The absence of writedowns helped Tandy Brands Accessories Inc. swing to a profit in its second quarter, but sales in the period fell because of slow holiday spending.
In the three months ended Dec. 31, the Arlington, Tex.-based manufacturer posted a profit of $952,000, or 14 cents a diluted share, versus a loss of $40.7 million, or $5.94 a share, a year ago. Sales in the period fell 13.4 percent to $42.9 million from $49.6 million in 2007.
The loss in the year-ago period included $36.5 million in charges for inventory, goodwill and other intangible assets.
Tandy blamed the fall in quarterly sales on a challenging holiday season at retail and the “protracted decline in the economy.”
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“Across the board, our customers have indicated that they are taking a very conservative approach toward replenishing inventory in this environment,” said president and chief executive officer Rod McGeachy. “We are making the necessary adjustments internally to respond to these measures, and we continue to work closely with our retail partners to develop products and programs to help them through these difficult times.”
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Last month, the company eliminated 17 percent of its salaried workforce in an effort to reduce operating expenses, increase flexibility and focus on product development. Tandy estimated it will take a pretax charge between $550,000 and $650,000 related to the downsizing in its third quarter ending March 31. The move could potentially result in $3 million in annualized savings, the company said.
For the first half of its fiscal year, Tandy recorded a loss of $328,000, or 5 cents a share, compared with a loss of $42.4 million, or $6.20 a share, in the year ago period. Sales in the two quarters fell 12.9 percent to $77.6 million from $89.1 million.