LeapFrog posts lower-than-expected Q4 sales

Full-year results hit by a weak fourth quarter.
Publish date:

For the full year 2008, net sales were $459.1 million, up four per cent year-on-year. Sales increased by 23 per cent during the first nine months of the year as the company launched its first four web-connected products, a new content library and Learning Path.

Leapfrog cited the increasingly challenging macroeconomic climate in Q4 as the reason behind the drop in sales in the last quarter, reducing the full year sales growth to just four per cent.

Gross profit was $181.5 million for 2008, up from $173.3 million in 2007. Operating costs fell for the year to $241.6 million compared to $274.5 million in the previous year.

Throughout the year, net sales from the US segment were $262.4 million for the year, an increase of seven per cent.

Online sales also increased by 20 per cent year-on-year to $16 million. Net sales from the international segment totalled $95.7 million for 2008, down seven per cent, compared to 2007.

In the fourth quarter, net sales were $137.8 million, down 24 per cent from $181.3 million year-on-year. Gross profit was $48.1 million , compared to $67.5 million for the same period in 2007.

Jeffrey Katz, president and CEO commented: “As was the case for many consumer goods companies, LeapFrog experienced considerable challenges during the 2008 holiday selling season.

“Consumer sentiment fell off sharply during the quarter, and exchange rates trended unfavourably. Discounting accelerated through the quarter, which impacted margins and diluted merchandising strategies, and ultimately the discounting that occurred did not adequately reduce year-end retailer inventories.”

LeapFrog expects this overhanging retailer inventory, coupled with the weak economy to result in lower shipment levels in the first half of 2009.

Chief financial officer Bill Chiasson added: “Clearly the weak economic conditions impacted our results. This year we recognised approximately $24 million in charges and provisions related to the weak macro-environment.

“These costs included $5 million in restructuring expenses, $5 million in bad debt expense, $6 million in product markdowns, $2 million in product returns and $6 million for the impairment of Auction Rate Securities.

“We are committed to improving operating performance and protecting our sound liquidity position. We realise conditions can change rapidly and we will maintain the flexibility to adjust appropriately. That means gearing up quickly when the economy improves or reducing spending further if conditions worsen.”


Featured Jobs


Marketing Director UK

Gameplan I Southeast of England I Salary: Competitive I Date Published Monday 7th January 2019

Rainbow logo landscape_home of classic Final

Product Manager

Rainbow Designs Ltd I Olympia, London I Salary: Competitive I Date Published Wednesday 16th January 2019