Third Quarter Review
Net sales for the three months ended April 2, 2011 were a record $125.0 million, an increase of $17.0 million, or 15.8%, as both of the Company’s business segments achieved double-digit sales growth compared to the prior year third quarter. The Company's third quarter operating income was $8.1 million, an increase of $3.2 million, or 65.3%, compared to the third quarter of fiscal year 2010. The effective tax rate decreased to 23.7% in the current quarter compared to 25.4% in the same quarter of the prior year. Net income for the quarter ended April 2, 2011 was $5.7 million, or $0.65 per diluted share, compared to $3.0 million, or $0.34 per diluted share, in the prior year third quarter.
Branded Segment Review
Branded segment sales were $54.3 million, a 17.5% increase from the prior year third quarter sales of $46.2 million. The sales increase is comprised of organic growth of 9.3% and the additional revenue from The Cotton Exchange, the college bookstore division of Soffe. Higher sales of Soffe® apparel and The Game® headwear, coupled with the new Salt Life® collection, drove the organic sales growth during the quarter. After achieving 70% sales growth in the prior year third quarter, revenue declined in the Junkfood business during the current year third quarter; sales did, however, remain above levels in the third quarter of fiscal 2009. This decline, coupled with additional marketing and operational expenses associated with Salt Life® and the digital printing business, drove a decrease in operating income to $1.5 million in the third quarter of fiscal year 2011 compared to $3.3 million for the same period last year.Basics Segment Review The basics segment had sales of $70.6 million for the quarter ended April 2, 2011, an increase of 14.5% compared to the prior year third quarter, driven by sales growth in both catalog and private label products. The revenue growth resulted from a 19.6% increase in average selling prices partially offset by slight decline in units sold. The higher selling prices, coupled with strong manufacturing results and lower selling, general and administrative expenses, resulted in operating income of $6.6 million for the quarter ended April 2, 2011, a $5.0 million improvement from the prior year third quarter.