RC2 reports lower-than-expected Q4 - ToyNews

RC2 reports lower-than-expected Q4

RC2 has announced fourth quarter preliminary net sales of $121 million, down 10 per cent year-on-year.
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The latest figures exclude recall items and discontinued product lines, of approximately $134 million.

Sales for the full year declined by eight per cent to $434 million, compared with the prior year net sales, excluding recall items and discontinued product lines, of an estimated $472 million.

Throughout the quarter, the company reduced its outstanding debt by around $43 million and at year-end had a cash balance which exceeded $30 million.

The firm has also planned an operating cost reduction plan, reducing its work force by around 15 per cent and reducing operating expenses in 2009. In total, the company expects this plan to result in over $10 million of cost savings this year.

Curt Stoelting, CEO of RC2 commented: “Fourth quarter sales and profits were negatively impacted by unprecedented declines in holiday spending, the global economic slowdown and the negative impact from foreign currency exchange rates.

"Although we were disappointed with the fourth quarter sales results, holiday retail sell-through met or exceeded our plans in many product categories.

“Despite lower sales, we were successful in the fourth quarter at generating positive cash flow, reducing our outstanding debt and implementing a meaningful operating cost reduction plan. Although we are still experiencing the impact of higher product costs, we expect cost trends to improve in the second half of 2009.

Stoelting concluded, “We faced some difficult challenges in 2008 and made some tough decisions which we believe better position RC2 for sustainable growth once economic conditions improve.”

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