2023-05-09 12:16:36 ET
Escalade ( NASDAQ: ESCA ) was one of the biggest decliners in the consumer discretionary sector after reporting Q1 results below expectations.
Sales declined 21.3% on a year-over-year basis for the sporting goods manufacturer due to a combination of changing post-pandemic consumer demand, excess inventories in the retail channel, and unfavorable weather conditions in the quarter which delayed the start of the spring business.
The Indiana-based company reported Q1 gross margin of 19.4% of sales vs. 27.8% a year ago. The gross margin drop was primarily driven by less favorable product mix, ongoing additional inventory storage and handling costs, and lower operating leverage with the lower sales level.
EBITDA declined 85.2% to $1.6M during the quarter.
CEO update: "As expected, consumer demand softened during the first quarter and retailers continued to aggressively manage inventories, both contributing to a year-over-year decline in revenue and profitability... While sales volumes declined across most categories in the period given a challenging prior-year comparison, we continued to maintain price discipline, consistent with our strategic focus. Entering the second quarter, channel inventories remain elevated. We anticipate wholesale restocking to gradually increase as we move into the warmer, summer months and the second half of the year."
Shares of Escalade ( ESCA ) dropped 16.60% in early afternoon trading on Tuesday to $12.86 vs. the 52-week trading range of $9.25 to $15.83.
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Escaladed drops 17% after soft consumer demand leads to earnings miss