Sales and earnings both fell at Cutter & Buck as the firm, as it had predicted, failed to keep pace with its growth during the first half of its fiscal year.

In the three months ended 31 January, the Seattle-based sportswear and golfwear concern's net income was US$330,000, or 3 cents a diluted share, 31.4% below the year-ago level of $481,000, or 4 cents.

Sales fell 3.1% to $30.3m from $31.2m. By division, corporate sales were down 11.1% to $12.9m, specialty retail sales were off 11.9% to $5.2m and golf channel sales contracted 4.2% to $4.8m.

However, sales at the two smallest units both grow at a double-digit pace. The consumer direct portion of the business expanded 46.2% to $3.5m during the quarter, and international/licensing was up 38.1% to $1.0m. Additionally, gross margin ticked up to 46% of sales in the period from 45.3% a year ago.

"As we said last quarter, we did not expect the rate of sales increases to continue at the same pace in the latter half of this year," said Ernie Johnson, chief executive officer.

"We are now comparing current results to the third quarter last year which included significant sales of marked down, discontinued core styles as well as the initial launch of our new product strategy."

Johnson attributed some of the sales declines, such as the one in the corporate unit, to the wide availability of discounted products that were being phased out a year ago.

In the first nine months of the fiscal year, net income was up 39.3% to $4.8m, or 45 cents a diluted share, from $3.5m, or 31 cents. Sales increased 8.3% to $102.5m from $94.7m.

By Arnold J Karr.