US: Reduced A&P spend slows losses at Castle Brands

Castle Brands has trimmed back its losses in the first nine months of its fiscal year, despite slowing sales in the period.

The US-based spirits developer and marketer said yesterday (17 February) that net losses for the nine months to the end of December slowed to US$12.7m, down from losses of $14.5m in the corresponding period a year earlier.

Operating losses also improved, to $12.7m from $16m. Sales, meanwhile, dipped to $20.2m from $20.9m.

For the third quarter, net losses came in at $2.2m versus $6.9m with sales rising slightly, to $6.9m from $6.4m. Operating losses came in at $5m against losses of $7.2m a year ago.

Selling expenses for the quarter decreased by 21% to $4m and for the nine-month period by 18% to $11.3m due to "cost containment efforts" and a decrease in advertising, marketing and promotional expense, the company noted.

The results included a pre-tax, non-cash gain of $4.2m from the exchange of the company's 6% convertible notes in its third quarter.

"The closing of the private placement transaction resulted in a significant capital infusion and the conversion of virtually all of our debt into equity," said company president and CEO, Richard Lampen.

"These developments put our company on firmer footing in our efforts to build our own premium brands, support our existing agency brands, pursue new agency relationships and make brand acquisitions.

"During the third quarter we implemented efforts to streamline our organisation and find efficiencies at every level. We recognise that ongoing expense discipline is an essential part of achieving our goals."

John Glover, Castle's COO, added: "We continue to aggressively cut and control costs throughout the organisation and promote efficiency in our efforts to achieve profitability. Our reinforced partner relationships should have a positive impact on operations in the coming quarters."

Castle's portfolio includes, Gosling's Rum, Pallini Limoncello, and Boru Vodka.