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Tandy Brands Reports Fiscal 2013 Fourth Quarter And Year-End Earnings Results

Fourth quarter fiscal 2013 gross margin as a percentage of net sales declined to 23.9 percent, compared to 30.2 percent in the fourth quarter of fiscal 2012. The decrease in gross margin percentage over the prior year period was driven by a high mix of sales of inventory at net book value associated with exited products in connection with the March 18, 2013 restructuring plan ("Restructuring Plan").  

Total selling, general and administrative (SG&A) expense for the fourth quarter of fiscal 2013 improved by $0.8 million over the prior year period to $7.1 million. The 11 percent improvement was due to savings initiatives in labor, facilities and distribution costs as expected in the Restructuring Plan.

For the fourth quarter, the Company reported a net loss of $3.8 million, or ($0.53) per diluted share, compared to a net loss of $2.2 million, or ($0.32) per diluted share, in the prior year period. Adjusted EBITDA loss and adjusted net loss for the fiscal 2013 fourth quarter were flat when compared to the same period in the prior year.

"Our fourth quarter results reflect the cost savings and lower margins we expected in the Restructuring Plan as we continue to liquidate exited products, while preparing for a successful holiday 2013," said Hemminghaus.

The Company reported future gift margins were expected to improve as a result of savings from outsourcing and relocating distribution, lowering freight costs, reducing product return privileges, limiting margin agreements with retailers and locking ocean freight rates. 

"As outlined in the Restructuring Plan, we expect holiday 2013 gifts margins to be significantly improved when compared to the past two holiday seasons," said Hemminghaus.

Fiscal Year 2013 Results

Fiscal 2013 net sales were $114.0 million, down 3 percent, compared to $117.6 million for the prior year. The gifts segment's net sales increased by $5.5 million, or 18 percent, over the prior year due to increased sales under the totes ® and Eddie Bauer ® licenses, primarily during holiday 2012. The accessories segment net sales declined $9.1 million, or 11 percent, over the prior period. This decline was driven by the planned exit of unprofitable product categories which were sold at lower than normal prices, and lower replenishment sales by our Canadian subsidiary. 

For fiscal 2013, gross margin for the accessories segment declined from 33.5 percent to 24.3 percent. The fiscal 2013 gross margin includes a $5.4 million inventory write-off associated with the Restructuring Plan, which included liquidating low-volume products. Excluding this write-off, fiscal 2013 gross margin would have been 31.3 percent. Accessories segment adjusted gross margin percent was lower in fiscal 2013 primarily due to lower sales of previously written down inventory, higher customer deductions and cost increases in leather, metal and freight over fiscal 2012. 

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