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Lakeland reports fiscal 2009 Q3 financial results
16
Dec '08
Lakeland Industries Inc announced financial results for its third quarter and nine months ended October 31, 2008. "The third quarter again showed the success of our international growth strategy and cost-reduction initiatives, with earnings before interest, taxes, depreciation and amortization ('EBITDA') margins the highest in nearly three years," said Christopher J. Ryan, President and CEO of Lakeland Industries.

"Although we expect domestic sales in the US to trend downward in the coming quarters on a comparative basis, we anticipate strong growth in overseas markets to more than offset these declines and enable us to maintain upward momentum in both sales and earnings. In North America, our customers are deleveraging and going through a sharp inventory adjustment, but at some point -- likely in the first quarter -- we believe their reserves will be exhausted and demand will resume. Many, if not most, of our product offerings are required to be worn by federal or state safety rules and regulations and are thus not generally discretionary purchases."

"For example, on November 24, 2008, a US federal law went into effect requiring that anybody working along highways that receive federal money -- including firemen, police, construction workers, highway cleaning crews, and even members of the media -- must wear high-visibility safety vests. As a result, our high-visibility vest sales rose by 98% in the third quarter as distributors stocked up in anticipation of the new law.”

“While we continue to experience continued demand for this product line, we expect the rate of growth to moderate in the coming quarters. According to our channel checks, the new law along with the reported stimulus package of the incoming Obama administration is driving growth for our high-visibility product lines and additional gains for other product lines beginning in the first calendar quarter of 2009. Thus, in terms of our outlook for the next year, we believe we are more insulated than many companies from the general economy at large.”

“Furthermore, certain government regulations, such as Occupational Safety & Health Administration ('OSHA') rules, are now being formulated and implemented in the foreign markets we are penetrating, so we expect additional demand for our products to meet mandatory requirements. Many of these nations are mandating that the public and private sector adopt OSHA-like standards so that they may benefit from membership in associations such as the World Trade Organization.”

"In the fourth quarter to date, we have seen our lower trending domestic sales being partially offset by the traction of our international operations, which may be somewhat mitigated on a reported basis depending on the strength of the US dollar. Beginning in the first quarter of fiscal 2010, we see domestic sales rebounding for several product lines and continued expansion overseas. Given these expectations along with our ongoing cost-cutting measures, we expect next fiscal year's results to show top and bottom line improvement of over 10%, excluding any future potential acquisitions and the impact of currencies."

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