Lowers 2007 Revenue and EPS Guidance and Number of 2007 Store Openings
FORT WORTH, Texas--(BUSINESS WIRE)--Sept. 6, 2007--Tandy Leather Factory, Inc. (AMEX:TLF) reported today that sales for the month of August were $4.4 million, the same as that of last year's August sales. Year to date sales are up 2% to $36.7 million in the current year from $36.1 million last year.
Retail Leathercraft posted a 15% sales increase for August, with sales totaling $1.9 million compared to $1.6 million in August 2006. The 62 comparable stores posted a 6% same store sales gain for the month. The 8 stores opened since July 2006 added August sales of $155,000. Year-to-date sales for Retail Leathercraft are $16.0 million this year, a 14% increase over sales of $14.0 million for the same period of 2006. As of the end of August, the same store sales gain for the 53 comparable stores is 4% for the year.
Wholesale Leathercraft posted sales of $2.3 million for August, down 8% from August 2006 sales of $2.6 million. Within the Wholesale Leathercraft division, the wholesale stores' same store sales were down 2% for the month while the National Account group posted an August sales decline of 42%. Mid-Continent Leather Sales added sales of $56,000 for the month. For the year to date, Wholesale Leathercraft sales are $19.8 million compared to $20.6 million in 2006, a loss of 4%. The comparable wholesale stores posted a 4% sales decline for the year and National Accounts reported a 17% sales decline. Mid-Continent's year-to-date sales were $502,000.
Chief Executive Officer and President, Ron Morgan, commented, "While the retail stores continue to perform well, August sales from our Wholesale Leathercraft division were disappointing, even though we had more wholesale stores with sales gains than with sales losses this month. The lack of consistency in National Account sales has been frustrating all year and at this point, I don't think it's unrealistic to expect it will end the year with a 25% sales decline from 2006."
Shannon Greene, Chief Financial Officer, added, "The year has been disappointing so far. Our performance in the second quarter really hurt us, particularly as it pertains to earnings. While July sales were better, August sales looked similar to that of the first half of the year. We are making progress in cutting expenses, but my concern is that we are going to run out of time to see enough impact, especially when we're not getting the sales results we want. As a result, I don't think we've got any choice but to revise our 2007 guidance downward."
Ms. Greene continued, "Besides adjusting revenue and earnings guidance, we are only going to open 10 stores in 2007, instead of 12 as originally announced, although it bears no relation to our expectations of the Retail Leathercraft division's performance. We've made ten manager changes this year in addition to staffing the new stores. As a result, our pool of manager trainees can't support any additional openings at this time. In addition, we expect to open 4-6 new stores in 2008 for the same reason. We need time to hire and train more managers. To do otherwise virtually guarantees poor performing stores."
Financial Outlook:
The following statements are based on TLF's current expectations as of September 6, 2007. These statements are forward-looking statements and should be read in conjunction with the cautionary information about these statements that appears below.
The Company plans to open 10 retail stores in 2007 and estimates consolidated net sales for 2007 will be in the range of $56-57 million, a 2-3% increase over 2006 sales. Diluted EPS for 2007 is expected to be in the range of $0.43-$0.44, the same as in 2006. Average diluted shares outstanding in 2007 are estimated to be approximately 11.2 million shares. The Company assumes an effective tax rate for the year between 35% and 37%.
Tandy Leather Factory, Inc., (http://www.tandyleatherfactory.com), headquartered in Fort Worth, Texas, is a specialty retailer and wholesale distributor of a broad product line including leather, leatherworking tools, buckles and adornments for belts, leather dyes and finishes, saddle and tack hardware, and do-it-yourself kits. The Company distributes its products through its 29 Leather Factory stores, located in 19 states and 3 Canadian provinces, 70 Tandy Leather retail stores, located in 33 states and 4 Canadian provinces, and Mid-Continent Leather Sales, one store located in Oklahoma. Its common stock trades on the American Stock Exchange with the symbol "TLF".
This news release may contain forward-looking statements. All forward-looking statements made here or in other news releases issued by Tandy Leather Factory, Inc. are based on current expectations as of the date of the release. These forward-looking statements involve risks and uncertainties that could cause the results of Tandy Leather Factory, Inc. to differ materially from management's current expectations. Many of these risks and uncertainties are detailed from time to time in TLF's reports filed with the Securities and Exchange Commission, including its most recent annual report on Form 10-K and the most recent quarterly report on Form 10-Q. Investors are reminded that past performance may not be predictive of future results.
CONTACT: Tandy Leather Factory, Inc.
Ron Morgan, CEO, 817-496-4414
or
Shannon L. Greene, CFO, 817-496-4414
sgreene@tandyleather.com
"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Tandy Leather Factory, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.