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TLF achieves a respectable sales gain in light of the economy

06
Aug '08
Tandy Leather Factory Inc reported financial results for the second quarter of 2008. Consolidated net income for the quarter ended June 30, 2008 was $655,000 compared to consolidated net income of $397,000 for the second quarter of 2007. Fully diluted earnings per share for the quarter was $0.06, compared to $0.04 in the second quarter of last year. Total sales for the quarter ended June 30, 2008 were $13.8 million, up 4% from $13.4 million in the second quarter last year.

Consolidated sales for the six months ended June 30, 2008 were $27.1 million, down 3% from the 2007 first half sales of $27.9 million. Consolidated net income for the first half of 2008 was $1.2 million or $0.11 per fully-diluted share versus $1.7 million or $0.16 per fully-diluted share in the comparable period last year.

Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $393,000 in the second quarter, a 7% improvement over last year's second quarter. Seventy-two stores comprised the Tandy Leather's retail operations on June 30, 2008, compared to sixty-eight retail stores a year ago. For the first six months of 2008, Tandy Leather sales increased $410,000, or 3%, over the first six months of 2007.

Second quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory wholesale centers and national account group, basically matched that of the same quarter last year, reporting a $42,000 or a 1/2% increase. For the first six months of 2008, Wholesale Leathercraft's sales were down $1.2 million, or 8%, over the same period in 2007. International Leathercraft, consisting of one combination wholesale and retail store located in the United Kingdom, added sales of $194,000 and $235,000 for the quarter and year, respectively. This store was opened in February 2008.

Consolidated gross profit margin for the current quarter was 57.9%, improving slightly from 57.5% for the second quarter of 2007. For the first two quarters, consolidated gross profit margin for the current year was 58.1%, declining minimally from last year's gross profit margin of 58.4%. Consolidated operating expenses decreased $61,000 in the current quarter but increased $315,000 for the first six months over the same periods a year ago.

For the second quarter, the significant reductions in expenses occurred in personnel costs, rent, supplies and professional/consulting fees. For the year, the operating expenses associated with the new stores accounting for the increase in operating expenses. Consolidated operating margin improved for the quarter to 7.9% compared to 5.3% last year. On a year-to-date basis, consolidated operating margin declined from 9.5% last year to 6.7% in the current year.

Ron Morgan, Chief Executive Officer, commented, "While we are still behind in terms of sales and profits from where we were at this time last year, our second quarter results are positive. We achieved a respectable sales gain in light of the economy, gross profit margin rose slightly and our operating expenses were down, even with the several new stores in this quarter that didn't exist last year.


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