No big surprise here: Golf apparel maker Ashworth
The respected name in golf shirts tried a hole-in-one attempt to bring its founder, John Ashworth, back in January, hoping to escape the sand trap of declining sales it's been reporting. OK, if you're in a sand trap, you obviously can't make a hole in one. But Ashworth is also proving that it can't make more sales, either.
It's not completely the company's fault. Golfing just hasn't been in the swing of things these days. Even Cutter & Buck, previously featured as a Motley Fool Hidden Gems micro-cap standout, was having sales trouble. It's now been acquired by Swedish clothing and corporate gift maker New Wave Group.
Nor is golf clothing the only such area to suffer. Golf club shaft maker Aldila
Bringing back a golf-shirt icon can't do much to reverse this trend. Ashworth's net loss for the quarter was $2.5 million, or $0.17 per share. That's in stark contrast to last year, when the maker of the Gekko and Kudzu brands reported profits of $4.7 million, or $0.32 per share.
Part of the blame for the lousy results can be placed with the $2.9 million tax charge the company took to establish a valuation allowance against deferred tax assets. Absent that $0.20-per-share charge, Ashworth would have recorded a gain. That's still way below last year, and even lags analyst expectations of a $0.17-per-share gain.
People just aren't buying golf stuff. Domestic sales fell 10.7%, and international sales were off 3.7%. The company's largest channel, domestic golf, fell 22% compared to last year, bringing in $21.8 million.
The company also endured personnel changes. It booted its president -- officially, he "left to pursue other interests" without giving further details -- and fired 16 employees to reduce costs. Add in an underutilized distribution center, which directly deflated gross margins, and investors can only expect more disappointment.
Playing a round of golf can be an enjoyable way to spend a day. Going a round with golf industry investments like Ashworth? Not so much.
Tee off with more Foolish articles:
- Ashworth's Quarter Unravels
- Ashworth Not Even Worth Ashes
- Foolish Forecast: Ashworth Stuck in Sand Trap
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