NEW YORK — Tandy Brands Accessories Inc.’s losses grew nearly 60 percent in the fourth quarter as continuing cutbacks of retail inventories lowered the firm’s sales.
For the three months ended June 30, the net loss mounted to $4.7 million, or 67 cents a diluted share, from $2.9 million, or 43 cents, in the 2007 quarter. Tandy incurred $1.2 million in taxes in the more recent quarter, versus a $1.7 million tax benefit in last year’s period. The loss before income taxes dropped to $3.4 million from $4.6 million.
Net sales dropped 17.2 percent to $30.1 million from $36.4 million a year ago.
“Quite simply, 2008 was one of the most difficult years in the retail consumer industries that I have seen in my 30-plus year career,” said J.S.B. Jenkins, chairman, president and CEO, told a conference call Friday morning. The firm responded to consumer cutbacks and resulting retail inventory reductions by slashing its head count about 20 percent with the elimination of 185 jobs, closing a distribution center in West Bend, Wisc. and outplacing more of its sourcing. In the fourth quarter, this resulted in a 19.8 percent reduction in cost of goods sold, to $20.3 million, and an 11.7 percent cut in selling, general and administrative expenses, to $12.7 million.
Positive developments “that should benefit financial results in 2009 and beyond,” according to Jenkins, included the introduction of small leather goods under the Goodyear license and the addition of The TJX Companies’ T.J. Maxx and Marshalls units to its customer base.
Jenkins reported that the search for his successor as president and CEO is ongoing and that “several qualified candiates” had been interviewed by Tandy’s board. “We hope to announce something in the very near future,” he said.
For the full year, the company reported a net loss of $49.3 million, or $7.18 a diluted share, which included an $18.7 million inventory writedown and a $17.8 million impairment charge. In 2007, the Arlington, Tex.-based firm earned $1.9 million, or 28 cents. Net sales were off 23.8 percent to $149.3 million from $195.8 million.
M.C. Mackey, CFO, reported that belts accounted for 59 percent of annual sales; small leather goods, primarily wallets, for 19 percent; gift accessories for 14 percent, and women’s handbags and other products for the remaining 8 percent. Men’s made up 80 percent of volume and women’s 20 percent.
Gross margin declined to 21.9 percent of sales from 35.7 percent a year earlier.