Lifetime Brands Net Falls 73 Percent in Second Quarter
GARDEN CITY, N.Y.-Rising expenses made a deep cut into the bottom line for Lifetime Brands in its fiscal second quarter, ending on June 30.
The company's net income fell 72.9 percent to $559,000. Selling, general and administrative expenses rose 15.5 percent in dollars and 225 basis points as a percentage of sales to 24.8 percent. Gross margin slipped 41 basis points to 37.3 percent, due primarily to a decline in gross margin in Lifetime's products in its Home Solutions segment.
The expense story offset a 5.1 percent gain in net sales in the quarter, which totaled $94.9 million. The top line included net sales for Creative Tops, which Lifetime acquired in November 2011, and an increase in sales of kitchenware products. Sales of Home Solutions products declined in the quarter--which, according to Jeff Siegel, Lifetime's chairman, president and CEO, stemmed from many retailers reducing their floor space allotted to home decor products.
Siegel said, "The quarter was marked by continuing economic uncertainty, which restrained retail sales of our product categories. In response, our major retailer partners generally maintained conservative inventory positions." He added that, as the company previously noted, Lifetime is transitioning its home decor business to higher-quality branded products sold under the Mikasa and Pfaltzgraff brands. "While these new product lines have been well received by our key retailer partners, I do not foresee a significant turnaround in this category taking place in the next 12 to 18 months," he said.
At the same time, Siegel said the second half of this year could produce some good results for Lifetime with the launch of a number of new kitchenware programs, including the Guy Fieri cookware line and the Savora line of kitchen tools and gadgets. He also said the company's non-U.S. businesses are making progress, with significant growth achieved in particular by Lifetime's Canada and Mexico partner companies.