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Everlast achieves 83% rise in operating income for Q1

28
Apr '06
Men's and women's apparel and accessories seller Everlast Worldwide Inc announced its financial results for its fiscal 2006 first quarter ended March 31, 2006.

For the first quarter ended March 31, 2006, net revenues increased 20 percent to $10 million, as compared to $8.3 million in the same period in 2005.

Growth in net revenue resulted from a 33 percent increase in sporting goods sales to a record $7 million, the second consecutive quarter of more than 30 percent year-over-year sales growth.

Net licensing revenues for the first quarter of 2006 were $3 million, as compared to $3.1 million in the same period a year ago.

In the first quarter of fiscal 2006, Everlast's net licensing revenues were impacted by the Company's decision not to renew its previous footwear license that was allowed to expire in December 2005, as well as an increase in licensing commissions resulting from the litigation settlement which requires the Company to pay commissions to the former agent of Everlast during 2006.

In the first quarter of 2006, the Company's gross margin was 44.5 percent, compared with 48.1 percent in the first quarter a year ago. The lower gross profit margin was primarily due to a change in revenue mix.

This was driven by higher sporting goods sales, which have a lower gross margin than our revenue stream of licensing. However, the Company's sporting goods gross margins did improve 330 basis points over the 2005 comparableperiod due to lower product costs, improved operational efficiencies and cost reductions in labor and overhead.


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