

"We are very happy to have achieved our 10th consecutive quarter of year-over-year growth of Spy brand products, with strong Spy brand year-to-date sales growth of 8 percent in 2013 over of the same period in 2012, and year-to-date sales in 2013 were 19 percent higher than the same period in 2011," said Marckx. "In addition to the expanding Happy Lens Collection, we are pleased with the year-to-date growth of our Rx and goggle product lines that grew by 110 percent and 13 percent, respectively, in 2013 compared to 2012. The growth of these product lines helps diversify our revenue portfolio while expanding our Spy brand.”

Total company net sales increased by 6 percent or $1.7 million, to $29.2 million during the nine months ended Sept. 30, 2013, compared to $27.5 million in the same period in 2012. The difference between our Spy brand sales and total company sales in 2012 was due to our discontinued licensed brand products, which will have no sales in the future. Discontinued licensed brand sales were less than $50,000 during the nine months ended Sept. 30, 2013, compared with sales of $0.4 million in the same period of 2012.

Income from operations improved by $5.3 million to $0.8 in the nine months ended Sept. 30, 2013, compared to a loss from operations of $4.5 million during the same period in 2012. The $5.3 million improvement was partially due to the increase in sales combined with a 400 basis point improvement in gross profit as a percent of sales, which generated $1.9 million in additional gross profit contribution.

Additionally, total operating expenses in the nine months ended Sept. 30, 2013 were lower by $3.3 million, compared to the same period in 2012, primarily a result of the restructure actions taken in the third quarter of 2012. Cash flow generated by operating activities was $2.5 million in the nine months ended Sept. 30, 2013, compared to negative $4.1 million in the same period in 2012, or an improvement of more than $6.6 million.

The net loss improved by $4.4 million to $1.6 million in the nine months ended Sept. 30, 2013, compared to a net loss of $6.0 million during the same period in 2012. The net loss improved by $1.5 million to $0.3 million in the third quarter of 2013, compared to a net loss of $1.8 million in the third quarter of 2012. The improved net loss in each period was due to the reduction in our loss from operations, partially offset by higher interest expense. Interest expense included in the net losses is primarily "paid in kind" by being added to the outstanding principal balance rather than being paid in cash.

By press release through sportsonesource

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