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Tandy Brands Accessories net sales decline

Sep '08
Tandy Brands Accessories reported results for the fiscal year ended June 30, 2008, and announced the board of directors approval of a $0.04 per common share quarterly dividend payable on October 17, 2008 to stockholders of record at the close of business on September 30, 2008.

For the fiscal year ended June 30, 2008, the company reported a net loss of $49.3 million, or $7.18 per share, on net sales of $149.3 million. The fiscal 2008 results include noncash impairment charges and inventory writedowns totaling $36.5 million. Net income for fiscal 2007 was $1.9 million, or $0.28 per fully diluted share, on net sales of $195.8 million.

For the fourth fiscal quarter ended June 30, 2008, the company reported a net loss of $4.7 million, or $0.67 per share, on net sales of $30.1 million, versus a net loss of $2.9 million, or $0.43 per share, on net sales of $36.4 million for the quarter ended June 30, 2007.

Despite $6.3 million in lower sales, the company's fiscal fourth quarter pretax loss for fiscal 2008 was $1.2 million less than the loss in the fiscal 2007 fourth quarter due to reductions in selling, general and administrative expenses.

Balance Sheet:
The company's financial position remains strong. As of June 30, 2008, the company had working capital of $53.3 million. Inventories at the end of the year were $35.5 million, a 45 percent decline from June 30, 2007 levels partly due to an $18.7 million write-down during the year.

Outstanding borrowings were $363,000 at year end and credit facility borrowing availability was $18.9 million. Stockholders' equity of $57.9 million equated to a book value of $8.21 per share at June 30, 2008.

Sales Growth Initiatives:
During the fourth quarter, the company announced that it signed a license to manufacture and to sell a wide range of men's, women's, young men's, and juniors' leather accessories under the Dr. Martens brand. The Dr. Martens license gives the company another entrée into the important youth and teen markets. Also, the company continues to expand its totes gifts distribution.

“Fiscal 2008 was one of the most difficult years that the company has seen in its 17-year history,” said J.S.B. Jenkins, chairman and chief executive officer of Tandy Brands.

“We took several decisive measures during the year to address these challenges, including expanding our product manufacturing sources, closing facilities, writing off inventory and reducing headcount. As a result, we have reduced operating expenses by $9 million over the past 18 months and our current cost structure is better aligned with current market conditions.

“As we enter fiscal 2009, we remain cautious and conservative in our approach to the market because of the difficult retail environment,” added Mr. Jenkins. “The measures taken over the past year have made us more agile and a lower-cost organization.

Tandy Brands Accessories' product quality, commitment to superior customer service, long-term customer relationships, and strong balance sheet should position us to rebound faster when the market improves.”

Tandy Brands Accessories Inc

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