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Tandy Brands Accessories posts Q2 results
05
Feb '09
Tandy Brands Accessories reported financial results for the second quarter of fiscal 2009. For the second fiscal quarter ended December 31, 2008, the company reported net income of $952,000, or $0.14 per share, on net sales of $42.9 million compared to a net loss of $40.7 million, or $5.94 per share, on net sales of $49.6 million for the quarter ended December 31, 2007.

The second fiscal quarter results include an increase in the provision for doubtful accounts receivable of $1.1 million. The prior year second fiscal quarter results include charges of $36.5 million associated with the write-down of inventory ($18.7 million), goodwill ($16.5 million) and other intangible assets ($1.3 million).

For the six months ended December 31, 2008, the company reported a net loss of $328,000, or $0.05 per share, on net sales of $77.6 million compared to a net loss of $42.4 million, or $6.20 per share, on net sales of $89.1 million for the six months ended December 31, 2007. The prior year six month results include charges of $36.5 million associated with the write-down of inventory ($18.7 million), goodwill ($16.5 million) and other intangible assets ($1.3 million).

The company attributed the decline in revenue in the quarter to the protracted decline in the economy and the very challenging holiday retail environment. Several of Tandy Brands' retail partners reported flat-to-down sales in the period, and the company's sales results reflect those trends.

“The recent holiday period was obviously a very challenging time for our retail partners, and our sales results reflect those difficulties. Our customers have indicated that our products performed well in their respective product categories, but that overall spending in the space was soft,” said Rod McGeachy, president and chief executive officer of Tandy Brands.

“Across the board, our customers have indicated that they are taking a very conservative approach toward replenishing inventory in this environment,” continued Mr. McGeachy. “We are making the necessary adjustments internally to respond to these measures, and we continue to work closely with our retail partners to develop products and programs to help them through these difficult times.”

On January 20, 2009, the company announced an organizational restructuring plan designed to focus its product development efforts, build critical capabilities, increase flexibility to better serve its retail partners' needs and reduce operating expenses. The company has identified more than $3 million in potential annualized savings through the restructuring. The company estimates that pretax charges related to the restructuring plan will be in the range of $550,000 to $650,000 which will be incurred in the third fiscal quarter ending March 31, 2009.

“We have responded to the challenging retail environment by approaching our markets with realism. We have redesigned our organization to be more effective and to stabilize our platform for future profitable growth. We streamlined our sales force, flattened the organization for better communication and accountability, built stronger performance metrics and recruited new talent. This talent will help us build capabilities in consumer-led product development, planning and forecasting, new business development, and performance management,” said Mr. McGeachy.


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