Tank Sports grew sales 26 percent in fiscal year 2008, which ended Feb. 29, the company reported in a press release June 16. However, it wasn’t able to obtain the same gross margin it did during the previous fiscal year.
The company attributed the lost margin to the higher purchase cost of products from China, raw materials, higher inflation in China, the appreciation of Chinese currency and the heavy discounts needed to sell products in the last quarter because of the economic slowdown in the United States.
Operating results for the year were a $5.4 million loss, including a one-time, $1.61 million write off of goodwill from the Redcat acquisition; Tank subsidiary Dazon Arizona’s disposal for $750,000; and general increases in expenses resulting from the Redcat and PMI merger.
Looking ahead to face the challenges from the slowdown in the economy, the company has devised plans to cut down on operating expenses in the first fiscal quarter of 2008 and the full effect of these savings will be shown in the second quarter, ending Aug. 31. Eliminating warehouse space and consolidating work to reduce manpower are the key measures adopted to drive down operating expenses.
On the expansion front, Tank’s European subsidiary PMI’s sales channel will help the company offer Tank products that were not previously available to importers.
“With the successful execution of these cost saving measures and sales strategies, I anticipate that Tank Sports will be able to report a good result in the second quarter of 2008,” said Jiangyong Ji, Tank Sports CEO.