R.G. Barry CFO pleased with strength of H1 performance

10 Feb '10

3 min read

Accessory footwear marketer R.G. Barry Corporation reported a 36.0 percent increase in net earnings on a 13.8 percent increase in net sales for its second quarter, ended January 2, 2010.

For the quarter, the Company reported:

• Net earnings of $8.2 million or $0.76 per basic share and $0.74 per diluted share compared to $6.1 million, or $0.57 per basic share and $0.56 per diluted share, in the second quarter of fiscal 2009;
• Net sales of $55.6 million compared to $48.9 million reported for the corresponding period of fiscal 2009;
• Gross profit as a percent of net sales in the quarter was 43.1 percent versus 39.5 percent in the comparable quarter of fiscal 2009; and
• Selling, general and administrative expenses of $10.8 million were down fractionally as a percentage of net sales but up $1.1 million versus the equivalent quarter of fiscal 2009, as detailed in the management comments portion of this news release.

For the first half, the Company reported:

• Net earnings of $10.5 million, or $0.97 per basic and $0.96 per diluted share, versus net earnings of $7.2 million, or $0.67 per basic and diluted share, in the comparable period one year ago;
• Net sales for the period rose 14.0 percent to $85.0 million versus $74.5 million in the first half one year ago;
• Gross profit as a percent of net sales increased to 42.6 percent from 39.5 percent in the comparable six months of fiscal 2009; and
• Selling, general and administrative expenses were $19.6 million, up $1.3 million versus the comparable period last year, but down 150 basis points as a percentage of net sales for the half, as detailed in the management comments portion of this news release.

The balance sheet continues to reflect the benefits of the Company's flexible business model and growth strategies.

• Cash and short-term investments increased to $37.4 million, up $9.5 million from one year ago.
• Inventory was $16.9 million, up $1.9 million from one year ago; and
• Net shareholders' equity increased to $57.3 million from $53.6 million at the end of the second quarter of fiscal 2009.

Management Comments

"We continue executing at a level that places us among the best in our industry," said Greg Tunney, President and Chief Executive Officer. "Our year-over-year, double-digit net sales increase and higher profitability stem from the strong sell-through we experienced across most retail channels during our first half. We take great pride in the fact that this healthy performance is being measured against our results from the equivalent period last year, which were among the best reported in our sector. We view today's results as a reaffirmation of the ability of our business model to adapt and perform well, even during uncertain economic times."

"We are very pleased with the strength of our first-half performance," added Jose Ibarra, Senior Vice President Finance and Chief Financial Officer. "The benefits of lower product costs, resulting primarily from the increased availability of manufacturing capacity and lower oil prices, have allowed us to achieve a first half gross profit percentage of net sales that is above our 40 percent annual target.

"Our selling, general and administrative costs, while up on a dollar basis, are slightly lower as a percentage of net sales for both the quarter and half. These increased overhead dollars principally reflect our increased investment in advertising and marketing for the Dearfoams brand. We will offset some of this investment spending by continuing to take advantage of operational efficiencies elsewhere in the business," Mr. Ibarra said.

R.G. Barry Corporation

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