Included in these results was a one-time non-cash gain of approximately $6.1 million resulting from the reversal of an accrual in connection with a favorable ruling in the Company’s lease litigation. Without this one-time gain, the Company would have reported a net loss from continuing operations of approximately $3.1 million for the quarter.
The Company reported income per share from continuing operations of $0.37 for the 2013 second quarter compared to a loss of $0.39 for the same period last year.
Net sales increased $8.5 million or 48.2% over the second quarter of 2012. The increase in net sales was driven by significant volume increases at Hampshire Brands with new licensing arrangements with Dockers and Panama Jack which more than offset sales from brands that were discontinued at the end of 2012. Sales at the Company’s Rio Garment division increased slightly over the comparable period last year.
Gross profit for the quarter was $5.3 million versus $4.1 million a year ago. The gross margin for the quarter was 20.4% compared with 23.5% reported in the same quarter last year. The decline in gross margin was primarily due to a higher mix of Hampshire Brands licensed products which had a lower gross profit percentage.
Selling, general and administrative expenses for the second quarter were $8.5 million or 32.4% of net sales vs. $6.9 million or 39.1% of net sales in last year’s quarter. The increase in SG&A was primarily due to a $0.5 million lease charge related to the New York office and higher freight and warehouse charges resulting from higher sales this year as compared with the prior year.
For the second quarter, the Company’s earnings before interest, taxes, depreciation and amortization, referred to as EBITDA, was $2.2 million compared to negative $2.7 million for the same period last year. Adjusted EBITDA, which excludes contract terminations, restructuring and stock based compensation charges, was $2.6 million compared to negative $2.3 million for the comparable year-ago period.
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