Embroidery systems provider Hirsch International reported static sales but an improved gross margin as a percentage of sales for the third quarter of 2004. 

Third-quarter sales from continuing operations totalled $11.9 million compared to $11.9m for last year's quarter, while gross profit rose to $3.9m from $3.7m. Gross margin as a percentage of net revenues grew to 32.7 per cent from 31.4 per cent.

Third-quarter net income totalled $508,000 compared to a net loss of $78,000 in the same quarter last year, which included a gain from the sale of Hometown Threads of $943,000, and net loss from discontinued operations of $374,00.

For the nine months 30 ended October 2004, net revenues fell 8.6 per cent to $31.9m from $34.9m for the same period in 2003.

Gross profit fell 9.5 per cent to $10.5m from $11.6m last year due to a sales volume slump in the multi- head embroidery machines market and more competition in the small machine market, leading to lower prices. Nine-month net loss totalled $1.2m, compared to a net income of $1.2m in the comparable period in 2003.

Paul Gallagher, president and chief executive officer, said of the third-quarter gross margin increase: "in an industry with declining price points, as well as a demand shift from multi- head machines towards smaller, lower margin machines, this indicates that the overall value we deliver to the marketplace is a distinct competitive advantage".

He added: "We're also pleased with the sale of Hometown Threads as it will allow us to focus more closely on our core business - providing our customers with the best embroidery machines and software in the world."