Escalade swings to Q1 loss
Evansville-based Escalade Inc. is reporting a first quarter net loss of $952,000, compared to net income of $6.7 million during the same period last year. The sporting goods and recreational equipment manufacturer said Tuesday it has initiated an effort to cut costs, which includes a reduction in workforce.
Escalade also reported that quarterly sales declined 21.3% to just under $57 million.
The company attributed the lower sales to a combination of changing post-pandemic consumer demand, excess retail inventories, and unfavorable weather conditions in the quarter, which delayed the start of its spring business.
“As expected, consumer demand softened during the first quarter and retailers continued to aggressively manage inventories, both contributing to a year-over-year decline in revenue and profitability,” CEO Walter Glazer Jr. said in a news release. “While sales volumes declined across most categories in the period given a challenging prior-year comparison, we continued to maintain price discipline, consistent with our strategic focus.”
Despite the quarterly drop, Glazer said demand conditions improved in February and March, particularly in the indoor games, fitness and safety markets. He added while overall e-commerce sales declined, the company’s direct-to-consumer website sales increased 44% year over year.
Glazer said the company expects wholesale restocking to gradually increase moving into the second half of the year.
In February, Escalade detailed plans to divest its facility in Rosarito, Mexico as part of an effort to optimize its manufacturing footprint. The company said it expects to see savings between $500,000 and $1.5 million once the sale is complete, and net proceeds will be used to reduce debt.
This quarter, the company began a targeted reduction in workforce. While a specific number of jobs being eliminated isn’t known, a spokesperson for Escalade told IIB the effort will have a minimal impact in Indiana and will be more focused on manufacturing operations in Florida and the Mexico facility being divested.
The company expects to save about $2.3 million annually with the workforce reduction, beginning in the third quarter.
Escalade’s stock fell nearly 16% to just under $13 per share as of mid-morning Tuesday. You can connect to the full earnings report by clicking here.