US: Castle Brands losses extend despite sales increase

Castle Brands has reported a leap in sales volumes and value for its full year, although increased costs lead to deeper losses for the company over the 12 months.

The spirits group recorded an 18% growth in total case sales to 314,644. Volume was driven by strong sales in the US, with Boru Vodka contributing significantly to this growth. This increase in vodka case sales was approximately 54% in the US and 9% internationally. The rum category was also a driver during the year, with a 21% lift in global case volume for the fiscal year.

Meanwhile, net sales increased 19% over the same period to US$25.2 million. Gross profit increased 12% to $8.4m.

Selling expense, however, increased 29% to $16.8m. This increase was attributed to the increases in costs associated with the Boru relaunch, sales support costs and increased expenses in connection with the Gosling's rum advertising campaign. General and administrative expenses were $8.6m as compared to $5.5m in fiscal 2006

For the twelve months ended March 31, 2007, Castle Brands generated a net loss of $16.6m, versus a net loss from the prior year of $14.7m.

Mark Andrews, the company's chairman chief executive said: "Fiscal 2007 was a pivotal year for Castle Brands and we saw our heavy investments in distribution and brand building begin to yield results. Enhanced distribution, as well as a broader product portfolio, enabled US sales to grow significantly faster than overall company growth. Globally, we were able to deliver record case sales and revenue despite the decision to discontinue sales of some lower margin Irish cream products."

"The momentum we have going into fiscal 2008, coupled with other initiatives underway to build brand awareness and drive sales is expected to result in another record year of case sales for Castle Brands."

The company said it was projecting fiscal 2008 case sales to be in the range of 375,000 - 380,000.