RC2’s net sales to March 31st dropped by 17 per cent to $93.3 million compared with $112.6 million for the first quarter a year ago.
Recall-related costs of $1.5 million had a negative impact on the firm’s net income, falling from $8.1 million in the first quarter of 2007 to just $2 million this year.
The firm attributed the net sales decrease to a softness seen across all product categories. The mother, infant and toddler products category decreased about ten per cent while the preschool, youth and adult products category decreased some 23 per cent.
Curt Stoelting, CEO, said: “Our 2008 first quarter results were disappointing. While the strong sales and earnings performance in the 2007 first quarter make comparisons difficult, the current year results were impacted by continued softness at the retail level. Retailers’ comparable sales have noticeably slowed and reorders of our products have been reduced.
“It is hard to predict when the retail environment will improve but we are excited about the new products we are introducing throughout 2008.”
Stoeling also said that the majority of the firm’s price increases will take effect in the second and third quarters.
“Looking forward, we continue to be guided by our strategic plan and we plan to continue to leverage consumer insights and digital marketing investments to guide our new product development and drive sustainable sales increases. We also remain committed to making acquisitions that will build long term shareholder value. In closing, we are excited about the opportunities to improve our business and to build momentum for future growth and profitability,” he concluded.