In what is likely to be the final quarterly report on its financial results as a public company, Swank Inc. said that costs related to its merger into Randa Accessories threw it to a loss in the first three months of 2012.
In a combination of two of the largest companies in men’s accessories, Swank agreed in February to be acquired and taken private by Randa for about $57.5 million. Swank shareholders will vote on the merger agreement at a special meeting at the company’s Taunton, Mass., headquarters Thursday. If approved, consummation of the deal would take place on or before June 17.
In the three months ended March 31, Swank registered a net loss of $919,000, or 17 cents a diluted share, versus net income of $32,000, or 1 cent, in the year-ago quarter. Included in the results were merger-related costs totaling $935,000. Selling, general and administrative costs rose 2.9 percent, to $8.4 million, without the transaction expenses and were up 14.4 percent, to $9.3 million, with them.
Sales rose 8.9 percent to $28.4 million from $26.1 million in the 2011 quarter. Gross margin fell to 27.7 percent of sales from 31.5 percent because of higher costs for products and displays, increased royalty expense and a sales mix that was less favorable to gross profit.
In a Form 10-Q filing with the Securities and Exchange Commission, the company said that the improvement in sales came from an increase in belt revenues, principally in private label transactions, offset in part by a reduction in personal leather goods “to certain ‘labels for less’ customers.”