SecProbe.io

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Mail Stop 3-8

								February 4, 2005

By Facsimile and U.S. Mail

Mr. Donald W. Jewell
Chief Executive Officer
Sport-Haley, Inc.
4600 East 48th Ave
Denver, CO 80216-3215

	RE:	Form 10-K for the fiscal year ended June 30, 2004
		File No. 033-74876-D
Filed October 13, 2004

Form 10-Q for the quarterly period ended September 30, 2004

Dear Mr. Jewell:

	We have reviewed your filings and have the following
comments.
We have limited our review to only your financial statements and
related disclosures and will make no further review of your
documents.  Where indicated, we think you should revise your
documents in response to these comments.  If you disagree, we will
consider your explanation as to why our comment is inapplicable or
a
revision is unnecessary.  Please be as detailed as necessary in
your
explanation.  In some of our comments, we may ask you to provide
us
with supplemental information so we may better understand your
disclosure.  After reviewing this information, we may or may not
raise additional comments.

	Please understand that the purpose of our review process is
to
assist you in your compliance with the applicable disclosure
requirements and to enhance the overall disclosure in your filing.
We look forward to working with you in these respects.  We welcome
any questions you may have about our comments or on any other
aspect
of our review.  Feel free to call us at the telephone numbers
listed
at the end of this letter.

General

1. Unless otherwise indicated, where a comment below requests
additional disclosures or other revisions to be made, these
revisions
should be included in your future filings, as applicable.

FORM 10-K FOR THE YEAR ENDED JUNE 30, 2004

Item 7. Management`s Discussion and Analysis of Financial
Condition
and Results of Operations

Critical Accounting Policies and Estimates, page 18

2. You state that you estimate the net realizable value of your
inventory based on management`s disposition plans and historical
experiences.  In light of your disclosures elsewhere in the
document
regarding material weaknesses in your internal control structure
with
respect to inventory valuation, please expand your disclosure to
describe the estimates and assumptions you used to determine the
lower of cost or market of your inventory at June 30, 2004.  In
this
regard, we understand from your disclosures elsewhere in the
document
that you used a standard cost assumption for valuing inventories
at
June 30, 2004 because you were unable to determine weighted
average
cost.  You should discuss in detail the standard cost method you
applied.  Also discuss the sensitivity of reported results to
changes
in your assumptions, judgments, and estimates, including the
likelihood of obtaining materially different results if different
assumptions were applied.  Show us supplementally how the revised
disclosures will read.

Results of Operations, page 21

3. Where you describe two or more business reasons that
contributed
to a material change in a financial statement line item between
periods, please quantify the extent to which each change
contributed
to the overall change in that line item.  For example, with
respect
to the change in your selling, general and administrative expenses
from fiscal year 2002 to 2003, please quantify the extent to which
the changes are attributable to the various contributing factors,
such as increased royalties, commissions, advertising expenditures
and salaries.  Also, with respect to the increase in net sales
from
fiscal year 2003 to 2004, please disclose the individual impact of
the increase in Ben Hogan apparel sales and the offsetting
decrease
in Haley apparel sales. See Item 303(a) of Regulation S-K and SEC
Release No. 33-8350.

4. You indicate that based on your trend of net losses in the
current
and most recent prior years, you believe it is more probable than
not
that none of your net deferred tax assets will be recovered.  In
view
of this disclosure, please revise your MD&A to elaborate on your
outlook on your future financial performance, in terms of whether
you
expect to generate book and/or taxable income in future periods
and
why or why not.  Also clarify what changed between fiscals 2003
and
2004 in terms of your outlook regarding the likelihood of
generating
taxable income in future periods.  Show us supplementally how the
revised disclosures will read.

Liquidity and Capital Resources, page 25

5. On pages 2-3, you indicate that you plan to introduce in the
fall
2005 season a new limited line of performance fabric apparel under
the HALEY label as part of a redesigned commodity/corporate line.
If
material, please quantify the cost you expect to incur related to
your line expansion and the impact these efforts will have on your
results of operations and liquidity.

Item 9A. Controls and Procedures, page 30

6. Please amend your filing to address the following issues
related
to your Item 9A disclosures:
a. We note that your certifying officers disclose their
conclusions
as to the effectiveness of your disclosure controls and procedures
"as of the date of this report."  However, Item 307 of Regulation
S-K
requires that your certifying officers disclose their conclusions
regarding the effectiveness of your disclosure controls and
procedures "as of the end of the period covered by the report."
See
also paragraph 4(b) of Exhibits 31.1 and 31.2.
b. In light of the fact that a material weakness existed with
respect
to the valuation of your finished good inventories, please
disclose
in reasonable detail in paragraph (a) the basis for the officers`
conclusions that the company`s disclosure controls and procedures
were nonetheless effective as of the end of the period covered in
the
report.
c. We note that you designed your disclosure controls and
procedures
to provide "only reasonable assurance" of achieving the desired
control objectives.  Therefore, revise your conclusion in
paragraph
(a) that your disclosure controls and procedures are effective to
reflect, if true, that the disclosure controls and procedures are
effective at the "reasonable assurance" level.  Please refer to
Part
II.F.4 of Final Rule Release 33-8238 for guidance.  Please note -
your statement under paragraph (b) that "Sport-Haley`s control
systems provide a reasonable assurance level" is not sufficient in
this regard.
d. We note your disclosure that you did not institute any
significant
changes in your internal control over financial reporting "except
certain difficulties . . ."
Please revise your disclosure to delete the qualification and to
provide an unqualified conclusion as to whether there were any
changes in your internal control over financial reporting during
your
most recent fiscal quarter.  Also note you are required to
identify
"any changes," not just "significant" changes that have materially
affected, or are reasonably likely to materially affect, your
internal controls over financial reporting.  See Item 308(c) of
Regulation S-K.
e. We note that your chief executive officer and chief financial
officer certified, in their Rule 13a-14(a) certifications, that
based
on their knowledge, "the financial statements, and other financial
information included in [your filings], fairly present in all
material respects the financial condition, results of operations
and
cash flows of the registrant as of, and for, the periods presented
in
[your reports]."  Given the material weakness discussed in your
disclosure, disclose why you believe that the financial statements
for the fiscal period covered by your reports fairly present in
all
material respects your financial condition, results of operations
and
cash flows.  The disclosure should include specific discussion of
how
you were able to validate the amount of costs removed from
inventory
(i.e., cost of sales).
Please amend your September 30, 2004 Form 10-Q to make conforming
revisions to your Item 4 disclosures.

Financial Statements

Consolidated Statement of Shareholders` Equity, page F-5

7. We believe that the use of one line item encompassing all stock
option transactions does not adequately illustrate the nature of
the
underlying transactions in this category.  Please consider
breaking
out the "Stock options" line item into more descriptive
categories.
If applicable, you could utilize line items such as issuance of
common stock for stock options exercised, tax benefit on exercise
of
options, and recognition of stock-based compensation.  If you
believe
that other captions are more appropriate, please advise.

1. Organization and Significant Accounting Policies

General

8. Please disclose the types of expenses that you include in the
cost
of goods sold line item and the types of expenses that you include
in
the selling, general and administrative expenses line item.  In
doing
so, please disclose specifically whether you include inbound
freight
charges, purchasing and receiving costs, inspection costs,
warehousing costs, internal transfer costs, and the other costs of
your distribution network in cost of goods sold.  If you currently
exclude a significant portion of these costs from cost of goods
sold,
please provide cautionary disclosure in MD&A, similar to the
disclosure on page 18 of your Form 10-Q for the period ending
September 30, 2004, that your gross margins may not be comparable
to
others, since some entities include the costs related to their
distribution network in cost of goods sold and others like you
exclude all or a portion of them from gross margin, including them
instead in a line item such as selling, general and administrative
expenses.  To the extent the excluded costs are material to your
operating results, quantify these amounts in MD&A.  If you
determine
that these amounts are immaterial for disclosure, please
supplementally provide us with your qualitative and quantitative
assessment of materiality for all periods presented.

9. Please disclose your policy for classifying shipping and
handling
costs in the statements of operations.  If shipping and handling
costs are significant and are not classified in cost of goods
sold,
disclose the amount of these costs and the line item(s) that
include
them.  Please also disclose, if true, that you include amounts
paid
to you by customers for shipping and handling in net sales.  See
EITF
00-10.

10. Please tell us the nature and terms of any incentives you
offer
to customers, including discounts, rebates, cooperative
advertising
and free products.  Please also disclose your accounting policy
for
these types of arrangements, including the statement of operations
line item in which each type of arrangement is included.   For
each
type of arrangement treated as an expense rather than as a
reduction
of revenues, please tell us how this type of arrangement meets the
requirements in EITF 01-09.
Inventories, page F-7

11. You disclose that inventories are stated at the lower of
weighted
average cost or market.  Please revise your disclosure to clarify
how
inventories as of June 30, 2004 were valued and to make the
disclosure consistent with disclosures elsewhere in the document
where you have indicated that due to internal controls issues over
inventory valuation, you used a standard cost model in valuing the
year end inventories.  Show us supplementally what the revised
disclosures will look like.
Revenue Recognition, page F-8

12. We note your disclosure that revenues are recorded in
accordance
with SAB 101, as amended.  Please expand your disclosure to
indicate
whether revenues are recorded upon shipment to or receipt by your
customers.  If revenues are recorded upon shipment, please also
disclose the shipping and/or other terms of your selling
arrangements
that support revenue recognition upon shipment.  Show us
supplementally how the revised disclosures will read.

13. Based on your disclosures here and on page 20, we understand
that
your independent wholesale sales representatives have the right to
return sample garments to you at the end of the selling season,
free
of charge.  Please clarify for us how you account for these
transactions; example journal entries may facilitate our
understanding.  Based on your current disclosures, it appears that
you record a sale and a completely offsetting allowance when the
sample garments are given to the sales representatives.  In view
of
the fact that these sample garments are returnable to you if they
are
not sold by the sales representative, we are unclear as to why
sales
recognition is appropriate upon transfer of the sample garments to
the sales representative, rather than upon sale through to the
ultimate customer.  Moreover, this treatment appears inconsistent
with the fact that you retain the sample garment inventory on your
books, designated as consignment inventory.  Please tell us
supplementally how your accounting complies with GAAP.  Please
include in your response an explanation as to when, if ever, title
of
the sample garments passes to the sales representative and how
this
supports your accounting.  Please also revise your footnote
disclosures in future filings to clarify your accounting for these
transactions.  In this regard, we obtained a better understanding
of
your accounting from the description on page 20 than from the
audited
footnote disclosure.

7. Income Taxes, page F-12

14. We do not understand why the fiscal year 2003 deferred income
tax
benefit per the footnote does not agree to the line item on the
statement of cash flows where the non-cash deferred tax benefit is
deducted from net losses to arrive at net cash used in operating
activities.  Nor do we understand why the fiscal year 2003 current
deferred tax asset balance per the footnote does not agree to the
2003 current deferred tax asset figure on the balance sheet.
Please
advise.

15. Please disclose the expiration dates of your operating loss
carryforwards.  See paragraph 48 of SFAS 109.

9. Commitments and Contingencies, page F-13

16. You state that amounts recovered from your insurance carriers
for
legal-related expenses are either offset against other legal
expenses
in SG&A or included in other income as they are recovered.  We are
unclear as to why certain insurance recoveries are recorded as an
offset to legal expenses in SG&A and other insurance recoveries
are
treated as other (non-operating) income.  Please advise and also
clarify your future disclosures accordingly.  Also, please
supplementally quantify for us the insurance recovery amounts that
were included in each of these line items in each period
presented.
We may have further comment.

10. Shareholders` Equity, page F-16

17. Please disclose the number and weighted-average exercise price
of
options exercisable at the end of each fiscal year presented.
Refer
to paragraph 47a. of SFAS 123.

Segment Reporting

18. Please tell us in detail how you determined that the company
has
only one SFAS 131 reportable segment.  Tell us specifically each
component of the company that has been identified as an operating
segment as defined in paragraph 10 of SFAS 131.  Also tell us your
basis for aggregating any identified operating segments.  Please
address each of the following points in your response.  Based on
our
understanding of your business, it appears to us that the
operations
represented by your HALEY and Ben Hogan labels are separate
operating
segments.  In this regard, we would assume that discrete financial
information is available and reported to the chief operating
decision
maker for each of these operations for purposes of resource
allocation and assessing performance.  Moreover, it appears to us
that your operating segments would not meet the aggregation
criteria
in paragraph 17 of SFAS 131.  Specifically, we do not see how the
operations represented by each of the labels are similar in terms
of
their economic characteristics, the nature of the products sold,
and
the class of customers.  With respect to similari