Kefir manufacturer Lifeway Foods Inc., Morton Grove, Ill., announced positive results for the first quarter ending March 31. Gross sales for the company increased approximately 16 percent to $32.1 million, compared with $27.6 million for the prior-year period. The company primarily attributes this growth to increased sales and awareness of its flagship Lifeway Kefir brand as well as its ProBugs Organic Kefir for kids and BioKefir brands.

Likewise, total consolidated net sales for the company increased approximately 20 percent to $29.1 million, compared with $24.4 million in the prior-year period. Net sales are recorded as gross sales less promotional activities, such as slotting fees paid, couponing, spoilage, and promotional allowances as well as early payment terms given to customers. The total allowance for promotions and discounts in the first quarter of 2014 was approximately $2.9 million or 9 percent of gross sales. compared with $3.2 million or approximately 12 percent of gross sales in the prior-year period.

Cost of goods sold as a percentage of net sales, excluding depreciation expenses, were approximately 74 percent during the first quarter, compared with approximately 63 percent during the same period in 2013. Gross profit for the first quarter of 2014 decreased 18 percent to approximately $7.1 million, compared with approximately $8.6 million in the prior-year period. The gross profit margin decreased to 24 percent in the first quarter of 2014 compared with 35 percent in the first quarter of 2013. Lifeway primarily attributes the decrease to the increased cost of conventional milk, which is the company's largest raw material. The total cost of milk was approximately 35 percent higher during the first quarter 2014 when compared with the same period in 2013, it notes.

Operating expenses as a percentage of net sales were approximately 21 percent during the first quarter of 2014, compared with approximately 20 percent during the first quarter of 2013. This is primarily attributable to an increase in selling-related expenses, which increased approximately 24 percent to $3.5 million during the first quarter of 2014 from $2.8 million during the prior-year period, the company says.

Reported income from operations was $1 million during the first quarter of 2014 compared with $3.7 million during the same period in 2013. Total net income was $700,000 or $0.04 per diluted share for the quarter compared with $2.4 million or $0.14 per diluted share in the prior-year period.