Updated: Spy details spending cuts, comments from CEO

Spy Inc. filed documents with the SEC Friday morning detailing spending cuts coming to the company that are expected to save up to $6 million in 2013.

Spy said it plans to layoff approximately 20 employees in North American and Europe, to switch from a direct business in Europe to a distributor model, and to reduce its marketing spend.

The company is also ending the employment of Gregory Hagerman, the VP of Sales and Operations, who joined the company in Dec. 2011.

According to the filing, Hagerman will be entitled to severance equal to his current base salary of $225,000 payable over the next 12 months.

As a result of the cuts, Spy is expected to incur $1.2 million in costs.

Spy has been investing in its core Spy brand in a bid rejuvenate it. The strategy has led to five quarters of consecutive year-over-year growth of the Spy brand.

In the quarter ended June 30, company sales rose 5% to $9.5 million, while the net loss narrowed to $1.6 million vs. a net loss of $3 million during the same period last year.

Sales of Spy product increased 13% during the quarter.

I emailed Spy CEO Michael Marckx this morning to see if he would like to comment, and he sent me this response:

“We have been enjoying great YOY growth over the last 5 straight quarters for SPY, which is huge for us, but as you know we inherited a large debt from previous management, so we are creating a new structure to continue the success but also streamline our expenses across the board, expediting our business viability proposition. This means a smaller, more nimble staff level, with a lot of key personnel being able to work cross functionally, as well a focused group effort on connecting all of our efforts back to retail in joint sales and marketing efforts.”

“We’ve learned so much about our business in the last 16 months that we have a much better sense of what efforts work to serve the brand and our sales and which efforts are either superfluous or just luxuries. The knowledge we’ve gained isn’t just in Sales and Marketing, but also in creating better margins through higher-end, technologically advanced features and more leading products in the market, like the Crosstown Collection, Platoon goggle, the Screw and the Helm. The exciting thing for us is the Spring launch of the most technological advanced product SPY has ever created, the Happy Lens, which will help continue our transformation in truly remarkable ways.”

“We definitely wanted to create a structure and support platform for the Happy Lens and all other new products we have launching this coming quarter and into 2013, so we’ve realigned our spending and staffing to this end, ensuring we have adequate funds and the right people to deliver the most exciting story to the market we’ve ever produced, but to do so as effectively and strategically as possible.”