Western & life style business perk up at McRae

March 17, 2010 - United States Of America

McRae Industries Inc reported consolidated net revenues for the second quarter of fiscal 2010 of $16,712,000 as compared to $16,591,000 for the second quarter of fiscal 2009. Net earnings for the second quarter of fiscal 2010 amounted to $711,000, or $.35 per diluted Class A common share as compared to net earnings of $455,000, or $.26 per diluted Class A common share, for the second quarter of fiscal 2009.

Consolidated net revenues for the first six months of fiscal 2010 totaled $33,753,000 as compared to $36,925,000 for the first six months of fiscal 2009. Net earnings for the first six months of fiscal 2010 amounted to $1,748,000, or $.84 per diluted Class A common share, as compared to net earnings of $1,667,000, or $.81 per diluted Class A common share, for the first six months of fiscal 2009.

Second Quarter Fiscal 2010 Compared To Second Quarter Fiscal 2009

Consolidated net revenues for the second quarter of fiscal 2010 totaled $16.7 million as compared to $16.6 million for the second quarter of fiscal 2009. Revenues from our western and lifestyle footwear products were up approximately 22% as demand for women's fashion related footwear remained strong. Revenues from our work boot products, which include our licensed, private label, and military boot products, totaled approximately $5.3 million for both second quarters of fiscal 2010 and 2009. Revenues from our non-core businesses, primarily the downsized bar code business, were down nearly $2.0 million. We expect our western and life style business activity to remain strong for the remainder of fiscal 2010. On the other hand, we expect our work boot business will continue to be suppressed by the current economic malaise in the construction industry and decreased military boot requirements for the U. S. Government (the "Government").

Consolidated gross profit amounted to approximately $4.7 million for both second quarters of fiscal 2010 and fiscal 2009. The gross profit attributable to our western and lifestyle product sales increased by 18.4% and was primarily attributable to the increase in related net revenues. The gross profit attributable to our work boot product sales declined nearly 15% as reduced production of military boots for the Government had a detrimental impact on per unit costs. Declining gross profit contributions from our non-core businesses were also a drag on consolidated gross profit.

Consolidated operating costs and expenses totaled approximately $3.6 million for the second quarter of fiscal 2010 as compared to nearly $4.0 million for the second quarter of fiscal 2009. This reduction in consolidated operating costs and expenses resulted primarily from cost savings related to the contraction of the bar code business. For our core footwear product businesses, operating costs increased by approximately $400,000 as a result of increased sales compensation costs, advertising/promotion costs, and employee benefit charges which were partially offset by reduced expenditures for group health insurance and professional fees.

As a result of the above, consolidated operating profit increased from $735,000 for the second quarter of fiscal 2009 to $1.1 million for the second quarter of fiscal 2010.

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