Skullcandy Had $3 Million Inventory Q4 Sitting ‘Idle’ at Seattle Port, CFO Says

Skullcandy spent more than $1.1 million on air freight in Q4 to circumvent the West Coast ports slowdown and deliver headphones and other consumer products to retail for the crucial holiday selling season, Chief Financial Officer Jason Hodell said March 5 on an earnings call. For Q4, the company also estimates it had about $3 million worth of inventory sitting “unfortunately idle” at the port of Seattle while the labor slowdowns continued, Hodell said. “Without the port slowdown, this inventory would likely have been consumed in Q4,” he said. As the West Coast ports crisis wasn’t resolved until the breakthrough in contract negotiations in late February and backlogs were expected to continue for weeks thereafter (see 1502240004), Skullcandy anticipates incurring additional air freight costs that will reduce earnings per share by at least a penny when it reports Q1 results, he said. But "this is a short-term issue,” he said.