Although the Handleman company reported a 14% increase in first-quarter sales, the Troy, Mich.-based company posted a wider loss this year due to taxes.

For the three-month period that ended July 28, Handleman reported a net loss of $17.7 million, or 88 cents per diluted share. During the same period last year, the company posted a loss of $5.9 million, or 30 cents per diluted share, on sales of $240.4 million.

But the company said the loss incurred was larger this year because it had a $51,000 tax expense versus a $16.25 million tax benefit last year.

In a statement, Handleman chairman and CEO Steve Strome said the company would continue to reduce expenditures. He noted that last year, the company cut overhead by $20 million, the same amount he expects to cut from overhead this year.

"Aligning our cost structure to be in line with forecasted reductions in our music revenues is an important component in returning our business to profitability," he said.