Further evidence that Ashworth may be seeking new owners is provided by the departure of the company’ chairman and chief executive, Randall L. Herrel Sr.. He will leave Ashworth on Oct. 17 after ten years with the company, and his responsibilities will be taken over by several other executives within the firm. James B. Hayes, the company’s leading independent director, has been elected as chairman, and Gary I. Schneiderman, executive vice president of sales, marketing and customer service, has been named president. Meanwhile, an “office of the chairman” has been created, and it will be headed up by Schneiderman and by Winston E. Hickman, chief financial officer, after Herrel quits.
Ashworth turned around to a net profit of $700,000 in the 3rd quarter, ended July 31, as compared to a loss of $3.4 million in the year-ago period. The improvement was due to a series of initiatives, implemented at the end of last year, that helped the company to sell more products at full price and with fewer markdowns. The gross margin thus expanded by 990 basis points to 41.0 percent, going back to historic levels. Total sales rose by 9.3 percent to $52.8 million. Outside of the USA, turnover climbed by 20.8 percent to $10.0 million, while domestic sales increased by 7.0 percent to $42.8 million.
Revenues in Ashworth’s golf specialty channel dropped by 18.5 percent to $17.3 million, but they were offset by higher revenues in the corporate distribution channel as well as a rise in the generic retail distribution channel. The improvement in the quarter was mainly due to a successful merchandising strategy that focused less on fashion products and more on classic products.
Ashworth East, which was formerly called Gecko, had growth of 18.5 percent to $17.3 million, stemming in part from its promotion as the exclusive on-site event merchandiser at the Kentucky Derby. Total sales of Ashworth branded merchandise fell by about 10 percent to $28.0 million, while apparel sales under the Callaway brand name went up by almost 32 percent to $12.0 million.
Ashworth’s company-owned stores generated a gain in revenues of 38.5 percent to $2.9 million. Four outlets were added during the quarter and two were closed since the year-ago quarter, giving the company a retail network of 16 doors. Same-store sales were up by 12 percent.
