RC2: Losses reported in second quarter

RC2 announced yesterday that sales were down for Q2.
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The company reported a net loss of $6.4 million, or 37 cents a share, for the second quarter of 2008, compared with net income of $2.5 million, or $0.11 per diluted share, in the second quarter of 2007.

Net sales for the second quarter decreased by approximately four per cent, to $89.2 million. Net sales for the quarter, excluding those of discontinued product lines and recall-related returns and allowances, of $89.1 million decreased approximately two per cent.

Losses have been mainly attributed to recall-related costs of $10.2 million this year and $4.0 million in 2007. The bulk of the costs this year were made up by a one off cash payment of $15 million made to HIT Entertainment in July in exchange for a release from indemnification claims.

The results were an improvement on the first quarter. “Our 2008 second quarter results showed an improvement over our 2008 first quarter comparisons,” said Curt Stoelting, the company’s CEO.

“Overall sales declines slowed as compared with the declines of the first quarter with our preschool, youth and adult products category reporting a slight increase in comparable sales.“

The company reaffirmed its full-year earnings outlook of $1.90 to $2 a share, excluding the impact of recall-related costs and the Children's Publishing Division acquisition.

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