Koss Corp. reported fiscal first quarter net income of $79,402, or 1 cent per share, compared with $366,153, or 5 cents per share, in the same period a year ago.
The Milwaukee-based headphone manufacturer’s quarterly sales dipped to $6.8 million from $8.9 million a year earlier.
“The first quarter saw a return of the weakness we experienced last year in certain export markets,” said Michael Koss, president and chief executive officer. “Weak economies in general and an overstock of inventory at some distributors drove the sales decline. In the U.S., the Company experienced a decline in sales at one major retailer due to more limited product placement compared to a year ago.”
Koss added, “The Fit Series, designed for women with the help of Gold Medalist Dara Torres, was launched a few months ago and continues to gain shelf space at U.S. retailers. The company has initiated dual product sourcing through the addition of a factory in Mexico. Margins were lower in the quarter compared to a year ago due to the impact of ramping up manufacturing operations in Mexico and the impact of fixed costs on the lower sales volume. The startup costs in Mexico decreased gross margins by approximately 4 percent. We are excited about the opportunities of manufacturing in Mexico and the positive impact it will have on our ability to be more nimble in new product introductions while decreasing our investment in inventory.”