Skullcandy Q1 Loss Narrows, Lifts 2014 Earnings Outlook

(RTTNews) - Headphone maker Skullcandy, Inc. (SKUL) on Thursday reported a loss for the first quarter that narrowed from last year on higher sales and lower expenses. Looking ahead, the company raised its earnings outlook for fiscal 2014, but maintained its revenue growth range. The company's shares gained 9 percent in extended trades.

Hoby Darling, President and Chief Executive Officer of Skullcandy said, "The first quarter marked our return to revenue growth as both our domestic and international markets posted positive gains. Equally important, gross margins stabilized and we were able to leverage operating expenses while continuing to invest in key long-term growth drivers such as demand creation, innovation and talent."

Park City, Utah-based Skullcandy's net loss for the first quarter narrowed to $3.46 million or $0.12 per share from $7.05 million or $0.25 per share in the same period last year. On average, eight analysts polled by Thomson Reuters expected the company to report loss of $0.17 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter rose 6 percent to $39.08 million from $37.05 million in the same period last year. Analysts had a consensus revenue estimate of $39.23 million.

Gross margin expanded to 46.5 percent from 44.5 percent in the year-ago period, primarily attributable to a shift in product sales mix into higher margin products, decreases in shipping related costs, and reductions in warranty related costs.

Selling, general and administrative expenses decreased 16 percent to $22.08 million from $26.31 million in the previous-year period.

North America net sales for the quarter rose 1 percent from last year to $29.04 million, while international net sales grew 20 percent to $10.04 million.

The North America segment includes net sales of $0.6 million and $2.1 million in the latest and year-ago quarters, respectively, of products that were sold from the U.S. to customers with a "ship to" location outside of North America.

Looking ahead to the second quarter, Skullcandy forecast adjusted net income to be approximately breakeven and net sales to increase between 5 percent to 7 percent over the year-ago period levels. Street expects the company to earn $0.03 per share for the quarter on 5.1 percent increase in revenues to $53.40 million.

For fiscal 2014, Skullcandy raised its earnings outlook to a range of $0.16 to $0.20 per share from the prior range of $0.10 to $0.14 per share. However, the company maintained its forecast for net sales to increase in the mid -to-high single digit percentage range over the prior-year levels.

Analysts currently expect full-year earnings of $0.13 per share on 6.7 percent growth in sales to $224.23 million.

SKUL closed Thursday's regular trading session at $7.75, up $0.05 or 0.65 percent on a volume of 480,218 shares. In after-hours, the stock further gained $0.70 or 9.03 percent to $8.45.