Shares at Tropical Sportswear, Inc. dropped almost 25% for the week after the company reported a wider-than-expected loss and Swiss Army Brands announced it would take its apparel license back from the struggling Tampa-based apparel manufacturer.
Tropical shares, already beaten down from about $12 a share when the company ousted its founder and principal creative force in November, dropped another 24.7% last week to close at $5.17 on Friday. The stock is down 45.6% since October 2002.
Analysts had been expecting Tropical to report a loss of about 1 cent a share after the company warned the quarter would be break-even at best. Instead, the company reported a loss of $5 million, or 45 cents a share, reversing 2001 Q1 net income of $3 million, or 38 cents a share. Revenues for the quarter slumped 10% to $99 million in the critical holiday season because it missed delivery dates to retailers who then canceled their orders. Tropical was forced to dump the unsold product at deep discounts to closeout operators.
The company will close eight of its 16 remaining Duck Head brand outlet stores by year’s end and shutter the rest as leases expire. The company hopes to save $2 million a year selling its two aircraft.
Swiss Army Brands had announced Monday that it planned to take control of its Victorinox Apparel business as an in-house division and is ending its licensing agreement with Tropical. Swiss Army Brands described the decision to conclude its licensing agreement with TSI as amicable as it allows TSI to focus on its core business of private branded men’s and women’s casual and dress sportswear.
The transition is expected to be completed in 90 days.
The decision will wipe out an unprofitable business line that generated sales of less than $2 million for TSIC last year at stores such as Saks Fifth Avenue and Belk.
The bleak news marked the first quarterly earnings report issued by a new management team trying to pick up the pieces after company founder and veteran chief executive Bill Compton was forced out in November.
When Compton left on Nov. 18, the company put out a cryptic statement citing “management issues,” and a doctor’s October diagnosis that the 59-year-old apparel industry veteran had terminal leukemia. The company later confirmed the former CEO was ousted partly because he billed the company for tens of thousands of dollars in personal expenses.
KEY METRICS:
- Q1 Loss $5.02 million vs. $3.0 million Profit Q1 LY
- Q1 Net Sales Down 10% to $99.04 million
