Koss reported a weaker first quarter of fiscal 2027, as sales fell and the company swung from a profit to a loss. The headphone maker said stronger sales to some U.S. distributors and continued growth in direct-to-consumer sales were not enough to offset the absence of a large education-customer order that had boosted the year-earlier quarter.
Key details
- Sales declined 24% to $3.09 million in the three months ended Sept. 30, from $4.07 million a year earlier.
- Koss recorded a net loss of $234,168, compared with net income of $243,729 in the prior-year quarter. Basic and diluted loss per share was 2 cents, versus earnings of 3 cents per share.
- The prior-year comparison included a large custom order for an education customer’s new product launch. That order did not recur this quarter, Koss said.
- Some U.S. distributor sales were strong, while European distributor sales were roughly in line with the year-earlier period, supported by inventory-replenishment orders.
- Direct-to-consumer sales now account for about 37% of total sales, which the company said continues to support growth.
- Gross margin slipped to 39.5% from 40.0%. A more favorable mix of higher-margin direct-to-consumer and U.S. distributor sales, plus a $76,000 refund of previously paid import duties on goods from China, was offset by the effect of lower sales on factory-cost absorption and by higher freight rates and peak-season surcharges.
The results show the impact of a one-time customer order on year-over-year comparisons: its absence contributed to the sales decline, while lower volume also weighed on manufacturing-cost absorption. At the same time, Koss said direct-to-consumer sales are a growing part of its business.