NEW YORK — Leather goods manufacturer Tandy Brands Accessories Inc. said Wednesday that it will exit its low-margin socks, cold weather accessories, fashion scarves, evening bags and most children’s businesses to focus on its core areas of women’s belts, wallets, handbags and gift accessories.
The company said the decision is an effort to improve profitability, even though it will reduce annual sales by about $30 million.
The announcement came as Tandy Brands reported a wider third-quarter net loss on a 3.4 percent increase in sales. The loss was negatively affected by a $7.1 million pre-tax charge from costs associated with the women’s division product-line discontinuations and subsequent staff-reduction costs.
“We have been taking aggressive steps to improve the overall performance in our women’s accessories business,” Britt Jenkins, president and chief executive officer, said in a written statement.
He said that while giving up the businesses — which do not include the children’s belts category — will reduce sales, it should improve overall profitability and margins as well as cut selling, general and administrative costs.
“We are well positioned to concentrate on our four best-performing categories in the women’s business, which are belts, wallets, handbags and gift accessories,” Jenkins said. He added on a post-earnings conference call that the company is “evaluating the opportunity for additional licensed business, small leather goods, belts, bags and wallets.”
Aside from the restructuring, the company said that it had a third-quarter net loss of $5.9 million, or 89 cents a diluted share, which compared with a loss of $997,000, or 16 cents, a year ago. Net sales were $45.4 million, up from $43.9 million last year.
In the nine months ended March 31, Tandy Brands swung to a loss of $2.4 million, or 37 cents, versus net earnings of $6.1 million, or 93 cents, the previous year. Net sales rose 1 percent to $180.2 million.