Tuesday August 7th, 2012 - 2:48PM
Lifetime Brands, Inc. financial results for its second fiscal quarter, ended June 30, showed a net sales increase of 5% for the period, to $94.9 million, compared to the same period in 2011. However, net income for the same period slipped 72.9% to $559,000 from $2.1 million.
Top line increased primarily as a result of including the net revenues of Creative Tops, acquired in November 2011, and increased net sales of kitchenware products, the company said.
Contributing to the net income decline, selling, general and administrative expenses rose 15.5% in dollars to 24.8% as a percentage of sales. Gross margin slipped to 37.3%, a decrease that primarily reflects a decline in the gross margin percentage of Home Solutions products.
According to Jeffrey Siegel, Lifetime Brand's chairman, president and CEO, “Within our Home Solutions products category, net sales of home décor products decreased, due to an industry-wide shift that resulted in many retailers reducing floor space allotted to home décor products. As previously noted, we are transitioning our home décor business to higher-quality branded products designed to be sold under our Mikasa and Pfaltzgraff brands. While these new product lines have been well received by our key retailer partners, I do not foresee a significant turnaround in this category taking place in the next 12 to 18 months."
Adjusted net income for the quarter was $1 million, as compared to $1.7 million, in 2011. Adjusted net income in the 2012 period excludes a loss on early retirement of debt, related to the repayment of $10 million principal amount of the company’s term loan, and an expense related to retirement benefit obligations. Adjusted net income in 2011 excludes the equity earnings from an entity that discontinued the sale of products in late 2011.
While Siegel noted that the quarter was marked by "continuing economic uncertainty," he remains optimistic about the company's continued growth.
“There is good reason to be optimistic about the second half of the year, during which we expect to roll-out a number of new kitchenware programs, including the roll-out of our new Guy Fieri cookware line and the launch of our new Savora line of kitchen tools & gadgets," Siegel said. “Overall, we believe Lifetime is well positioned to meet its business and financial goals for the year.”