Ashworth Inc, the designer of golf apparel and sportswear, has swung to a third quarter net loss after being hit by a tax charge and lower sales in its corporate, retail and international divisions.  

For the three months to 31 July, net loss was $5.7m, or $0.39 per share, compared to net income of $0.7m, or $0.05 per diluted share, for the same quarter of the prior year.

The company recorded a tax charge of $1.4m or $0.10 per diluted share to establish a valuation allowance against deferred tax assets.

Its selling, general and administrative expenses also rose by 10.1% to $21.8m on larger compensation costs for the principals of Gekko Brands, the headwear and apparel maker it bought in July 2004.

Consolidated net revenue fell 6.4% to $49.5m from $52.8m.

The company said total revenues in the domestic golf channel remained flat at $17.2m, but reported a 5.2% for Gekko Brands and an 11.8% rise in company-owned stores.

However, these gains were offset by a 17.1% drop in corporate sales, a 43.7% decrease in the retail channel, and a 16.9% drop in its international segment.

Carlsbad, California based Ashworth also said that despite the under-utilisation of embroidery capacity at the firm's embroidery and distribution centre, it has now decided to retain the unit and focus instead on reducing operating costs and increasing its operating efficiency.