Cutter & Buck chairman and CEO Fran Conley appears to be signaling that the hard work is complete in her turnaround efforts at a company she has guided through some pretty difficult times since her appointment to the CEO slot in April 2002. Conley, who was already a member of the CBUK Board of Directors at the time, took the reins after the Board accepted the resignation of former chairman and CEO Harvey Jones. Four months later, Conley announced the discovery of accounting irregularities that led to a restatement of financials, an SEC probe, shareholder lawsuits, the loss of the company’s D&O insurance, a NASDAQ de-listing notice, the divestiture of its retail unit, and the indictment of three former executives in the fraud probe.

Conley, who has been widely credited with bringing CBUK back to life, will step down from the CEO position once a replacement is found but will remain as COB.
“I have accomplished more than what I set out to do. It's time for a transition,” said Conley in a release on Thursday.

Not many industry watchers gave Cutter & Buck much of a chance to weather the storm created from the problems, but a steady hand has brought stability to the company and has resulted in increasingly positive results. In the prior fiscal year, the company was losing money while increasing sales and sacrificed sales this last fiscal year as they increased the bottom line. Both appeared to be working for CBUK as they completed the company’s fiscal fourth quarter.

CBUK reported a 5.8% increase in net sales in the fiscal fourth quarter ended April 30 to $38.4 million from $36.3 million in Q4 last year. Gross margin improved 160 basis points to 45.9% of sales from 44.3% in the year-ago quarter.

The business in the Golf (Green Grass) accounts inched up 1.3% in the quarter to $13.9 million from $13.7 million in fiscal Q4 2004. An improving economy certainly helped the Corporate business as it increased revenues 12.4% to $14.9 million, the largest channel for the quarter. Specialty Retail was the lone decliner, falling 8.7% in the period to $5.3 million from $5.8 million in the year-ago period. International sales were up 10.6% in U.S. dollars to $816,000. International sales for the year included $750,000 of direct sales in Europe. The undefined “other” channel grew the most in the quarter, up 23.8% to $3.4 million.

The company posted net income of $5.6 million, or 49 cents per diluted share, in the quarter compared to a net loss of $1.0 million, or a loss of nine cents per diluted share, in the year-ago period. Net income includes a $2.0 million dollar reduction in taxes due in large part to eliminating a deferred tax asset reserve and $400,000 of pre-tax expenses related to the 2002 restatement of prior years' earnings.