RC2 sales fall - ToyNews

RC2 sales fall

RC2 has posted a lower than expected profit for the third quarter, hurt by a decline in sales.
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The firm reported net income for Q3 of $11.11 million or 64 cents per share, compared to $10.77 million or 52 cents per share in the same quarter last year. On average, analysts expected the company to earn 79 cents per share for the quarter.

Net sales for the period were $132.86 million, down 8 per cent from $144.84 million in the third quarter 2007.

Excluding net sales of discontinued product lines and recall-related items, net sales decreased 6 per cent to $132.45 million from $146.53 million in the same quarter last year.

Gross profit declined to $62.10 million from $63.88 million in Q3 2007. Gross profit margin, expressed as percentage of sales, increased to 46.7 per cent from 44.1 per cent in the prior-year quarter.

Selling, general and administrative expenses decreased to $41.03 million from $42.68 million in the same quarter in 2007.

Curt Stoelting, CEO of RC2 said: "Our 2008 third quarter sales results reflected conservative ordering by retailers in the North American market. For the quarter, our international sales increased by 12 per cent, despite a negative impact of 3 per cent, due to foreign currency exchange rates.

"We remain very concerned about the current economic conditions and its impact on consumer spending in the holiday season. We continue to closely monitor ordering trends and retailers' point of sale information.

"Looking forward, we continue to be guided by our strategic plan which includes accelerated development of new high value product lines. Our new product pipeline in both product categories is strong for 2009."

Based on the results, the impact of current economic conditions, including higher financing costs, and committed new product marketing expenditures in the fourth quarter, RC2 is lowering its outlook for the remainder of 2008.

The company now estimates that fourth quarter 2008 diluted earnings per share are expected to range from 45 cents to 60 cents. This estimate excludes the impact of non-recurring items, if any, that may be recorded in the fourth quarter of 2008.

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