Tandy Brands Accessories Inc. president and chief executive officer Rod McGeachy believes the firm is on track to break even in 2013 despite a third quarter in which its losses narrowed only slightly.
“We exited some unprofitable businesses and selectively shrunk the top line in order to improve the bottom line,” McGeachy told WWD. “Our selling, general and administrative expenses were down $1 million in the quarter, and our debt is down to $7.5 million from $20 million a year ago. Our new licenses are starting to take off. We’re hoping for profitability in the next fiscal year.”
In the quarter ended March 31, the net loss came in at $3.07 million, or 43 cents a diluted share, just below the $3.08 million, or 44 cents, registered during the 2011 quarter. In addition to a 10 percent reduction in SGA, to $9.8 million, cost of goods sold fell one-sixth to $16.3 million from $19.6 million. Excluding one-time items, such as an $890,000 provision for bad debt, the loss before interest, taxes, depreciation and amortization was reduced to $918,000 from an EBITDA loss of $1.4 million a year ago.
Revenues were off 16 percent to $23.9 million from $28.4 million, and gross margin ticked up to 31.7 percent of sales from 31.1 percent in the prior-year quarter.
Tandy in 2011 extricated itself from unprofitable lines of business, including eyewear and hunting gear, and cut its workforce 15 percent to about 340. More recently, it’s added a series of licenses, including Miss Me, Sperry Top-Sider, Elie Tahari and Eddie Bauer, in core accessories categories. The Bauer license, originally for gifts, was recently augmented with belts and small leather goods.
The year-to-date loss was $1.4 million, or 20 cents a diluted share, slightly more than one-third the size of the loss of $5 million, or 72 cents, in the prior-year span. Revenues fell 4.5 percent to $96 million from $100.5 million.
The loss for the full year is expected to be between $1.5 million and $2.7 million, implying a loss of $100,000 to $1.3 million in the fourth quarter.
Separately, Tandy said that Chuck Talley has been promoted to vice president and chief financial officer of the company. He had served as vice president and chief accounting officer. The firm had been without a cfo since the Jan. 2011 departure of M.C. Mackey.