Lifetime Brands Reports Preliminary Financial Results (posted 3/20/09)
Lifetime Brands, Inc. recently announced preliminary, unaudited financial results for the quarter and full year ended December 31, 2008. Lifetime also announced that it would file a Form 12b-25 “Notification of Late Filing” with the Securities and Exchange Commission stating that the company expects to file its Annual Report on Form 10-K on or before March 31, 2009.
In the fourth quarter, the company incurred a net loss of $39.2 million (net of tax benefit of $3.0 million), or $3.27 per diluted share, compared to net income of $5.4 million, or $0.40 per diluted share, in the fourth quarter of 2007. The loss for the quarter included pre-tax charges of $42.7 million for the following special items: $29.4 million in non-cash charges attributable to the write-off of goodwill and certain intangible assets in accordance with SFAS 142, Goodwill and Other Intangible Assets; $10.5 million of restructuring charges, primarily attributable to the closing of the company’s retail stores, all of which were closed by December 31, 2008; $1.9 million of operating losses attributable to the retail stores; and $0.9 million in non-recurring transition expenses related to the Mikasa acquisition. Excluding these items, the company would have reported a net loss for the quarter of $0.1 million, or $0.01 per diluted share.
For the full year, the net loss was $49.0 million (net of tax benefit of $10.5 million), or $4.09 per diluted share, compared to net income of $8.9 million, or $0.68 per diluted share, in 2007. The company’s net loss for 2008 included pre-tax charges of $57.3 million for the following special items: $29.4 million in non-cash charges attributable to the write-off of goodwill and certain intangible assets; $18.0 million, of which $3.9 million was non-cash, of restructuring charges, primarily attributable to the closing of the company’s retail stores; $6.9 million of operating losses attributable to the retail stores; and $3.0 million in non-recurring transition expenses related to the Mikasa acquisition. Excluding these items, the company would have reported a net loss for the year of $2.0 million, or $0.17 per diluted share.
Net sales for the year were $487.9 million, a decrease of 1.2% compared to net sales of $493.7 million in 2007. Net sales for the company’s wholesale segment in 2008 were $403.6 million, a decrease of $13.3 million, or 3.2%, compared to net sales of $416.9 million for 2007. Excluding Mikasa net sales of $32.8 million, net sales for the wholesale segment were $370.8 million for the year ended December 31, 2008, a decrease of 11.1% compared to 2007. Net sales for the direct-to-consumer segment in 2008 were $84.3 million compared to $76.8 million for 2007. The increase largely was due to the going-out-of-business sales at the company’s retail stores.
“The economic recession, which we now know began in December 2007, adversely affected consumer discretionary spending throughout 2008,” said Jeffrey Siegel, chairman, president and chief executive officer. “As a result, most non-food retailers sharply curtailed their inventories. This had a significant negative effect on our business, especially in the fourth quarter, as these retailers aggressively took steps to assure that they would not have to carryover large quantities of merchandise into 2009.
“While our overall results for the year obviously were very disappointing, we did achieve some notable successes. Our acquisition of Mikasa met our expectations and provided us with new opportunities to strengthen our existing placement at a number of retailers and to open new doors. Our kitchenware business also grew significantly. In addition, our ongoing initiatives to reduce inventory and improve efficiency by consolidating certain distribution centers yielded the anticipated results.
“The restructuring of our dinnerware and glassware businesses should produce a turnaround, as compared to prior years in which these lines of business generated significant operating losses. Coupled with the acquisition of Mikasa, we believe the company is well-positioned for profitable growth in those classifications.
“The closing of all our retail stores removes what has been a significant burden, both on our financial results and on our operating efficiency. It also frees management to concentrate on the stronger and more profitable parts of our business.
“We have aligned our operations to fit current market conditions by reducing headcount, freezing salaries, trimming employee benefits and consolidating distribution centers. As a result of these initiatives, which are ongoing, we expect employee-related costs in 2009 to decrease as a percentage of net sales by approximately 350 basis points compared to 2008, and by approximately 300 basis points compared to 2007.
“While we expect economic conditions to remain challenging during all of 2009, we remain optimistic that our financial results this year will be substantially better than in 2008. Our wholesale business this quarter is on plan and likely to achieve approximately the same level of net sales as in the first quarter of 2008. Moreover, our portfolio of well-known and respected brands, together with our commitment to innovation, should position the company for a strong recovery.
“We are pleased to note that, according to the International Housewares Association (IHA), buyer registration by key U.S. retailers for the 2009 International Home + Housewares Show, to be held at McCormick Place in Chicago, March 22-24, 2009, is greater then the goal set by the IHA. We believe this reflects the fundamental strength of the housewares sector and is an indicator of confidence by key retailers. As in the past, Lifetime will be among the largest non-electrics exhibitors at the show, at which we will introduce approximately 1500 unique new products, including several that we believe could have the potential to be very important to the company.”
Visit www.lifetimebrands.com for more information.