Lifetime Brands' First Quarter Results Reflect "Continuing Economic Challenges"
GARDEN CITY, N.Y.-Lifetime Brands has reported a net income loss of $949,000 for the first quarter of 2011 ended March 31, compared to a gain of $729,000 for the same period in 2010.
The housewares, tabletop and home decor company also said its gross margin as a percentage of net sales for its wholesale segment declined to 34 percent from 37 percent in the corresponding period in 2010. The company attributed this decrease to certain temporary price reductions related to marketing initiatives that, among other things, will provide the company with additional retail shelf space later in the year, low margin sales of excess inventory and changes in product mix, Lifetime said in a release.
"Lifetime's first quarter results reflect continuing challenges in the retail economy, which have constrained sales at certain large retailers where such retailers' traditional consumers are especially sensitive to increases in the price of food, clothing and fuel. In addition, during the quarter, we temporarily reduced certain prices in connection with targeted marketing programs and retailers' price roll-back strategies," said Jeffrey Siegel, chairman, president and CEO. "These marketing initiatives will provide us with additional facings, which should generate sufficient additional volume, beginning in the third quarter of the year to more than make up for the reductions in the gross margin percentage."
Consolidated net sales for the first quarter of 2011 climbed 3.5 percent to $91.8 million, as compared to consolidated net sales of $88.7 million for the corresponding period in 2010. Net sales for the wholesale segment were also up, increasing 3.4 percent to $2.8 million, as compared to $84.9 million in the same period in 2011. Net sales for the retail-direct segment were up $0.3 million, or 4.5 percent, to $6.9 million in the first quarter of 2011.
"Lifetime's sales in the third and fourth quarters of 2011 also should benefit from sales of new products and programs introduced earlier this year at the International Home + Housewares Show," Siegel added. "We have expanded our product categories to include a new line of whimsical kitchen gadgets, an extensive selection of ceramic knives, new enamel on cast-iron cookware and new lines of food storage products, a new product category for Lifetime. These new products will be available in retailers' stores beginning in the third quarter of 2011."
Siegel also addressed anticipated price increases in the back half of the year. "We have worked with our retailer partners to raise prices with the goal of keeping our margins neutral, as well as protecting the retailers' margins. We are not alone in having to pass along input price increases and our retailer partners generally have been supportive of our actions. These price increases will take effect in the third and fourth quarters of the year, when we record a significant majority of our sales."
Siegel added that the company is also working with select retailers to source private label kitchenware from North, Central and South America with Housewares Corporation of Asia Limited, which it formed in January with its international partners, Accent-Fairchild Group, Inc. and Grupo Vasconia S.A.B., along with Fackelmann GmbH Co. KG, a leading European housewares company.