CARLSBAD, Calif. (BRAIN) — Spy Inc. on Wednesday reported an 18 percent decrease in second-quarter sales compared with a year earlier, ending 12 consecutive quarters of year-over-year growth at the optical brand.
"The second quarter of 2014 was the first in over three years where a number of factors created challenges that precluded us from keeping our excellent growth streak going—especially the raised bar we had achieved the year before in Q2 that we had to compete against," president and CEO Michael Marckx said in an earnings conference call.
Among those challenges were that Spy is no longer shipping to its largest retailer from a year earlier, which had accounted for about half of sales in the second quarter of 2013.
The company has also ceased shipping to its largest motorcycle customer from a year ago. "Significant credit issues made it imprudent to continue doing business with them," Marckx said.
Second-quarter sales totaled $8.2 million, down from $10 million a year earlier.
Sales for the first half came in at $17.4 million, down 9 percent from $19 million in the year-ago period.
Marckx noted during the call that April and May were tough months for the action sports and eye industries overall, and that Spy was back on a growth track starting in June. Bright spots during the quarter included a 22 percent increase in Spy's prescription business and a 24 expansion of international sales outside of North America. Additionally, gross margin increased by 270 basis points in Q2.
Moving into the third quarter, Spy's snow goggle preorders are up substantially and are expected to account for 40 percent of sales during the period, Marckx said.
Key retail partnerships also have Spy well positioned to boost sales across several categories, he noted.
"We have a new alliance with Powder, who manages the sponsorship of the greatest collection of resorts across the United States, opening up a legion of new doors and associations for both our snow and moto goggle businesses as well as our mountain biking goggles and glasses," Marckx said.
