Hampshire: net sales up in Q3

19 Nov '11

4 min read

Hampshire Group, Limited announced its results for the three and nine months ended October 1, 2011 and filed its quarterly report on Form 10-Q.

Commenting on the quarter, Heath L. Golden, President and CEO of Hampshire Group, stated, “We marked a key milestone in the new strategic direction of the business in the third quarter with the completion of the acquisition of Rio Garment. This important step on our path to profitability diversifies our distribution channels and provides access to the fast-growing specialty store channel.

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. 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.”

Third Quarter 2011 Highlights
• Acquired Rio Garment S. de R.L. (Rio), a Honduras-based apparel manufacturer, that designs, sources and produces knit tops for retailers and distributors in the United States;
• David Gren joined the Company as President of Rio Garment upon the acquisition of the entity on August 25, 2011 with over 20 years of experience in the garment production services in the apparel industry. Mr. Gren has acted as general manager of Rio Garment since 2006 and will continue to oversee the business.

Results of Continuing Operations for Three Months Ended October 1, 2011
Net sales increased 22.5% to $33.5 million for the three months ended October 1, 2011 from $27.3 million for the same period last year. The $6.2 million increase in net sales over the same period last year was primarily due to the inclusion of Rio's net sales of $5.4 million from August 25, 2011 to October 1, 2011.

Rio sells a higher volume of units at a lower price point than Hampshire Brands. Hampshire Brands sold less units, but at a slightly higher price per unit and therefore, its net sales remained comparable to the prior year period. Due to the seasonality of Hampshire Brands, a significant portion of its net sales occur in the third and fourth quarters, however, the Company does not expect Rio to experience high levels of seasonality.

The gross profit percentage of 16.8% of net sales for the three months ended October 1, 2011 compared with 22.6% of net sales for the same period last year reflects an increase in cost of goods sold for the menswear division. Cost of goods sold increased 31.2% to $27.9 million for the three months ended October 1, 2011 from $21.2 million for the three months ended October 2, 2010. This increase is a result of higher volume of units sold coupled with the rising costs in transportation, labor and materials.

For the three months ended October 1, 2011, the Company had aloss from continuing operations of $2.2 million compared to income from continuing operations of $3.4 million for the same period last year. This loss was primarily due to an increase in selling, general and administrative costs, which was the result of increased overhead costs for the current quarter that were absorbed by the women's division during the third quarter 2010 and are now reflected in discontinued operations and transaction costs relating to the acquisition of Rio and the addition of Rio's selling, general and administrative costs.

More Hampshire Group Limited News... More Apparel/Garments News - United States Of America...