Chicago - Although Cobra Electronics recorded only a 2 percent decrease in first quarter sales, the company more than doubled its operating loss and nearly doubled its net loss for the period.
Sales hit $20.6 million in the first quarter, ended March 31, down from the $21 million reported in the year-ago period.
Cobra's first quarter operating loss reached $696,000, compared with an operating loss of $312,000 in the same three months in 2002. Net loss for the first quarter totaled $453,000, up from a net loss of $236,000 in the same three months a year earlier.
Despite a continued difficult retail environment, Cobra's first quarter sales nearly matched last year's numbers. 'As we projected last quarter, our first quarter sales were restricted by retailers' reluctance to build inventories in an uncertain economic climate,' said Jim Bazet, president/CEO. 'In addition, we chose not to do business with two accounts that represented significant sales one year ago.'
Cobra said it also was encouraged by its second consecutive quarter of year over year gross margin growth, climbing 230 basis points, to 24.9 percent, from 22.6 percent in the year-ago period.
Offsetting the first quarter gross margin increase, however, was a $750,000 increase in Selling, General and Administrative expenses, compared with the first three months in 2002. Much of the increase can be attributed to the company's $420,000 bad debt reserve benefit in the first three months of 2002, which did not repeat in the first quarter of this year.
'While we remain sensitive to short-term performance goals,' said Bazet, 'we are continuing to invest in outstanding medium- and long-term growth opportunities.'
Said Bazet about the second quarter, 'As our customer composition continues to shift away from distributors and toward direct retail accounts, we are seeing a continued shift in our sales seasonality from the first half to the second half of the year. Because of this, as well as the currently weak economic environment, we expect second quarter sales and net income to be down slightly from one year ago,' he said.
For the 12 months, Bazet anticipates that sales will be flat to slightly down, but net income will significantly exceed 2002 levels.