Accessory Footwear Marketer Reports 2nd Quarter/1st Half Results
PICKERINGTON, Ohio, Feb. 6 /PRNewswire-FirstCall/ -- Accessory footwear marketer R.G. Barry Corporation, the Dearfoams company (AMEX:DFZ), today said that despite the weak holiday performance reported by some of its retailer customers, it experienced improved retail sell-through rates during the 2007 holiday season and it expects revenue and earnings for the 2008 fiscal year to fall within its previously issued guidance.
Reporting its second quarter and first half operating results for the period ended December 29, 2007, the Company said that its projected increase in net sales for the full fiscal year is expected to be in the lower end of its previously issued 4-to-8 percent range; and that the anticipated increase in income from continuing operations, before taxes and excluding the fiscal 2007 gain of $878,000 on the sale of land, is expected to be in the upper end of its previously issued 6-to-10 percent range.
The Company also reiterated that its operating results for the periods met its expectations and reflected a planned shift in its historic patterns of revenue and earnings performance from the first half to the second half of this fiscal year. The shift is principally related to the Company becoming the sole supplier of replenishment slippers for its largest mass-market customer.
For the second quarter of fiscal year 2008, the Company reported:
-- Net earnings of $4.1 million or $0.39 per basic share and $0.38 per
diluted share compared to $20.3 million or $2.03 per basic share and
$1.96 per diluted share in the second quarter of fiscal 2007;
-- Net sales of $38.6 million compared to $39.5 million reported for the
corresponding period of fiscal 2007;
-- Gross profit as a percent of sales increased in the quarter to 40.8
percent from 38.4 percent in the comparable quarter of fiscal 2007; and
-- Selling, general and administrative expenses increased to $9.3 million
versus $8.6 million in the equivalent period of fiscal 2007. For the first half, the Company reported:
-- Net earnings of $7.8 million, or $0.75 per basic share and $0.74 per
diluted share, versus net earnings of $26.6 million or $2.65 per basic
share and $2.57 per diluted share in the comparable period one year
ago;
-- Net sales of $70.7 million versus $74.8 million in the first half one
year ago;
-- Gross profit as a percent of sales at 42.2 percent compared to 40.1
percent in the comparable period of fiscal 2007; and
-- Selling, general and administrative expenses of $17.6 million, up from
$16.8 million in the equivalent period last year. The Company's second quarter and first half fiscal 2008 net earnings reflected income tax expense of $2.4 and $4.6 million, respectively, while results from the comparable periods in fiscal 2007 reflected the income tax benefit of $12.9 and $12.8 million, respectively, which resulted from the reversal of the Company's deferred tax asset valuation allowance in the second quarter of fiscal 2007. Second quarter net earnings for fiscal 2007 also benefited from the previously mentioned gain on the sale of land.
Management Comments "We are quite pleased with our overall performance during another very difficult, highly-promotional season at retail," said Greg Tunney, President and Chief Executive Officer. "Our success resulted in great part from the flexibility of our business model and our very broad presence across many retail channels. Our business with mass merchandisers and warehouse clubs was especially good this holiday season.
"The net sales decline reported today primarily reflects a shift in sales to the second half of this year due to our largest customer selecting us as their single resource for year-round basic replenishment slippers. This retailer previously bought these products from three suppliers of which we were the largest. The first phase of this major initiative involved selling inventory already in the retailer's stores and warehouses to make way for fresh, new R.G. Barry products. To accommodate this effort, we did not ship to this customer in November, December or January. This month, we will begin restocking their stores and distribution centers and as a result, meaningfully increase our second half business this year and our annual business going forward.
"Our strategy of diversification of products, channels and brands within the accessory footwear category is now just beginning to add some balance to the highly seasonal nature of our business. While the impact of this strategy will be modest in this fiscal year, we believe that by continuing to introduce products like our Terrasoles casual hybrid footwear and our licensed Superga canvas active fashion footwear, we will lessen our reliance on one selling season and one product category.
"We also believe that significant, profitable growth opportunities still exist in our core business. We are investing heavily in development and marketing support for our existing Dearfoams family of brands; and we are taking advantage of opportunities in the slipper category with extensions like our NCAA-licensed My College Footwear and our newly licensed Nautica slippers, both of which we will introduce this fall.
"Our business is healthy and growing. We plan to continue refining our existing businesses and seeking out and investing in new opportunities to fuel real, sustainable, profitable growth. Our goal continues to be becoming the number one global accessory footwear company," Mr. Tunney concluded.
Conference Call/Webcast Today R.G. Barry Corporation senior management will conduct a conference call for all interested parties at 10:00 a.m. EST today. Management will discuss the Company's performance, its plans for the future and will accept questions from participants. The conference call will available at (888) 530-7880 or (706) 634-1795 until five minutes before starting time. To listen live via the Internet, simply log on at http://www.videonewswire.com/event.asp?id=45208 .
Replays of the call will be available approximately one-hour after its completion. The audio replay can be accessed through Wednesday, Feb. 13, 2008, by calling (800) 642-1687 or (706) 645-9291 and using passcode 31490170. A written transcript and audio replay of the call will be posted for 12 months at the Company's Web site http://www.rgbarry.com/ under the "Investors/News Release" section.
About R.G. Barry Corporation R.G. Barry Corporation, the Dearfoams(R) company, is one of the world's leading developers and marketers of accessory footwear. Visit us online at http://www.rgbarry.com/ to learn more about our business.
Forward-Looking Statements The Private Securities Litigation Reform Act of 1995 provides a "safe harbor" for forward-looking statements. Certain statements in this news release, which are not historical fact, are forward-looking statements, and are based upon information available to the Company on the date of this release. Our forward-looking statements inherently involve risks and uncertainties that could cause actual results and outcomes to differ materially from those anticipated by our forward-looking statements. Factors that could cause or contribute to our actual results differing materially from our current forecasts include, but are not limited to, the following: the strength of the retail market; the success of planned project launches; our receipt of shipments from third-party manufacturers in China on a timely basis; our ability to distribute to customers on a timely basis goods held in our own distribution centers and third-party distribution centers; product returns, customer concessions and promotion costs that are materially higher than what we currently plan; the unexpected loss of key management or one or more of our key customers; an unexpected reduction in business from one of our key customers; the impact of competition on the Company's market share; unfavorable changes in foreign exchange rates, particularly China's exchange rate; and our ability to comply with the various terms and covenants of our unsecured credit facility with The Huntington National Bank. Other risks to our business are detailed in previous press releases, shareholder communications and Securities Exchange Act of 1934 filings, including those in the disclosure in "Item 1A -- Risk Factors" of Part I of our 2007 Annual Report on Form 10-K for the fiscal year ended June 30, 2007. Except as required by applicable law, we do not undertake to update the forward-looking statements contained in this news release to reflect new information that becomes available after the date hereof.
-- financial charts follow -- R.G. BARRY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands of dollars, except for per share data)
(unaudited) Thirteen Weeks Twenty-six Weeks
Ended Ended
December 29, December 30, December 29, December 30, %Increase
2007 2006 2007 2006 Decrease Net sales $38,555 $39,527 $70,685 $74,818 -5.5%
Cost of
Sales 22,813 24,337 40,884 44,809 -8.8%
Gross
profit 15,742 15,190 29,801 30,009 -0.7% Gross
profit
(as
percent
of sales) 40.8% 38.4% 42.2% 40.1% Selling,
general and
administrative
expenses 9,340 8,562 17,605 16,768 5.0%
Gain on
disposal
of land - (878) - (878)
Restructuring
and asset
impairment
(credit)
charges - (2) - 72 -100.0% Operating
profit 6,402 7,508 12,196 14,047 -13.2% Other income 35 51 50 96 -47.9%
Interest income
(expense),
net 79 (257) 178 (536) -133.2% Income from
continuing
operations,
before
income tax 6,516 7,302 12,424 13,607 -8.7% Income tax
expense
(benefit) 2,434 (12,929) 4,576 (12,849) NM Earnings from
continuing
operations 4,082 20,231 7,848 26,456 -70.3% Earnings
(loss) from
discontinued
operations - 80 - 153 -100.0% Net earnings $4,082 $20,311 $7,848 $26,609 -70.5% Earnings per
common share:
continuing
operations
Basic $0.39 $2.02 $0.75 $2.64 -71.6%
Diluted $0.38 $1.95 $0.74 $2.56 -71.1% Earnings per
common share:
discontinued
operations
Basic $ - $0.01 $ - $0.01 -100.0%
Diluted $ - $0.01 $ - $0.01 -100.0% Earnings per
common share:
total
Basic $0.39 $2.03 $0.75 $2.65 -71.7%
Diluted $0.38 $1.96 $0.74 $2.57 -71.2% Average number
of common
shares
outstanding
Basic 10,426 10,040 10,411 10,030
Diluted 10,640 10,384 10,664 10,358 CONSOLIDATED BALANCE SHEET
(in thousands of dollars)
(unaudited) December 29, December 30, June 30,
2007 2006 2007
ASSETS
Cash & Short term
investments $24,195 $14,843 $18,207
Accounts Receivable, net 10,305 13,703 6,860
Inventory 14,428 12,172 14,639
Prepaid expenses and
other current assets 2,723 9,550 7,192
Assets held for disposal - - 2,788
Total current assets 51,651 50,268 49,686 Net property, plant and
equipment 3,095 2,569 2,255 Other assets 11,468 7,811 11,587
Total Assets $66,214 $60,648 $63,528 LIABILITIES & SHAREHOLDERS'
EQUITY
Short-term notes payable 2,278 2,668 2,278
Accounts payable 6,753 4,860 7,443
Other current liabilities 2,065 5,336 3,412
Liabilities associated with
assets held for sale - - 2,357
Total current liabilities 11,096 12,864 15,490 Long-term debt 233 331 272
Accrued retirement costs
and other 10,828 11,517 11,551
Shareholders' equity, net 44,057 35,936 36,215
Total liabilities &
shareholders' equity $66,214 $60,648 $63,528
DATASOURCE: R.G. Barry Corporation CONTACT: Roy Youst, Director Corp. Comm. - Investor Relations, +1-614-729-7275, or Daniel Viren, Senior Vice President Finance - CFO, +1-614-864-6400, both of R.G. Barry Corporation Web site: http://www.rgbarry.com/
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