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Lifetime Brands Announces 2009 Financials, "Re-Energized" Pfaltzgraff

March 16, 2010
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Lifetime Brands, Inc. recently announced its results for the fourth quarter and year ended December 31, 2009. For the fourth quarter of 2009, net sales totaled $128.1 million, compared to $156.7 million for the fourth quarter of 2008. The company reported net income of $5.0 million, or $0.41 per diluted share, for the fourth quarter of 2009, compared to a net loss of $36.8 million, or $3.07 per diluted share, for the fourth quarter of 2008.

For the fourth quarter of 2009, the wholesale segment’s net sales were $118.2 million, compared to $119.1 million for the fourth quarter of 2008. The direct-to-consumer (DTC) segment’s net sales for the fourth quarter of 2009 were $9.9 million. The DTC segment’s comparable net sales for the fourth quarter of 2008, which exclude net sales of the company’s retail outlet stores that were closed by the end of 2008, were $10.7 million.

Net sales for the full 2009 year were $415.0 million, compared to $487.9 million for 2008. Net income for the year was $2.7 million, or $0.22 per diluted share, compared to a net loss of $47.8 million, or $3.99 per diluted share, in the prior year. The company’s 2009 results include restructuring charges of $2.6 million, and the 2008 results include goodwill and intangible asset impairment and restructuring charges totaling $47.4 million.

For 2009, the wholesale segment’s net sales were $389.0 million, compared to $403.6 million in 2008. The decrease primarily reflects lower net sales in the food preparation category, primarily reflecting changes in the company's key customers’ sourcing patterns and in product mix, the absence of sales to Linens 'N Things and a decrease in the net sales of the company’s home décor category resulting from the company’s elimination of certain low-margin business. The decreases in these categories were offset, in part, by the benefit of a full year of sales of Mikasa® products in the company’s tabletop category and the added net sales of the company’s new line of thermal mugs and water bottles.

Net sales for the company’s DTC segment in 2009 were $26.0 million. The DTC segment’s comparable net sales for 2008, which exclude net sales of the company’s retail outlet stores that were closed by the end of 2008, were $28.5 million.

“2009 ended on a very positive note for Lifetime Brands,” said Jeffrey Siegel, chairman, CEO and president. “Throughout the year, we focused on expanding our market share, improving our gross margin, controlling expenses and reducing inventory. While the business environment was consistently challenging, with soft consumer spending exacerbated by retailers’ destocking actions, our strategy of providing products that set us apart from the competition produced solid results for the fourth quarter and the full year.

“Offering trusted brands and outstanding design at significant values, we grew our Mikasa brand in all tabletop categories and re-energized the Pfaltzgraff® brand in casual dinnerware. Our new Design for Living® line of water bottles and thermal mugs continues to grow.

“Grupo Vasconia S.A.B., in which we own a 30% interest, posted strong results for 2009. Net sales and net income (in Mexican pesos) increased 5% and 77%, respectively. These gains were driven by strong increases in sales of kitchen and tabletop products across all distribution channels. Sales of aluminum blanks and other commodity products produced by its mill operations decreased, reflecting both lower demand and lower world aluminum prices. For 2009, Lifetime’s equity in Grupo Vasconia's earnings, net of taxes, increased to $2.2 million, compared to $1.5 million in 2008, notwithstanding a weaker Mexican peso in the 2009 period.

“Continuing the success of our ongoing restructuring activities, selling, general and administrative expense (SG&A) decreased by $9.4 million for the fourth quarter and $35.6 million for the year, reductions of 25.8% and 27.1%, respectively, compared to 2008. Inventory at year-end 2009 was $103.9 million, compared to $141.6 million at December 31, 2008, a decrease of 26.6%. Lower inventory levels combined with strong cash flow enabled us to reduce the company’s borrowings under our bank credit agreement to $24.6 million at year-end 2009, a decrease of 72% from $89.3 million at December 31, 2008.

“In 2010, we expect economic conditions to remain challenging throughout the year, with modest, if any, organic growth in market size, continued cautious spending by consumers and lean inventory levels at retail. Nevertheless, we expect to be able to gain market share and achieve some sales growth in all of our product categories.”

Additional details are available at www.lifetimebrands.com.

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