Koss profits fall, despite improved U.S. sales

Sales mix cuts into margins during second quarter

Koss Corp. headquarters at 4129 North Port Washington Ave. in Milwaukee.

Last updated on May 13th, 2019 at 10:45 pm

Milwaukee-based Koss Corp. saw softer sales in a number of markets and reported a drop in revenue and profits for the second quarter.

Koss Corp. headquarters at 4129 North Port Washington Ave. in Milwaukee.
Koss Corp. headquarters at 4129 North Port Washington Ave. in Milwaukee.

The headphone maker had net income of $140,112, down from $386,632 during the same period last year. Earnings fell from 5 to 2 cents per diluted share and revenue was down 7.5 percent to $6.7 million.

Chairman and chief executive officer Michael J. Koss attributed the declines to a change in sales mix.

“It was a difficult quarter with softening of sales to Scandinavia and Asia as well as certain European markets. The declines were partially offset by strong sales in the export OEM business as well as improved sales in the U.S.,” Koss said.

Even with the sales decline, the company’s cost of goods sold was down just 1.9 percent to $4.5 million and selling, general and administrative expenses were off less than 1 percent at slightly less than $2 million.

The company reported Scandinavian and Asian distributors had excess inventories of certain products leading to lower sales volumes. Margins on the OEM business are not as high as those products, contributing to the higher cost of goods sold.

Selling, general and administrative costs were kept higher by a number of factors, including increased expense for testing related to new product introductions.

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Arthur covers banking and finance and the economy at BizTimes while also leading special projects as an associate editor. He also spent five years covering manufacturing at BizTimes. He previously was managing editor at The Waukesha Freeman. He is a graduate of Carroll University and did graduate coursework at Marquette. A native of southeastern Wisconsin, he is also a nationally certified gymnastics judge and enjoys golf on the weekends.

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