Huffy Corporation announced that sales for the fourth quarter of 2002 are expected to be approximately $123.0 million, an increase of close to 45% when compared to sales of $85.1 million reported for the same period last year. While sales were within the range anticipated, re-orders by retailers during the last four weeks of the quarter fell below expectations.
Don Graber, President and CEO stated, “We were pleased with our sales growth during the quarter, driven primarily by acquisitions completed earlier in 2002 and by moderate organic growth in our other businesses. As with other retail suppliers, we did see a reduction in normal replenishment orders from late November through the end of the year, as retailers reacted to softness in sales by reducing orders. However, early indications are that post-Christmas inventories of Huffy products at retail are within normal ranges, and we do not expect inventory carry-over at retail to adversely impact sales during the first quarter of 2003.”
Mr. Graber continued, “Despite the residual impact of the West Coast dock lockout, we were able to meet our shipping targets for the fourth quarter and maintain the level of service that our customers have come to expect. Maintaining this level of service has not come without a price — we estimate that the additional costs incurred in the form of premium freight charges, demurrage and special surcharges on ocean-going containers could reduce earnings by much as $0.07 per common share from our earlier estimates. With the lower level of replenishment orders and the impact of the additional freight costs, we expect earnings per common share from continuing operations to range between $0.03 and $0.04 per common share, compared to a loss from continuing operations, excluding restructuring charges, of $0.47 per common share in the fourth quarter of 2001.
Mr. Graber concluded, “In spite of the prospect of a slow economic recovery, we are excited about the prospects for Huffy in 2003 and beyond. Through the acquisitions of Gen-X and McCalla Companies last year, we have created a much stronger platform for growth, diversified our customer base and set the stage for the future. In fiscal 2001, our largest customer accounted for 38% of total sales and in 2003 we expect the same customer to account for approximately 10% of total sales. Given the current economic, political and retail environment we believe it is prudent to be conservative in our guidance. Although less aggressive than our initial outlook, we currently expect sales for 2003 in the range of $460.0 to $480.0 million and earnings of $0.55 to $0.65 per common share. The entire Huffy team remains committed to the goal of expanding our market share of the $46 billion sporting goods industry at retail. Looking forward, we will continue to focus on growing our business profitably and increasing shareholder value.”
