Tandy Brands Accessories Inc. said Wednesday it posted a first-quarter loss, citing lower sales in the period.
The Dallas-based company attributed the decline in sales to “reduced belt assortments and curtailed levels of replenishment orders by a significant customer,” as well as delayed shipments to other customers until later in the fiscal year.
For the three months ended Sept. 30, the loss was $2.7 million, or 39 cents a diluted share, against income of $1.1 million, or 15 cents, in the year-ago quarter. On an adjusted EBITDA basis, the loss was $1.7 million versus earnings of $1.2 million in the prior-year quarter. Sales dropped 21.4 percent to $29.2 million from $37.2 million.
Gross margin declined to 34.9 percent of sales from 38.3 percent in the year-ago quarter. “The decline was attributable to lower sales of previously written-down inventory, higher freight costs and promotional pressures from our retail partners,” the company said.
Rod McGeachy, president and chief executive officer, commented, “Due to a recent arrangement with a significant customer, we expect to regain lost belt market share on an annualized basis. Additionally, our gifts sales are occurring later this year, but we expect strong second-quarter selling and fiscal year 2011 gifts net sales to be consistent with fiscal year 2010.”
He noted that shipments are occurring later in the year as retail customers have delayed building holiday inventory levels.
McGeachy said that for fiscal 2011, the company expects “net sales to decline by midsingle digits, gross margins to decline slightly and our selling, general and administrative expenses to be between $44 million and $46 million.”
The firm recently entered into a licensing agreement with Wolverine. The ceo said the company continues to “pursue similar license agreements” to further expand its product offerings.
Shares of the company dropped 39 cents, or 12.2 percent, to $2.81 in Nasdaq trading Thursday.