Shipments of SWANK Tumi accessories collection up

25 Feb '09

5 min read

John Tulin, Chairman of the Board and Chief Executive Officer of SWANK INC reported net sales and net income for the Company's fourth quarter and 12 months ended December 31, 2008.

Fourth Quarter Results:
Net income for the quarter ended December 31, 2008 was $2,576,000 or $.44 per diluted share compared to $3,453,000 or $.57 per diluted share for the corresponding period in 2007. Net income for the quarter included pretax income of $2,000,000 associated with the settlement of a coverage dispute with one of the Company's insurance companies. Income before taxes exclusive of the insurance settlement was $2,245,000 compared to $5,827,000 for the fourth quarter of 2007.

Net sales for the quarter ended December 31, 2008 decreased 19.2% to $34,809,000 compared to $43,094,000 for the corresponding period in 2007. The difficult economic climate continued to affect retailers during the quarter resulting in one of the most disappointing holiday shopping seasons in recent memory.

The decrease in retail sales made for a particularly difficult season for a number of our department and chain store customers that led to a reduction in our wholesale shipments to them. Shipments of our belt and personal leather accessories fell 22.4% and 18.5%, respectively, during the quarter mainly due to declines in certain branded merchandise programs.

In addition to the difficult economic conditions, comparisons to last quarter were adversely affected by the launch of certain new merchandise programs during 2007's fourth quarter.

Gross profit dollars for the quarter ended December 31, 2008 declined 30.1% to $10,914,000 while gross profit as a percentage of net sales was 31.4% compared to last year's 36.2%. The decrease in gross profit in both dollars and as a percentage of net sales was primarily due to lower net sales and an increase in certain inventory control costs, mainly merchandise markdowns.

Selling and administrative expenses for the quarter decreased $881,000, or 9.5% compared to last year's fourth quarter, but, as a percentage of net sales, increased to 24.2% from 21.6%.

Selling expenses decreased by $773,000, or 10.2%, during the quarter primarily due to a reduction in variable sales-related costs, including compensation and benefits, discretionary travel and entertainment, warehouse and distribution costs, and advertising and image fund contributions based on net sales pursuant to our various license agreements.

Those decreases were partially offset by higher compensation costs associated with the addition of staff to strengthen our product development and sourcing functions, increased travel expenses, and certain national advertising.

Administrative expenses decreased $108,000 or 6.3%, during the quarter compared to the same time last year. The decrease was mainly due to a decrease in environmental costs offset in part by increases in bad debt expenses.

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