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Announces Restructuring Plan to reduce operating expenses by $6.0 to $7.0 million in fiscal year 2014
Provides updates on negotiations with senior lender to address covenant violation
DALLAS, March 18, 2013 (GLOBE NEWSWIRE) -- Tandy Brands Accessories, Inc. (Nasdaq:TBAC) today announced a broad restructuring plan that is expected to reduce operating expenses by $6.0 to $7.0 million on an annualized basis, beginning in fiscal year 2014, and the Company provided an update on negotiations with its senior lender to address covenant violation.
"We learned some tough lessons this past holiday selling season, and today we are announcing actions to accelerate our turnaround in order to deliver sustainable profitability and enhance our competitive position going forward," said Rod McGeachy, President and Chief Executive Officer. "We plan to run a smaller, leaner, more profitable business with a lower risk profile. We intend to accomplish this by reducing complexity, including how we serve customers, manage the supply chain, and use our facilities," continued Mr. McGeachy.
The Company announced the elements of the restructuring plan, which are expected to improve customer service, increase profits, improve working capital efficiency, and reduce overhead. The key elements of the plan include:
Eliminating low-volume products
Emphasizing licensed products and high volume private label products
Reducing the amount of risk associated with the Gifts business
Reducing corporate employee headcount by approximately 32%
Closing or downsizing four of eight leased facilities
Outsourcing and relocating Gifts distribution from Dallas to California
Exiting development efforts and accelerating recognition of future expenses associated with non-core brands
"We will aggressively pursue this phase of our turnaround strategy," said Rod McGeachy. "Through these restructuring measures, we will sharpen our focus on our most profitable core products, brands and categories, simplify our SKU offerings and significantly reduce SG&A expenses associated with exiting non-core product lines. We think paring down our customer base and reducing the risk associated with the Gifts business will reduce our overall risk profile in fiscal 2014."