Tandy, Down in Q4, Retains Financo

by MR Magazine Staff

ARLINGTON, Texas – Tandy Brands Accessories, Inc. announced its fourth quarter and fiscal year results this week, along with the news that it has retained the Financo investment group for strategic assistance.

Tandy’s return to profitability – $1.9 million net income for the fiscal year that ended on June 30 after a net loss of $3.5 million the previous fiscal year – was according to the company, “due to exiting certain non-profitable lines from the women’s business during fiscal 2006.” Revenue was down as a result.

The fourth quarter of fiscal 2007 brought a net loss of $2.9 million, a bit worse than the previous year’s fourth quarter loss of $1 million. Fourth quarter net sales dropped to $36.4 million from $47.1 million last year.

“Fourth quarter sales actually exceeded our expectations despite a slowdown in replenishment orders from our largest customer,” said CEO J.S.B. Jenkins in the company’s financial release. “Our gross margins were negatively impacted by unexpected returns in our gift product line and an unfavorable product mix including closeout sales of discontinued women’s merchandise.”

Jenkins also commented on the company’s retention of the investment banking firm Financo, saying, “While our initiatives over the past 18 months have significantly improved profitability and we remain confident in the future of the Company, we believe now is an appropriate time to explore a full range of strategic options to further enhance shareholder value.”

Observers note that such “strategic options” may include actually selling the company.

Financo specializes in the accessories and apparel industries. As we reported earlier in the month, Financo is among the strategic guidance firms retained by Minneapolis-based Wilsons Leather for similar issues.

Tandy recently secured licensing deals for belts, sandals and small leather accessories with Geno D’Lucca and with the tire company Goodyear for gifts and auto accessories.