BasicNet booked a net loss in the third quarter, as the company was bogged down by higher production and general costs. Net revenues were virtually flat at €20.66 million compared with €20.53 million for the same period a year ago, while production costs rose to €13.99 million from €12.04 million. Additional costs were incurred because of the start-up of new single-brand stores in Italy, which are set to continue to grow to a network of 55 units by the end of this year, up from 52 at the end of the latest quarter.
Operating results registered a €240,000 loss in the quarter against a €1,468,000 million profit, largely due to a fall in royalties and commissions, which declined to €4,893,000 because of the sale of the rights for the Kappa and Robe di Kappa brands in mainland China and Macao to DongXiang Sports Development. The bottom line for the quarter showed a pre-tax loss of €919,000, against a €678,000 profit, and a net loss of €1.285 million against a profit of €131,000.
Still, for the first nine months of the year BasicNet recorded a net profit of €24,874,000, as compared to a loss of €5,807,000 in the same period last year, thanks to the sale of the brand rights to DongXiang, which brought in an extraordinary gain of € 27.3 million. While it has improved considerably, the net financial position is still negative at €40.6 million, but the debt/equity ratio is better at 0.81.
Direct sales were up by 16.8 percent to €61.5 million during the 9-month period, and including the licensees’ sales, aggregated revenues increased by 1.8 percent, or by more than 8 percent on a comparable basis, reaching €179.5 million. The operating income before amortization and depreciation (EBITDA) has increased by 25 percent to more than €4 million, thanks in part to lower communication expenses. Margins are expected to improve for the full year.
On the other hand, BasicNet has signed a new sponsorship deal with the Argentinian Olympic Committee, involving a South African tournament that took place in Buenos Aires a few days ago running through the Beijing Olympics in 2008. It has renewed a distribution contract for K-Way in Germany and stipulated a new license for that brand in Switzerland and Liechtenstein.