Hampshire Group Ltd. swung to a third-quarter profit Friday as sales trends turned positive.
The New York-based sweater and sportswear maker said that for the three months ended Oct. 2, net income landed at $3.3 million, or 59 cents a diluted share, compared with a net loss of $572,000, or 10 cents a share, in the year-ago quarter. Income from continuing operations totaled $3.4 million, or 60 cents a share, due in part to income tax reserves and a reduction in restructuring charges, according to the company.
An increase in volume due to a favorable calendar shift, as well as higher average selling prices in the firm’s women’s business, helped net sales improve 3.7 percent to $52.7 million, from $50.9 million a year earlier.
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Quarterly gross margin contracted to 20.1 percent of sales compared with year-ago margin of 21.7 percent. Selling, general and administrative costs fell 4.4 percent to $9.3 million, from $9.7 million.
“We remain confident that the steps we are taking better position the company for the future,” said president and chief executive officer Heath Golden, who warned that fourth-quarter results are likely to be “negatively impacted” by a cautious consumer and heightened promotional activity, as well as the reversal of the favorable calendar shift.
“Looking ahead to 2011,” he said, “we foresee continued volume and margin challenges as we confront increasing inflationary pressures in our cost of goods, including those caused by rising costs for transportation, labor and, most dramatically, cotton.”
In the nine months, Hampshire’s net loss shrank to $9.6 million, or $1.72 a diluted share, from a loss of $16.8 million, or $3.07 a share. Sales contracted 12.9 percent to $87.9 million from $100.9 million.
Shares of Hampshire pulled back 16 cents, or 3.9 percent, to close at $3.90 Friday.
The company recently tapped Eric Prengel as president of its men’s division and said that it entered into a new $50 million credit facility with Wells Fargo Capital Finance.