Hampshire reports first quarter 2011 results

16 May '11

3 min read

Hampshire Group, Limited announced its results for the three months ended April 2, 2011 and filed its quarterly report on Form 10-Q.

Commenting on the results, Heath L. Golden, President and CEO of Hampshire Group, stated, “Our first quarter results for our continuing operations were in line with our expectations. With our now more sharply focused business model and an already strong balance sheet further strengthened by the proceeds from the sales of our women's businesses, we are pleased to turn our attention to vigorous pursuit of opportunities that will drive long-term value for our shareholders.”

Sale of Women's Businesses

On May 6, 2011, the Company announced a significant shift in its growth strategy to focus on Hampshire's men's business. In connection with this new strategic direction, the Company sold its women's businesses, Hampshire Designers and Item-Eyes, in separate transactions. The assets, liabilities, and results from operations for the women's businesses have been presented as discontinued operations in both current and prior year periods.

Results of Continuing Operations

Net sales increased 37.2% to $3.5 million for the three months ended April 2, 2011 from $2.6 million for the same period last year. The increase in net sales resulted primarily from an increase in average selling prices coupled with reduced customer allowances.

For the three months ended April 2, 2011, the Company had a loss from continuing operations of $3.7 million compared to a loss from continuing operations of $4.5 million for the same period last year. The reduction in the loss from continuing operations was primarily the result of a $0.5 million increase in gross profit and a $0.5 million reduction in non-operational costs. The increase in gross profit was primarily due to a decrease in customer allowances. Also, cost of goods sold increased 20.6% to $2.8 million for the three months ended April 2, 2011 from $2.3 million for the three months ended April 3, 2010. This increase reflected the higher costs associated with the scott james product and rising costs in transportation, labor, and materials.

The Company is providing earnings (loss) before income taxes, interest, depreciation and amortization and adjusted EBITDA because its management believes that these measures provide useful information for investors concerning the Company's operating results and financial performance. For the quarter ended April 2, 2011, the Company had negative adjusted EBITDA of $3.0 million compared to negative $3.2 million for the same period last year.

Basic and diluted loss per share from continuing operations for the three months ended April 2, 2011 was $0.67, compared to a basic and diluted loss per share of $0.81 for the same period last year.

On April 2, 2011, cash and cash equivalents totaled $38.3 million, including $1.8 million of restricted cash, compared with $40.5 million on April 3,

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