Cutter & Buck Inc. posted its fourth consecutive quarter of sales growth for their fiscal second quarter as the companys revamped lineup added benefits to both the top- and bottom-line. Sales were up in each of the companys business segments, while the back-end also improved. The only downside for the company was a remaining draw on margins as it had to air freight in extra inventory.
The quarterly sales growth in the companys corporate and golf business segments was attributed to new product introductions and expanded product selection by management. In the specialty retailer business, growth was attributed to sales to select department stores that have expanded their assortment of Cutter & Buck products to include golf styles. Sales were said to have also continued to grow with collegiate and pro sports teams and shops, but those increases were “partially offset by a decrease in sales to big and tall retailers.” The more than doubled consumer direct sales came as a result of the consumer catalog that CBUK launched in September 2005.
Gains on the gross margin line came from a diminished amount of discontinued Classics sales in the quarter compared to last year, but the company still took a bit of a hit as it had to air freight in product to meet “higher than originally anticipated demand for [their] new Classics line.”
On the bottom line, the company received two nonrecurring credits for a cumulative gain of $0.6 million. In the SG&A expense was included $0.2 million related to an insurance recovery, and $0.4 million was included in restructuring expense related to the sublease of warehouse space. Excluding the nonrecurring items in the current and prior years, net income would have been $2.1 million, or 19 cents per diluted share in the second quarter this year compared to $0.7 million or six cents per diluted share in the previous year.
CEO Ernie Johnson stated, “Looking forward to the second half of this fiscal year, we continue to anticipate year-over-year sales growth, however, not at the same pace as the first half of the year. Starting in the third quarter, the comparable period will include the positive impact from sales of our upgraded product offering and a full quarter of catalog sales.”
| Cutter & Buck, Inc. | |||
| Fiscal Second Quarter Results | |||
| (in $ millions) | 2007 | 2006 | Change |
| Total Sales | $37.3 | $33.7 | 10.7% |
| Golf | $7.7 | $7.3 | 4.6% |
| Corporate | $14.8 | $14.0 | 5.9% |
| Specialty Retail | $9.9 | $8.9 | 11.3% |
| Consumer Direct | $2.5 | $1.1 | 117% |
| International | $0.9 | $0.8 | 10.0% |
| Other | $1.5 | $1.5 | 1.3% |
| Gross Margin % | 47.0% | 44.6% | +240 bps |
| SG&A % | 37.1% | 40.4% | -330 bps |
| Net Income | $2.5 | $0.9 | +177% |
| Diluted EPS | 23¢ | 8¢ | +188% |
| Inventories* | $29.5 | $25.0 | +18.2% |
