NEW YORK — Weaker jewelry sales and higher transportation costs slowed Swank Inc. down in the fourth quarter, though the furnishings company said the new Tumi line will help it diversify its operations.
Fourth-quarter net income fell 65.1 percent to $3.5 million, or 57 cents a share. This compared with $9.9 million, or $1.63, a year earlier, when the firm registered a $5 million onetime tax benefit.
Stripping away the impact of taxes, income inched up 3.9 percent in a tough retail climate to $5.8 million for the company, which sells furnishings under the Kenneth Cole, Tommy Hilfiger and Nautica brands, among others.
Swank’s gross profits as a percent of sales fell 40 basis points to 36.2 percent, as higher freight and packing costs, and declining sales in the high-margin jewelry business took their toll. One hundred basis points equals 1 percent.
Sales for the three months ended Dec. 31 advanced 15.6 percent to $43.1 million from $37.3 million, thanks in part to the firm’s new Tumi leather goods and belts, which began shipping in the third quarter.
“Tumi can serve as an effective complement to our higher-margin jewelry business, which is somewhat more sensitive to changing fashion trends than other classifications,” said John Tulin, chairman and CEO.
Jewelry sales fell 7.2 percent during the quarter.
Tulin also said the New York–based firm is beefing up its sourcing operations and will continue to pursue growth possibilities through new licenses and strategic acquisitions.
For the year, profits slid 64.6 percent to $4.9 million, or $81 cents a share. Exclusive of taxes, earnings fell 12.8 percent to $8.5 million as sales increased 8 percent to $128.6 million.