Huffy Corporation announced Monday that fourth quarter sales and earnings are below plan. Currently, sales in November are lagging sales for the same period last
year, orders for the balance of the quarter are running below anticipated levels and it is too early for cost reduction initiatives currently underway to have a favorable impact on the fourth quarter.
Don Graber, Chairman and Chief Executive Officer stated, “October was the first full month in which we had new information systems in place and were able to track performance on a comparable basis against the prior year.
October sales and gross margin were essentially flat versus the comparable period, but we had initially expected sales and margins to increase during the month. November sales are currently lagging last year, with continued softness in the backboard segment and the action sports, in-line skate and opportunity businesses of Gen-X. Additionally, this quarter we are witnessing a shift to lower price points and lower margins products.”
Paul D'Aloia, President and Chief Operating Officer added, “In my first
two months in the COO role, the majority of my focus has been on integrating
proven business processes into the Gen-X organization. Gen-X has strong
sales, marketing and product development teams. These strengths, coupled with
a new experienced operational team that is focused on process improvement,
purchasing, planning and logistics, and distribution, better position the
Gen-X organization to fully realize its growth and earnings potential.
However, as in any organization undergoing significant changes in personnel
and processes, it will take time before the favorable impact of change is
evident in improved margins, reduced working capital and stronger earnings.”
Mr. Graber continued, “Based on our current view, we anticipate that sales
for the fourth quarter will be in the range of $120.0 million to $125.0
million and that we could see a loss from continuing operations in the range
of $0.08 to $0.10 per common share. For the year, we expect that net sales
will be in the $438.0 million to $443.0 million range, with earnings from
continuing operations in the range of $0.08 to $0.10 per common share. Net
income for the year is expected to be in the range of $0.18 to $0.20 per
common share, as a result of the favorable impact of the settlement related to
Washington Inventory Service.”
Mr. Graber concluded, “The fourth quarter is proving to be far more
challenging than anticipated, but we continue to focus our efforts on
improving earnings and reducing working capital requirements. We expect to see
benefits from these efforts in 2004 and without assuming any improvement in
the retail environment, we believe sales will be in the range of $450.0
million to $460.0 million with earnings in the range of $0.22 to $0.27 per
common share for fiscal 2004. As a management team, we remain dedicated to
fulfilling our strategic vision of creating value for our shareholders and
evolving towards our goal of being a much larger entity serving the retail and
sporting goods channels. We will discuss our strategic initiatives on the
implementation of a more profitable business platform in February during our
fourth quarter conference call.”
