R.G. Barry Corporation, the owner of Terrasoles, reported that net sales for its fourth quarter increased by 42 percent and its quarterly loss declined by nearly 50 percent as compared to a year ago, primarily as a result of two acquisitions. The company also reported a nearly 5 percent increase in annual consolidated net sales, as compared to the prior year, and consolidated net earnings per diluted share of 67 cents for the period ended July 2, 2011.
For the quarter, the company reported:
- Net sales of $23.5 million;
- A net loss of $863,000, or $0.08 cents per share loss, improved from the quarterly loss of $1.6 million, or $0.15 per share loss, reported in the fourth quarter of fiscal 2010;
- Gross profit as a percent of net sales improved fractionally to 37.4 percent; and
- Selling, general and administrative expenses of $10.1 million or 43.0 percent of net sales versus $8.8 million or 53.1 percent of net sales one year ago.
Consolidated Annual Results
For the full 2011 fiscal year, the company reported:
- A net sales increase of 4.7 percent to $129.6 million;
- Net earnings of $7.5 million, or $0.67 per diluted share, down approximately 20.0 percent from one year ago;
- Gross profit as a percent of net sales at 37.2 percent down from 41.5 percent one year earlier; and
- SG&A expenses of $36.5 million, or 28.1 percent of net sales, versus $36.6 million, or 29.5 percent of net sales, in fiscal 2010.
Financial Strength
The Company remained in a strong financial position at year-end.
Cash and short-term investments were at $24.7 million, down from $44.9 million one year ago, reflecting the use of cash reserves for acquisitions during the second half of fiscal 2011;
Inventory was at $25.5 million, up $12.0 million from one year ago, reflecting a change in fall footwear purchase strategy that was designed to help offset cost pressures and ensure on-time deliveries to customers and the addition of the inventories of two acquisitions;
Net shareholders' equity rose to $62.5 million from $54.6 million one year ago; and
Also of note was the inclusion of acquisition related goodwill totaling $15.5 million and bank debt totaling $28.6 million.
Management Comments
“We are very pleased with the integration of our acquisitions and the progress we have made incorporating them into our business; and, our footwear business is healthy and tracking positively,” said Greg Tunney, President and Chief Executive Officer.
“Our change from a one-dimensional, modest-growth slipper company to a faster-growing, multi-dimensional developer of great, fashionable, solution-oriented accessories brands and products has added an additional degree of balance to our traditionally first-half-heavy seasonal operating pattern. We believe we have positioned our consolidated operations to produce annual results well above the historical levels you have come to expect from the footwear-only model.”
Jose Ibarra, Senior Vice President Finance and Chief Financial Officer, added, “We are obviously pleased with the very strong performance of our new businesses. We have refocused our footwear business and eliminated underperforming initiatives. We expect the footwear unit gross profit as a percentage of net sales to return to around 40 percent on an annual basis in fiscal 2012.
“We remain very strong financially and well-positioned to execute our growth strategies. Since our business now extends over a much broader, less price-sensitive, less seasonal cross-section of the accessories universe, we have the potential and expect to produce higher and more consistent operating margins.”
Tunney concluded, “We are focusing on accelerating the annual growth rates of our new businesses; refining our footwear model to maximize sustainable future growth and profitability; and formalizing and initiating a plan for international business expansion. The impact of the changes made during the second half of fiscal 2011 should make a measurable positive difference in our performance for fiscal 2012, beginning with our next quarter.”
The company's primary brands include: Dearfoams slippers; baggallini handbags, totes and travel accessories; and Foot Petals premium insoles and comfort products. It also owns Terrasoles.
R.G. BARRY CORPORATION AND SUBSIDIARIES | ||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(in thousands of dollars, except for per share data) | ||||||||
Thirteen Weeks Ended | Thirteen Weeks Ended | Fifty-two Weeks Ended | Fifty-three Weeks Ended | |||||
(unaudited) | (unaudited) | (audited) | (audited) | |||||
July 2, 2011 | July 3, 2010 | July 2, 2011 | July 3, 2010 | |||||
Net sales | $ 23,526 | $ 16,552 | $ 129,568 | $ 123,787 | ||||
Cost of Sales | 14,718 | 10,409 | 81,405 | 72,428 | ||||
Gross profit | 8,808 | 6,143 | 48,163 | 51,359 | ||||
Gross profit (as percent of net sales) | 37.4% | 37.1% | 37.2% | 41.5% | ||||
Selling, general and administrative expenses | 10,092 | 8,794 | 36,483 | 36,623 | ||||
Operating profit (Loss) | (1,284) | (2,651) | 11,680 | 14,736 | ||||
Other income | 87 | – | 365 | – | ||||
Interest income (expense), net | (210) | 36 | (207) | 247 | ||||
Earnings (Loss), before income taxes | (1,407) | (2,615) | 11,838 | 14,983 | ||||
Income tax expense | (544) | (985) | 4,328 | 5,583 | ||||
Net earnings (loss) | $ (863) | $ (1,630) | $ 7,510 | $ 9,400 | ||||
Earnings (Loss) per common share | ||||||||
Basic | $ (0.08) | $ (0.15) | $ 0.68 | $ 0.86 | ||||
Diluted | $ (0.08) | $ (0.15) | ||||||
