Q1 Net Swells at Swank

NEW YORK – Strong sales of leather goods and belts helped lead the way to higher revenues and profits during the company’s first quarter.

In the three months ended March 31, net income nearly quadrupled to $93,000, or $0.02 a diluted share, from $24,000, or $0.00, in the prior-year quarter.

Sales increased 12.7% to $25 million from $22.2 million in last year’s quarter. Higher shipments of personal leather goods and belts, which rose 35% and 15%, respectively, were partially offset by a 9% decline in men’s jewelry sales.

Gross margin declined slightly to 32.6% of sales from 33% in the 2006 quarter, which the company said was partially attributable to a decline in initial markups of personal leather goods and jewelry because of a shift towards private label programs.

John Tulin, chairman and chief executive officer, said of the top-line growth in leather goods and belts, “In both cases, our spring business continues to benefit from a number of branded and private-label merchandise programs that were launched or in some cases expanded last fall. We also shipped a new belt program to a major customer earlier this season and hope to further expand our market share at certain other accounts later this spring.”

Royalty expense increased 4% because of higher sales and in some cases higher minimums due to licensors.

Swank produces and markets a full range of men’s accessories under private labels, its own name and licensed brands including Kenneth Cole, Tommy Hilfiger, Nautica, Geoffrey Beene, Claiborne, Guess, Chaps, Donald Trump, Ted Baker, Steve Harvey and Pierre Cardin. It will introduce Tumi to the luxury channel this fall.