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Thu, May 14, 2009
Wed, May 13, 2009
Tue, May 12, 2009 Swank, Inc.: Swank, Inc. Reports Net Sales and Improved Operating Results for the Quarter Ended March 31, 2009
NEW YORK, NY--(Marketwire - May 12, 2009) - John Tulin, Chairman of the Board and Chief Executive Officer of SWANK, INC. (
First Quarter Results
Our net loss for the quarter ended March 31, 2009 was $279,000 or $.05 per diluted share compared to a net loss of $411,000 or $.07 per diluted share for the corresponding quarter in 2008.
Our net sales for the quarter ended March 31, 2009 decreased 3.0% to $23,971,000 compared to $24,718,000 for the corresponding period last year. The challenging economic conditions during the first quarter of 2009 resulted in a general decrease in wholesale orders from many of our department and specialty store customers and had a particularly severe effect on the Luxury segment of the market. The decrease during the quarter was mainly due to lower net sales of our men's jewelry merchandise and our Luxury Division leather goods collections, in each case as compared to the prior year, offset in part by a reduction in in-store markdowns generally associated with slow moving or discontinued merchandise (we account for in-store markdowns and other customer allowances as a reduction to net sales). We made substantial shipments of our Luxury personal leather goods merchandise during the spring 2008 season reflecting the initial spring collections of this merchandise. Exclusive of our Luxury Division, net sales of our personal leather accessories merchandise increased 13.6% over last year. The increase was primarily associated with higher shipments of certain branded merchandise collections. Net sales of our belts (exclusive of Luxury) decreased 2.0% in large part due to a decline in international net sales associated with lower shipments to foreign licensor-affiliates.
Gross profit during the quarter was $7,493,000 which was approximately even with last year's $7,447,000. Gross profit expressed as a percentage of net sales increased to 31.3% from 30.1% last year. The increase in gross profit as a percentage of net sales was due mainly to improved margins for our personal leather goods and belt merchandise associated with a more favorable sales mix and, particularly for belts, a reduction in landed product cost. Merchandise display expenditures, which are included in cost of sales, also declined during the quarter. We made substantial display expenditures during last year's first quarter in connection with a fixturing program for a major chain store customer that was designed to give certain of our merchandise collections more prominent retail exposure. Product royalty costs fell 4.7% due to a combination of lower net sales and, in certain instances, reductions in contractual minimums.
Selling and administrative expenses decreased $50,000 or less than 1% to $7,836,000 or 32.7% of net sales during the quarter ended March 31, 2009 compared to $7,886,000 or 31.9% of net sales last year.
Selling expenses decreased $109,000 or 1.8% to $5,887,000 compared to $5,996,000 for the prior year period, and, expressed as a percentage of net sales, were 24.6% this year compared to 24.3% last year. The decrease in dollars was primarily attributable to reductions in a number of variable sales-related expenses including warehouse and distribution costs, sales commissions and in-store inventory coordinator fees.
Administrative expenses increased $59,000 or 3.1% to $1,949,000 from $1,890,000 during the quarter ended March 31, 2009 compared to the same period last year. Administrative expenses as a percentage of net sales were 8.1% and 7.6% for the quarters ended March 31, 2009 and 2008, respectively. The increase in administrative expenses for the quarter was mainly due to increases in bad debt expense and certain fringe-benefit costs.
Commenting on the results, John Tulin, Chairman of the Board and Chief Executive Officer, said "Despite the extremely challenging economic conditions our industry has experienced over the past several months, we are pleased that we were able to improve our operating results for the quarter relative to last year. Although net sales for the quarter decreased 3.0%, we were able to offset that loss through improved margins while at the same time, strengthening the Company's balance sheet. We were also able to control our expense levels and made great strides toward positioning the Company for an eventual economic recovery. For example, we recently established a representative office in China to give us a stronger Asian presence which will enable us to improve the overall efficiency of our supply chain."
Mr. Tulin continued, "While our near-term outlook remains quite cautious, we continue to explore new business prospects. We also believe the current environment has created an opportunity for us to work more closely with our retail partners to further solidify our market share in key retail venues, positioning us well when business conditions improve."
Forward-Looking Statements
Certain of the preceding paragraphs contain forward-looking statements, which are based upon current expectations and involve certain risks and uncertainties. Under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, readers should note that these statements may be impacted by, and the Company's actual performance and results may vary as a result of, a number of factors including general economic and business conditions, continuing sales patterns, pricing, competition, consumer preferences, and other factors.
Swank designs and markets men's jewelry, belts and personal leather goods. The Company distributes its products to retail outlets throughout the United States and in numerous foreign countries. These products, which are known throughout the world, are distributed under the names "Kenneth Cole", "Tommy Hilfiger", "Nautica", "Geoffrey Beene", "Claiborne", "Guess?", "Tumi", "Chaps", "Donald Trump", "Ted Baker", "Pierre Cardin", "US Polo Association", and "Swank". Swank also distributes men's jewelry and leather items to retailers under private labels.
SWANK, INC. CONDENSED STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE QUARTERS ENDED MARCH 31, 2009 AND 2008 (Dollars in thousands except share and per share data) 2009 2008 --------- --------- Net sales $ 23,971 $ 24,718 Cost of goods sold 16,478 17,271 --------- --------- Gross profit 7,493 7,447 Selling and administrative expenses 7,836 7,886 --------- --------- (Loss) from operations (343) (439) Interest expense 119 221 --------- --------- (Loss) from operations before income taxes (462) (660) (Benefit) for income taxes (183) (249) --------- --------- Net (loss) $ (279) $ (411) ========= ========= Share and per share information: Basic net (loss) per weighted average common share outstanding $ (.05) $ (.07) Basic weighted average common shares outstanding 5,659,517 6,011,805 Diluted net (loss) per weighted average common share outstanding $ (.05) $ (.07) Diluted weighted average common shares outstanding 5,659,517 6,011,805 SWANK, INC. CONDENSED BALANCE SHEETS (Dollars in thousands except share data) (Unaudited) March 31, 2009 December 31, 2008 ------------------- ------------------- ASSETS Current: Cash and cash equivalents $ 664 $ 343 Accounts receivable, less allowances of $4,513 and $5,419 respectively 15,798 13,502 Inventories, net: Work in process 1,156 1,174 Finished goods 21,117 25,113 --------- --------- 22,273 26,287 Deferred taxes, current 1,874 1,874 Prepaid and other current assets 2,894 2,966 -------- -------- Total current assets 43,503 44,972 Property, plant and equipment, net of accumulated depreciation 1,094 1,162 Deferred taxes, noncurrent 2,242 2,242 Other assets 3,473 3,638 -------- -------- Total assets $ 50,312 $ 52,014 ======== ======== LIABILITIES Current: Note payable to bank $ 11,158 $ 10,005 Current portion of long-term obligations 663 891 Accounts payable 2,353 4,222 Accrued employee compensation 751 1,126 Other current liabilities 1,555 2,047 -------- -------- Total current liabilities 16,480 18,291 Long-term obligations 6,339 6,048 -------- -------- Total liabilities 22,819 24,339 -------- -------- STOCKHOLDERS' EQUITY Preferred stock, par value $1.00: Authorized - 1,000,000 shares - - Common stock, par value $.10: Authorized - 43,000,000 shares: Issued -- 6,418,789 shares and 6,385,379 shares, respectively 642 639 Capital in excess of par value 2,133 2,037 Retained earnings 27,199 27,478 Accumulated other comprehensive (loss), net of tax (380) (378) Treasury stock, at cost, 736,999 shares and 736,999 shares, respectively (2,101) (2,101) -------- -------- Total stockholders' equity 27,493 27,675 -------- -------- Total liabilities and stockholders' equity $ 50,312 $ 52,014 ======== ========
