A.T. Cross Reports 5.3% Q4 Sales Decline

A.T. Cross Co., the parent of Native Eyewear, reported sales declined 5.3% in the fourth quarter to $39.5 million from $41.7 million a year ago. Sales in its Cross Optical segment rose 0.7% to 9.4 million, driven by continued growth of the Costa brand. Sales in the Cross Accessory division slid 7% to $30.1 million.

Gross margin in the fourth quarter was 54.7% compared to 54.5% in last year’s fourth quarter.

Operating expenses, excluding $0.8 million and $6.3 million of restructuring and impairment charges in 2009 and 2008, respectively, were $19.1 million, or 48.3% of sales in the 2009 fourth quarter, versus $19.6 million, or 47.0% of sales for the same period a year ago.

Operating income in the fourth quarter of 2009 was $1.7 million, as compared to an operating loss of $3.1 million in the fourth quarter of last year. In last year’s fourth quarter, the Company recorded a non-cash goodwill impairment charge of $3.9 million.

Net income for the fourth quarter was $1.2 million, or $0.09 per share, compared to a net loss of $3.7 million, or $0.25 per share, last year.

Full Year 2009 Results

Consolidated sales in 2009 decreased 11.5% to $141.8 million compared to $160.1 million in 2008. Cross Accessory Division revenue was $90.9 million, down 18.4% from prior year. The Cross Optical segment reported a sales increase of 4.5% to $50.9 million.

Gross margin for 2009 was 54.1% compared to 55.8% in 2008 due to unfavorable foreign exchange rates and shifts in product and channel mix.

Operating expenses, excluding restructuring and impairment charges, were $73.6 million, or 51.9% of sales, in 2009 compared to $79.3 million, or 49.5% of sales, in 2008.

For 2009, net income was $1.9 million or $0.13 per share, compared to $0.5 million or $0.03 per share in 2008. Included in 2009 and 2008 results are restructuring and impairment charges of $1.9 million and $6.5 million, respectively.

David G. Whalen, President and Chief Executive Officer of A.T. Cross, said, “2009 was a difficult but productive year. We battled the recession, generated profit and cash, lowered our cost base, repurchased 10% of the Company, entered an important licensing arrangement with Franklin Covey and positioned our brands – Cross, Costa and Native to grow revenue and profit as the global economy recovers. We are in a good position and look forward to achieving our business objectives in 2010.”

Guidance

As previously announced, the company has provided 2010 guidance of earnings between $0.33 and $0.35 per share.