Pickerington, OH—RG Barry today reported disappointing fiscal first quarter results due to a difficult retail environment and a shift in holiday shipments to retailers.
For the quarter ended Sept. 28, the footwear and accessories company posted net income of $4.8 million, or 41 cents a share compared with $6.1 million or 54 cents a share, in the same quarter last year.
Net sales declined 11.3% to $41.9 million. The decline in sales was attributed primarily to the footwear segment, where sales were down 14.2% to $32.8 million. Meanwhile, sales in accessories, which include the baggallini brand, increased 1.4% to $9 million.
Gross profit as a percent of sales widened to 46.5% versus 44.3% last year in spite of “lower top-line and gross profit dollars, resulted from our continuing shift to a more profitable mix of products and channels.”
‘Not an Easy Year for Suppliers to Retail’
Selling, general and administrative expenses increased 8% to $11.9 million, reflecting increased investment spending that is aligned with long-term growth initiatives.
“We are obviously disappointed in our first quarter results,” said Greg Tunney, president/ceo, “but ours has never been a quarter-to-quarter business. Holiday shipments to retailers can occur in either the first or second quarter, based upon retailer needs; and retail sell-through during the Christmas season has significant impact on our rate of profitability. We are working with our customers to maximize our in-store performance between now and Dec. 31.”
“Changes in the timing of some seasonal footwear shipments to retailers, the decision to exit a negative-margin private label department store footwear program and sluggish retail sales all contributed to the decline” in its first quarter sales, the company said.
Looking ahead, the company expects its full year report will likely be down “slightly” from last year.
“We recognize that based upon our business outlook and economic headwinds, this is not going to be an easy year for many suppliers to retail,” said Jose G. Ibarra, chief financial officer.
Noting that the company has a “strong cash flow and healthy balance sheet,” Tunney added that continue on its expansion into new product categories through acquisitions, international markets and e-commerce.
In October, RG Barry revealed that its board of directors formed a committee of independent directors to review a $228.4 million offer by private investment firm Mill Road Capital, which reportedly made the offer believing that RG Barry would be better able “to realize its full potential as a private entity.”