R.G. Barry Corp., which makes footwear under the Dearfoams, Terrasoles and Superga brands, reported a net loss of $42,000 in the third quarter due to costs tied to its acquisition of Foot Petals. Sales were down 9.4 percent to $20.1 million from $22.2 million a year ago.

The latest quarter included $900,000
of acquisition related costs and compared with earnings of $539,000 or 5 cents per share, reported in
the third quarter of fiscal 2010. Gross profit as a percent of net sales at 39.4 percent versus 40.4 percent in the comparable quarter one year ago.

For the nine months, on a consolidated basis, the company reported:

    * Net earnings of $8.37 million, or $0.75 per diluted share, which includes approximately $900,000 of acquisition related costs, down 24.1 percent from $11.0 million, or $1.00 per diluted share, in the comparable period of fiscal 2010;
    * Net sales declined to $106.0 million from $107.2 million in the first nine months last year; and
    * Gross profit as a percent of net sales was 37.1 percent versus 42.2 percent in the equivalent period of fiscal 2010.

On the consolidated balance sheet:

    * Cash and short-term investments totaled $28.4 million, down from $46.7 million reported one year ago, principally as a result of acquisition activity;
    * Inventory was $19.8 million, up from $14.1 million in the comparable period of fiscal 2010, primarily as a result of inventory acquired in the acquisitions of the Foot Petals and Baggallini businesses;
    * Long-term debt of $25.4 million, representing new borrowing in support of the Company’s recent acquisition activity; and
    * Total shareholders equity of $61.5 million, up from $57.8 million at the end of the third quarter one year ago.

Management Comments

“Fiscal 2011 has thus far been transformational for our company,” said Greg Tunney, president and chief executive officer. “Our nine month results reflect the impact of incremental costs related to our previously discussed fall 2010 delivery issues. We have taken appropriate actions and consider these issues fixed. Two major factors negatively impacted our third quarter performance. A new warehouse club program launched during the third quarter last year was not repeated at the same level this year; and we experienced softness in the replenishment slipper business with our largest footwear customer. We have proactively aligned our products and business strategies for this customer to coincide with their evolving needs and are confident about the viability of our programs and the future of our long-term partnership.

“The exciting transformational aspects of this year are related to the impact our two recent acquisitions and to our decision to exit under-performing footwear businesses will have on our overall performance in fiscal 2012 and beyond.  As a result of these important actions, we will enter our new year on July 3 as a more balanced, faster growing and more profitable multi-dimensional provider of footwear and accessories,” Tunney said.

“We obviously are pleased by the initial positive impact of the new Foot Petals business on our third quarter consolidated performance,” added Jose Ibarra, senior vice president finance and chief financial officer. “With the third quarter, we have begun segment financial reporting. Our business now is divided into footwear and accessories reporting segments, which are comprised of diverse customer bases, products and financial metrics.  When our new Baggallini business is included in the fourth quarter results this year, it will begin to validate our new operating model, which we expect to perform at rates well above those traditionally generated by our footwear business alone.”

R.G. BARRY CORPORATION AND SUBSIDIARIES


CONSOLIDATED STATEMENTS OF INCOME


(in thousands of dollars, except for per share data)
















Thirteen


Thirteen


%


Thirty-nine


Forty


%



Weeks Ended


Weeks Ended


Increase/


Weeks Ended


Weeks Ended


Increase/



April 2, 2011


April 3, 2010


Decrease


April 2, 2011


April 3, 2010


Decrease



(unaudited)


(unaudited)




(unaudited)


(unaudited)




Net sales

$       20,113


$       22,212


-9.4%


$     106,042


$     107,235


-1.1%


Cost of Sales

12,183


13,249


-8.0%


66,686


62,020


7.5%


  Gross profit

7,930


8,963


-11.5%


39,356


45,215


-13.0%















    Gross profit (as percent of ne sales)

39.4%


40.4%




37.1%


42.2%

















Selling, general and administrative expenses

8,080


8,245


-2.0%


26,391


27,829


-5.2%















   Operating profit

(150)


718


-120.9%


12,965


17,386


-25.4%















Other income

84





278





Interest income, net

(40)


36


-211.1%


3


211


-98.6%















    Earnings, before income taxes

(106)


754


-114.1%


13,246


17,597


-24.7%















Income tax expense

(64)


215


-129.8%


4,873


6,568


-25.8%















Net earnings

$             (42)


$            539


-107.8%


$         8,373


$       11,029


-24.1%















Earnings per common share













      Basic

$               –


$           0.05




$           0.76


$           1.02




      Diluted

$               –


$           0.05




$           0.75

About The Author

Thomas J. Ryan

Thomas J. Ryan Senior Business Editor | SGB Media tryan@sgbonline.com | 917.375.4699

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