RC2 has reported a loss of income for its Q3 results and first nine months, ending September 30th, 2007.
Income for the firm’s continuing operations was $10.8 million for the third quarter, down by almost $8 million or 42 per cent on the same period last year. Net sales decreased by eight per cent to $143 million due to a drop in preschool, youth and adult product categories.
For the first nine- month period, its income was $21.2 million compared to $34.3 million for 2006; a loss of 38 per cent or more than $13 million. Net sales decreased slightly from $364.3 million in 2006 to $347.8 million this year.
The downward slide is primarily due to costs related to the recalls of Thomas and Friends Wooden Railway items with the firm outlaying $9.4 million or $5.9 million net of tax in Q3 and $15.7 million or $10 million net of tax for the nine month period.
However, RC2’s board of directors have decided to increase its stock repurchase program by $75 million. The program has also been extended to December 31, 2008. The decision follows the firm’s repurchase of about 2.4 million shares for $72.5 million up until September 30th, 2007.
Curt Stoelting, CEO of RC2 said: “We have a positive yet guarded view of this year’s upcoming holiday season. Consumers, especially those in North America, have concerns about economic conditions and toy industry recalls. We have responded to toy safety concerns by implementing our Multi-check Toy Safety System. We’re hopeful concerned parents recognise that our toys have been subjected to intense scrutiny and testing,” Stoelting said.
“Our focus on product quality and safety coupled with our strategy to launch new products, expand our owned brands and build consumer awareness across all of our brands gives us confidence that we can achieve growth and improve operating results in 2008 and beyond,” he said.
The firm expects full year 2007 net sales, excluding discontinued product lines and recall-related returns and allowances, to be in the range of $465 million to $480 million.