Q1 results beat expectations for Learning Curve

Profits for the period rise to $3.4 million from $1.8 million for the first quarter of 2009.
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Sales for the first quarter ended March 31st 2010 increased by 2.1 per cent to $88.1 million compared with $86.3 million in 2009. Favourable fluctuations in foreign currency exchange rates increased for the period consolidated net sales by approximately four per cent.

The gross margin for Q1 2010 increased to 44 per cent from 40.2 per cent, primarily due to favourable product mix, lower impute costs and favourable currency exchange rates.

Curt Stoetling, CEO of Learning Curve commented: "First quarter sales reflected improved overall consumer spending, yet remained tempered by conservative retailer ordering, especially in the US.

"For the quarter our international sales increased 25.3 per cent due to favourable foreign currency exchange rates, initial shipments of Chuggingtom train-play+ products and strong international growth in the mother, infant and toddler products category.

"Net sales in our pre-school, youth and adult products category increased 7.9 per cent in the first quarter due to increases from the initial international shipments of Chuggington die-cast and Thomas & Friends Early Engineers product lines which were somewhat offset by sales declines in sell-off product lines including Take Along Thomas & Friends die-cast."

In the second quarter, the firm is expecting shipments of sell-off product to decline, likely resulting in negative year-on-year sales comparisons.

However, second half plans will see the launch of the Dinosaur Train line in North America and new Chuggington lines in international markets.

Stoetling continued: "Our first quarter results benefited from temporary raw material cost reductions which occurred in the second half of 2009. Raw material and freight costs have returned to more normalised levels which will put pressure on our margins for the remainder of 2010."

The company has made no changes to the 2010 financial outlook and estimates that diluted earnings per share in the second quarter of 2010 will likely be similar to 2010 Q1 results.


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