R.G. Barry Corporation, the owner of Dearfoams, Baggallini and Foot Petals, reported a 12.0 percent increase in sales in its second quarter ended Dec. 31, to $55.6 million versus $49.7 million one year ago. Net earnings surged 47.3 percent to $6.4 million, or 56 cents per share, up from $4.3 million, or 38 cents, in the second quarter of fiscal 2011.

Improved gross profit as a percent of sales at 41.4 percent compared to 34.7 percent in the equivalent quarter last year.

On a consolidated basis for the first half, the company reported:


  • A net sales increase of 23.2 percent to $105.8 million from $85.9 million in the first half one year ago;
  • Net earnings improvement of 57.3 percent at $13.2 million, or $1.17 per diluted share, versus net earnings of $8.4 million, or $0.75 per diluted share, in the analogous period of fiscal 2011;
  • Gross profit as a percent of net sales rose to 42.8 percent from 36.6 percent in the comparable six months of fiscal 2011; and
  • Selling, general and administrative expenses of $23.3 million were basically flat as a percentage of net sales at 22.0 percent, versus $18.3 million, or 21.3 percent of net sales in the equivalent period last year.
The company said that first half net sales in its Footwear segment rose 4.8 percent to $90.1 million from $86.0 million in the comparable period last year, yielding a 350 basis point improvement in gross profit as a percentage of net sales at 40.1 percent. In its Accessories segment, which includes Foot Petals and baggallini, acquired in January and March last year, respectively, the company recorded first half net sales of $15.7 million, yielding a 58.1 percent gross profit as a percentage of net sales.

The company's balance sheet reflected:

Cash and short-term investments of $36.2 million compared to $45.6 million one year ago;

Consolidated inventory of $18.9 million, comprised of footwear inventory of $12.5 million, or about $3.6 million less than in the comparable period of fiscal 2011; and $6.4 million in inventory related to the accessories businesses acquired last year; and

Net shareholders' equity of $75.3 million, up from $62.1 million at the end of the first half of fiscal 2011.

“We achieved our first-half performance and profit objectives, despite a demanding retail environment during the key Christmas selling season,” said Greg Tunney, president and chief executive officer. “Footwear, which is the largest component of our business and heavily tied to Christmas selling, fully met our revenue and profit expectations for the first half. We also benefitted from the accretive nature and richer margins of our accessories business units, which performed as we had planned.”

“Strong consolidated operating results in the first half have continued to validate our evolving business model,” added Jose Ibarra, senior vice president finance and chief financial officer. “Increased revenues, gross profit, operating margins and cash generation all reflect the benefit of the changes made to our operating model. Our financial strength continues to grow. Less than 12 months after acquiring our two accessories business units, we have returned to a positive net cash position. The quality and level of our consolidated inventories at the half is properly aligned to support our revenue expectations for the remainder of fiscal 2012.”

Tunney added, “We have successfully refocused our core business on the Dearfoams brand and fully integrated the Foot Petals and baggallini acquisitions made last year. We have now reinitiated our search for accessories category businesses that can help us achieve our long-term growth and profitability objectives. We have both the financial structure and business discipline to identify and acquire brands that will allow us to continue our evolution into a leading year-round provider of a variety of functional and fashionable accessories category products.”

   
R.G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands of dollars, except for per share data)













Thirteen Weeks Ended



Twenty-Six Weeks Ended



(unaudited)

(unaudited)

% Increase

(unaudited)

(unaudited)

% Increase

December 31, 2011

January 1, 2011

Decrease

December 31, 2011

January 1, 2011

Decrease
Net sales
$ 55,599

$ 49,660

12.0%

$ 105,829

$ 85,929

23.2%
Cost of Sales
32,602

32,431



60,579

54,503


Gross profit
22,997

17,229

33.5%

45,250

31,426

44.0%












Gross profit (as percent of net sales)
41.4%

34.7%



42.8%

36.6%














Selling, general and administrative expenses
12,415

10,537

17.8%

23,295

18,309

27.2%












Operating profit
10,582

6,692

58.1%

21,955

13,117

67.4%












Other income
88

84



175

193


Interest (expense) income, net
(189)

14



(444)

43














Earnings, before income taxes
10,481

6,790

54.4%

21,686

13,353

62.4%












Income tax expense
4,130

2,478



8,445

4,937














Net earnings
$6,351

$4,312

47.3%

$13,241

$8,416

57.3%












Earnings per common share











Basic
$ 0.57

$ 0.39

46.2%

$ 1.19

$ 0.76

56.6%
Diluted
$0.56

$0.38

47.4%

$1.17

$0.75

56.0%