2017 Third Quarter Net Sales Dip for Lifetime Brands
Consolidated net sales were $166 million, compared to consolidated net sales of $170.1 million in the corresponding period in 2016.
Lifetime Brands, Inc., parent company of Mikasa® and Pfaltzgraff®, among many others, recently reported its financial results for the third quarter ended September 30, 2017. Consolidated net sales were $166 million, compared to consolidated net sales of $170.1 million in the corresponding period in 2016. In constant currency, which excludes the impact of foreign exchange fluctuations, consolidated net sales decreased 2.5% from the corresponding period in 2016.
Gross margin was $57.2 million, or 34.5%, compared to $58.3 million, or 34.3%, for the corresponding period in 2016. Income from operations was $9.3 million, compared to $10.8 million for the 2016 third quarter. Net income was $4.3 million, or $0.29 per diluted share, compared to net income of $6.5 million, or $0.44 per diluted share, in the corresponding period in 2016. Adjusted net income was $5.5 million, or $0.37 per diluted share, compared to adjusted net income of $7.5 million, or $0.52 per diluted share, in the third quarter of 2016. Consolidated EBITDA was $15.7 million, compared to $16.7 million for the corresponding 2016 period.
“The third quarter was a challenging period for Lifetime,” said Jeffrey Siegel, chairman and CEO. “Our quarterly results fell short of last year’s strong numbers and were also below our internal expectations, as retailers in the U.S. continued to close stores, reduce inventory levels, and adjust their strategies in an effort to offset the inroads that online shopping has made in their business. In addition, we intentionally limited sales to certain retailers due to credit concerns. Gross margin percentage in the quarter increased, partially offsetting the impact of lower net sales.
“Also, on the positive side, our e-commerce sales grew dramatically in the quarter. If our growth in online sales through pure play online retailers and online sites of our traditional customers continues at the same pace as in the third quarter, we expect such e-commerce sales fully to offset the decline in sales to traditional brick-and-mortar stores during 2018.
“In the UK, the environment also has been difficult, with consumer confidence suffering from fall-out related to Brexit and the economic changes it may bring. These headwinds also impacted Lifetime Brands’ performance.
“Third quarter 2017 financial results included an unrealized foreign currency loss of $0.9 million, compared to a loss of $25,000 in the 2016 third quarter. These amounts represent mark-to-market adjustments on GBP/USD currency contracts related to purchases of inventory. The adjustments will reverse as the contracts are settled in the ordinary course of business and, therefore, are not expected to have a permanent economic impact. Excluding the non-cash mark-to market adjustments, consolidated adjusted EBITDA for the 12 months ended September 30, 2017, was in line with the prior year.
“Despite the quarter’s difficult market conditions, there were many bright spots in our performance. As noted, we have made significant progress in building our e-commerce presence. U.S. Wholesale e-commerce sales for three and nine months ended September 30, 2017, increased 59% and 51%, respectively, vs. the comparable periods in 2016. The double-digit sales increases we have achieved reflect the investments we made in infrastructure, staffing and data resources in order to compete effectively in this increasingly important arena.”
For more information, visit www.lifetimebrands.com.