Milwaukee-based headphone maker Koss Corp. saw its net sales drop more than 16% to $4.4 million during the first quarter of its fiscal year as shipping delays led to backorders and the company lost placement at a U.S. mass retailer.
The company also reported a net loss of $99,359 for the quarter, compared to net income of almost $127,000 during the same period in 2020.
Like many companies, Koss started seeing increased shipping delays on products from Asia in the spring and early summer. Disruption and congestion at U.S. ports and railyards has also contributed to delays and increased costs.
Michael J. Koss, chairman and chief executive officer of Koss, said increased freight costs and longer transit times have “become a major source of concern.”
“Although the freight costs had an immaterial impact on the first quarter results, the shipping delays resulted in backorders that should be fulfilled in the next fiscal quarter,” Koss said.
The company said higher shipping costs would negatively impact its margins “in the forseeable future.”
Gross profit margins were actually up in the first quarter from 31.4% in 2020 to 36.2% this year behind a more favorable product mix. The company made the final shipment of a lower margin non-Koss branded product to a U.S. mass retailer in early part of 2021.
While exiting the product line improved margins, the company saw a net sales loss of $727,000 in the quarter.
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