Sales slide at Koss Corp.

Fewer orders, brick-and-mortar woes weigh on headphone manufacturer

Koss headphones
Koss makes high-fidelity headphones.

Milwaukee-based Koss Corp. reported sluggish sales and a sizable net loss in its fiscal third quarter.

Koss headphones
Koss makes high-fidelity headphones.

The high-fidelity headphone and speaker manufacturer reported a $1.1 million net loss, or 15 cents lost per share, in the third quarter, compared with net income of $869,686, or 12 cents per share, in the third quarter of 2016.

Revenue totaled $4.8 million, down 20.5 percent from $6 million in the same period a year ago.

Koss incurred $39,663 in unauthorized transaction costs in the third quarter, compared with recoveries of $1.4 million in the same period a year ago, related to the 2010 revelation that Sujata “Sue” Sachdeva had embezzled $34 million from the company.

Fewer orders, a strong dollar and low export sales contributed to the poor quarter.

“Sales were weak in the quarter, with continued decrease in orders from distributors in Asia and Scandinavia, as well as lower demand for the OEM products in Asia. The lower order volume is driven by distributors working off inventory levels, as well as the continued strength of the dollar,” said Michael J. Koss, chairman and chief executive officer. “Earnings were negatively impacted by the low export sales and a charge to earnings to write down the inventory value on a group of products.”

The company also attributed its struggles to the fact that it relies on the brick-and-mortar retail segment for much of its distribution. Retailers, including Menomonee Falls-based Kohl’s Corp. and Milwaukee-based The Bon-Ton Stores Inc., have been negatively impacted by consumers’ shift to online shopping over the past several years.

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Molly Dill, former BizTimes Milwaukee managing editor.

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