LEAPFROG: Improved second quarter results announced

Higher sales and gross margin and lower operating expenses spell improved results for Leapfrog.
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LeapFrog has reported net sales of $68.3million for the second quarter of 2008 compared with $56million for the same period in 2007, an increase of 22 per cent.

Sales in the U.S jumped from $31.9million in 2007 to $50million this year after a series of new products were launched throughout the period, including Tag and Leapster 2.

International sales were down to $12.3million compared with $13.9 year-on-year. Sales for this sector do not reflect product launches, however, and are expected to rise as new stock is added to these markets throughout the second half of the year.

Gross profit improved to $26.9million in the second quarter, compared with $20.3million in the same period last year. Gross margin was also increased to 39.3 per cent compared with 36.2 per cent year-on-year, reflecting new higher-margin product sales and reduced discounts.

Operating expenses were reduced by 3.3 per cent to $49million, driven by previously implemented headcount reductions.

Jeffrey G Katz, president and chief executive officer of LeapFrog said: “We completed a very important milestone in the second quarter with the on-time launch of our new Tag Reading System in June and we also launched our two new web-connected educational gaming systems, Leapster2 and Didj, in early July.”

He continued: “That said, the second half of the year will be much more important with respect to sell-through of these products, particularly given the seemingly endless bad economic news impacting consumers.”

LeapFrog reiterated its current expectations for 2008, with net sales forecast to from at an annual percentage rate in the mid-to-high teems and the gross margin is expected to continue to improve.

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