RC2 ?disappointed? with results

Sales decline and recall-related costs sees RC2 more than halve its full-year income.
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RC2 posted an income of $0.4 million for its fourth quarter and $21.6 million for the 2007 full year, $22.2 million less than 2006.

Recall related costs totalled $12.6 million for Q4 and $28.3 million for the full year.

Net sales for the fourth quarter fell by ten per cent to $138.6 million. The trend continued in its full year sales, which dipped by six per cent to $489 million, compared with $519 million for 2006. The firm attributed its fall in sales to declines in licensed toy product lines and ride-ons.

Curt Stoelting, CEO said: “For the full 2007 year, we are disappointed with the 2 per cent comparative sales decline and with lower than normal profits. It was a challenging year as we experienced soft sales in our preschool products category, product cost pressures, product recalls and an eight per cent comparative decline in our North American sales.

“However, there were a few positive results. Our comparative international sales grew by 30 per cent in 2007 due to increased market penetration in both Europe and Asia Pacific. Additionally, our management and team members have responded to product recalls by implementing, in the second half of 2007, our comprehensive Multi-Check Safety System which now covers all of our product lines.

Stoelting predicts further challenges in 2008, including product cost increases and economic concerns.

“We are planning 2008 as a transition year, with a focus on growing sustainable sales and improving our profits. New 2008 product launches are weighted toward product line extensions with fewer new product line introductions than in 2007. At the same time, we are incubating and developing an extensive pipeline of new product lines for introduction in 2009 and 2010 and working to improve the effectiveness of our sourcing and manufacturing options,” he added.

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