NEW YORK – Tandy Brands Accessories again managed to increase its profits on lower sales during the second quarter as it continued to reap dividends from its exit from lower-margin women’s businesses.
Net income skyrocketed 67.3% to $3.4 million, or 50 cents a diluted share, during the three months ended Dec. 31. In last year’s quarter, net income was $2 million, or 30 cents a share.
However, net sales dropped 12.9% to $64.3 million from $73.9 million in the prior-year period.
“As expected, sales for the second quarter decreased due to our fiscal 2006 announced exit from several women’s product categories as well as from our continued efforts to improve the quality of our distribution at the retail store level,” said J.S.B. Jenkins, president and chief executive officer of the Arlington, Tex.-based accessories firm. “These initiatives have resulted in our second consecutive quarter of dramatic improvement to gross margin and net income, as well as to our balance sheet. As a result of our efforts, our debt was reduced significantly compared to the prior year.”
Gross margin in the quarter was 37.6% of sales, compared to 33.8% during the comparable quarter of 2005.
Jenkins noted in his remarks that Tandy is continuing to seek “additional licenses in our core product areas” and is continuing to develop new gift accessories items for the spring and summer seasons, part of an effort to balance its sales cycles.
Tandy projects full-year sales of between $177 million and $182 million, with earnings per diluted share expected to fall between 67 and 72 cents.
During the first six months of the year, net income catapulted 78% to $6.2 million, or 91 cents, from $3.5 million, or 52 cents. Sales were down 9.8% to $121.5 million from $134.8 million a year ago.