A more than $4 million reduction in the costs of goods sold allowed Tandy Brands Accessories Inc. to cut its fourth-quarter loss nearly in half despite continuing declines in sales.
The Arlington, Tex.-based manufacturer reported that, during the three months ended June 30, its net loss fell 46.1 percent to $2.5 million, or 36 cents a diluted share, from $4.7 million, or 67 cents, in the 2008 period.
Sales for the period declined 12.3 percent to $26.4 million from $30.1 million in the year-ago quarter. However, with the cost of goods sold reduced 20.4 percent, to $16.2 million from $20.3 million, gross margin improved to 38.7 percent of sales from 32.5 percent last year. Selling, general and administrative expenses were flat at $12.7 million in the quarter although reduced more than $3.5 million for the full year and, according to Rod McGeachy, president and chief executive officer, down $8.2 million over the last two years.
“We have made great strides in improving our core operations, solidifying our balance sheet and improving our cash cycle,” McGeachy said. “We’ve also established some solid new growth platforms this year, but the overall trend of retailers reducing inventory levels and cutting back on the number of suppliers to survive in this economy continues.”
Since joining Tandy in October. the ceo has overseen the establishment of a new management team and the acquisition of strategic assets of Chambers Belt Co., which holds several licenses for VF’s Wrangler brand. “The Chambers products and Wrangler licenses are already generating incremental, profitable sales growth, and we expect strong results from these products throughout fiscal 2010,” McGeachy said.
The company noted its gifts business grew to $23 million last year from $14 million in 2005.
For the full year, Tandy cut its net loss 69.3 percent to $15.1 million, or $2.18 a diluted share, while revenues were off 13.6 percent to $129 million. The company’s loss in 2008 included a $17.8 million pretax charge for impairment of goodwill and other intangibles.
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