R.G. Barry Corp. reported net sales declined 9.1% for the fourth quarter to $16.6 million. The decline reflected lower quarterly sales to one major customer, partially offset by increased spring business with several other key retailers.
The company's product lines include Dearfoams' slippers, Terrasoles' outdoor footwear, Superga canvas/active footwear, Levi's slippers and Nautica slippers.
Net loss for the quarter was approximately $1.6 million, or 15 cents per basic and diluted share, versus a net loss of $286,000, or 3 cents per basic and diluted share, in the comparable quarter one year ago. An approximate 1.0% decline in quarterly gross profit as a percent of net sales, largely related to a change in product mix for the quarter; and a 15.9% increase in SG&A expenses, chiefly related to increased incentive bonus payments, were the leading factors contributing to the increased quarterly loss versus one year ago.
The company noted that its business is heavily seasonal, with more than 70% of its annual revenue generated between July and December. The June-ending quarter is its weakest reporting period, and has been profitable only twice in the past 30 years. Due to this highly seasonal performance, the Company generally encourages analysis of its business on an annual rather than quarterly basis to help smooth any seasonal or timing issues.
Fiscal Year 2010 Results
Net sales up 8.8% to $123.8 million, reflecting healthy sell-through across its diverse base of retailers.
Net earnings up 34.4% at $9.4 million, or 86 cents per basic share and 85 cents per diluted share, compared to net earnings of $7.0 million, or 66 cents per basic share and 65 cents per diluted share one year ago.
Gross profit as a percent of net sales increased to 41.5% from 38.2% one year earlier, principally as a result of increased sales volume in most channels, the sales of higher margin products and lower product costs; and
Increased selling, general and administrative expenses to $36.6 million, or 29.6% of net sales, compared to $33.0 million, or 29.0% of sales a year ago, primarily reflecting higher spending in support of the Company's multi-year strategic marketing efforts and increased incentive bonus payments as a result of the company's strong profitability for the year.
Financial Strength
The company ended the fiscal year in a strong financial position.
Cash and short-term investments were at $44.9 million, up from $39.2 million one year ago, generally as a result of increased profitability during fiscal 2010;
Inventory, at $13.5 million, was up from its historically low level of $8.5 million at the end of fiscal year 2009, and at a level that the Company feels is more appropriate to support its growing business; and
Net shareholders' equity rose to $54.6 million from $45.9 million one year ago.
Management Comments
“Fiscal 2010 was a great year for our Company,” said Greg Tunney, president and chief executive officer. “Our products performed well across the many retail channels we serve and our overall results exceeded both our annual operating plan and prior year's performance. We are very are happy with our consistent five-year pattern of revenue growth and strong earnings, despite some very challenging outside economic forces.”
“We continue operating our business at levels of efficiency and excellence that allow us to pursue growth and diversification strategies while also offering an appropriate return and increasing value to our shareholders,” added Jose Ibarra, senior vice president finance and chief financial officer. “Our financial metrics uniformly reflect the strength and consistency of our operating model and the solid foundation for growth we have prepared.”
Tunney concluded, “The retail world continues to evolve and our challenge for the future is to continue to correctly position our business to profitably serve tomorrow's retailer. We believe that our multi-year investment in advertising and marketing the Dearfoams brand, our expansion into international markets with some key retailing partners and the successful integration of one or more category appropriate acquisitions into our business model this year will be among key factors that allow us to continue to lead our category and succeed in the long-term.”
