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Berliner McDonald

A Professional Corporation
  Attorneys at Law

5670 Greenwood Plaza Blvd.

Suite 418

Greenwood Village, Colorado 80111-2408

(303) 830-1700

(303) 830-1705 Fax

Steven W. McDonald

smcdonald@berlinermcdonald.com

February 25,
2005

By Facsimile and Federal Express

George F. Ohsiek, Jr.

Andrew Blume

Robyn Manuel

Securities and Exchange Commission

450 Fifth Street, N.W.

Washington, DC 20549

Re:Sport-Haley, Inc.—SEC
Comment Letter dated February 4, 2005

Lady
and Gentlemen:

        As
we have discussed, this firm represents Sport-Haley, Inc. (the "Company"). We have reviewed the Staff's comments to the annual report on Form 10-K for the
fiscal year ended June 30, 2004, filed October 13, 2004, and the quarterly report on Form 10-Q for the period ended September 30, 2004, filed
November 19, 2004, for the Company, as set forth in the Staff's letter dated February 4, 2005. In response to some of your comments, we are filing electronically today an Amendment
No. 1 on Form 10-K/A and an Amendment No. 1 on Form 10-Q/A. We have directed Merrill Corporation, the printer and company performing the Edgarizing,
to send to you by overnight mail both three courtesy clean copies of the amended Form 10-K/A and Form 10-Q/A, as refiled, as well as copies of marked versions
reflecting the changes made from the original filings. The documents filed contain the Edgar <R> tags to indicate paragraphs where any changes have been made. We are also enclosing a
redlined version of both amended filings generated in Word for your convenience.

Request for Expedited Review of Comments Requesting or Potentially Requesting Amendments to Prior Filings

        Before responding to the various comments, we would request that the Staff give expedited review of the amended filings and to comment 18 regarding Segment
Reporting for the following reasons: As we have discussed on the telephone, the Company's annual shareholders meeting is scheduled for April 8, 2005. Along with the proxy statement, the mailing
to shareholders will include the Annual Report to Shareholders ("ARS"), which consists primarily of the information in the Form 10-K for the year ended June 30, 2004, as well
as the latest quarterly report on Form 10-Q. The Company is currently scheduled to mail the proxy materials to the shareholders on or about March 7, 2005, and must have these
materials ready for printing by approximately March 2, 2005. Because the Company wishes to provide its shareholders with the information in the amended 10-K as part of its ARS, the
Company needs to be assured that the Staff has approved the amendments to the Item 9A of the 10-K and agrees that no amendment is required regarding Comment No. 18 regarding Segment
Reporting, other than the disclosures required by paragraph 26 of SFAS 131.

Responses to Staff Comments

        We have the following responses to the Staff's comments in the same numbering sequence as stated. As a preliminary matter, we understand that only Comment
No. 6 (regarding Item 9A—Controls and Procedures) and Comment No. 18 (regarding Segment Reporting), require amendment to the 10-K and 10-Q referenced
above. We have also chosen to correct our disclosures with regard to your Comment No. 14 within the amended 10-K.

General

        1.     We
understand that, unless otherwise indicated in the Staff's comments, the requested additional disclosures and revisions are to be made in future filings.

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

Critical Accounting Policies and Estimates, page 18

        2.     In
future filings, we will expand our discussion concerning the estimates and assumptions used to determine the lower of cost or market of our inventories (and the
standard cost method used to value finished goods inventories, if applicable).

        In
future filings, the Company's Critical Accounting Policies and Estimates section, under "Inventories" will include disclosure substantially similar to the following, which has
primarily been excerpted from our recently filed Form 10-Q for the period ended December 31, 2004:

As
previously reported, the Company began utilizing a new comprehensive computer system in January 2004 that was specifically designed for the garment industry and further tailored to our
business operations. Certain design, implementation and operational deficiencies of the computer system have affected our business operations for the last four consecutive fiscal quarters.

Previously,
we reported that we discovered programming and human errors that had affected the comprehensive computer system's ability to properly compute the valuation of our finished goods
inventories. The comprehensive system was designed to account for our finished goods inventories using a weighted average costing method. Due to the complexity of the transactions recorded within the
functions of the computer system and various human errors that we discovered, we were not able to specifically quantify the financial effects at March 31, June 30 or September 30,
2004, with regard to errors recorded in the system that affected the per-item cost valuations of our finished goods inventories. Therefore, we recomputed the estimated value of our
finished goods inventories at March 31, June 30, and September 30, 2004, using a standard cost assumption. We performed an analysis to compare the actual landed cost components of
our finished goods inventories with their respective standard cost components. We also performed an analysis of the allocated overhead portion of our standard costs. Because our analyses indicated
that our standard costs approximated actual costs, we believe that our standard cost valuations calculated at March 31, June 30 and September 30, 2004, yielded fair estimations of
our finished goods inventories at those dates. We considered the system malfunction with respect to the computation of per-item valuation of finished goods inventories to be an indication
of a material weakness in our internal controls over financial reporting with respect to inventory valuation during the periods ended March 31, June 30 and September 30, 2004.

The
material weakness persisted during the quarter ended December 31, 2004, and impaired our ability to rely upon information created by our computer system to fairly present, in all material
respects, our financial condition, results of operations and cash flows for the period covered by this report. As previously reported, in October 2004 we discovered a malfunction in the
operation of one of the computer system procedures that we performed in September 2004 in an attempt to correct errors previously discovered in the per-item cost valuations of our
finished goods

inventories. We requested that our former software consultants perform a review of the failed system procedure to determine the reason for the malfunction and to recommend how we should correct the
problem. The former consultants informed us that they could not determine why the system malfunctioned during the system procedure and deferred the problem to the software developers for advice. The
software developers suggested that we zero out all finished goods inventory balances, reverse other pending inventory-related system procedures and re-enter finished goods inventory
quantities into the system in order to correct errors caused by the system malfunction. To ensure the integrity of the finished goods inventory data within the computer system, at the end of
December 2004, we performed a physical inventory of our finished goods apparel. The standard costs of our finished goods inventories have not changed since the previous analyses were performed.
Therefore, at the conclusion of our December physical inventory, we entered the quantities of finished goods inventory items, as determined by the results of the physical count, back into our
computer system using their respective standard costs. After applying the recommended procedures, we compared the per-item costs of several of our finished goods inventory items with their
respective standard costs and noted no discrepancies. Had we analyzed the standard cost components of all or our finished inventory items on hand at December 31, 2004, we believe that the
probability of reaching a materially different conclusion is remote. Therefore, we concluded that our analyses provide reasonable assurance that our standard costs approximate the actual costs of our
finished goods inventories at December 31, 2004.

Inventories,
predominantly comprised of finished goods, are generally valued at the lower of cost or market. As discussed above, a material weakness in our internals has caused us to value our
finished goods inventories using a standard cost assumption for the last four consecutive fiscal quarters. Excess finished goods inventories are a natural component of a seasonal apparel business.
While certain finished goods items will sell out in any particular selling season, quantities of other finished goods items will remain at the end of each selling season. We market previous seasons'
finished goods inventories at reduced wholesale prices to our customers in the normal course of business. Remaining excess inventories are liquidated through other markets. Excess finished goods
inventories may have more of an adverse effect on the results of our operations than realized by other companies within the golf apparel industry. While, according to an industry-related survey, the
golf apparel market in total is generally comprised of 75% men's apparel and 25% women's apparel, our sales for fiscal 2004 were generally comprised of 40% men's apparel and 60% women's apparel.
Historically, a significant portion of our excess inventories have been comprised of women's apparel, which has fewer channels of distribution than are available within the men's apparel market.

We
perform analyses on a quarterly basis to identify discontinued or aging merchandise and adjust our inventory valuation allowance to reduce the carrying value of discontinued or aging merchandise to
its estimated net realizable value. The net realizable value of the discontinued or aging merchandise is estimated based on our disposition plans and historical experiences regarding the dispositions
of excess inventories. In the ordinary course of business, we maintain reserves for inventory write-downs due to the obsolescence of discontinued or aging merchandise. In October 2004, the
Company set a goal to attempt to arrange for the disposal of a majority of our prior seasons' inventories by December 31, 2004. That goal caused us to accelerate our disposition plans and to
revise our analysis with respect to the valuation of discontinued or aging inventories, accordingly. Our analysis of those excess inventories and expected methods to be used for their disposition
dictated that we increase our reserve for finished goods inventory write-downs at September 30, 2004. In December 2004, we sold substantially all of our discontinued or aging merchandise
to a major retailer for approximately $713,000. We sold approximately 98,000 units of women's apparel and 36,000 units of men's apparel in the December sale, which was comprised of essentially all of
our discontinued or aging merchandise from the spring 2004 and earlier selling seasons. The goal we established for disposition of those inventories prior to December 31, 2004,

may have weakened our bargaining position with respect to the amount we could recover through their disposition. Thus, after accounting for the reserve previously recorded on our finished goods
inventories aged from spring 2004 and earlier, we recorded an additional loss of approximately $179,000 on the sale in December 2004.

At
December 31, 2004, we improved the methods that we use to assess the recoverability of our finished goods inventories. We developed a system to better estimate the anticipated future sales
of our finished goods inventories in order to better forecast inventories expected to remain at the end of a current or future distribution period. Having better information available to forecast
quantities and mix of unsold inventories allows us to better estimate excess inventories expected to be on hand in a future period. Having such information also allows us to better plan marketing
strategies for the sales of such inventories through existing marketing channels and to better estimate the overall recoverability of our finished goods inventories. The use of the new method at
December 31, 2004, revealed that we expect to incur a significant amount of excess finished goods inventories remaining from the fall 2004 and spring 2005 selling seasons. Accordingly, we
increased our reserve for inventory write-downs by $695,000 at December 31, 2004. We estimated the recoverability of the fall 2004 and spring 2005 inventories based upon our expectations for
the success of future marketing plans and our historical experience regarding the disposition of such apparel. We believe that the methods we now use to identify and evaluate obsolete and aging
finished goods inventories produce a fair valuation of obsolete inventories, but, if actual market conditions are less favorable than those we have projected, additional allowances may be required or
losses on dispositions may be recorded.

The
inability of our computer system to properly calculate the per-item valuations of our finished goods inventories also affected the system-recorded amounts within our cost of goods sold
during the period covered by this report. Costs associated with invoiced sales and returns as well as inventory adjustments are natural components of our cost of goods sold. Because we concluded with
reasonable assurance that our using a standard cost assumption yielded a fair estimation of our finished goods inventories and we consistently recorded adjustments to inventories as components of cost
of goods sold during the periods covered by this report, we believe with reasonable assurance that our
cost of goods sold are fairly stated during the periods covered by this report. Therefore, we believe that a standard cost valuation of our finished goods inventories provides us with reasonable
assurance that our report fairly presents, in all material respects, our financial condition, results of operations and cash flows.

Results of Operations, page 21

        3.     In
future filings, where we describe two or more business reasons that contributed to a material change in a financial statement line item between periods, we will
quantify the extent to which each change contributed to the overall change in that line item. Also, in future filings, with respect to the change in our selling, general and administrative expenses
between the periods presented, we will quantify the extent to which the changes are attributable to the various contributing factors. Further, in future filings, with respect to changes in net sales
between the periods presented, we will disclose the impact of the changes between periods for the HALEY® and Ben Hogan® apparel that we market, as appropriate.

        4.     In
future filings, we will expand our discussion concerning our outlook on the Company's future financial performance, in terms of whether we expect to generate book
and/or taxable income in future periods, and why or why not, in the discussion regarding expected recovery of net deferred tax assets.

        Our
outlook with regard to the likelihood of future recovery of the Company's net deferred tax assets changed between fiscals 2003 and 2004. At the end of fiscal 2003, we projected
fairly significant

increases in our net sales for fiscal 2004 and believed that we were in a position to return to profitability. However, the general decline in the USA economy during fiscal 2004 and other economic
pressures negatively affected the travel and leisure sector of