Tandy Leather Factory Reports Q2 2014 Financial Results

FORT WORTH, Texas, Aug. 7, 2014 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. TLF today reported financial results for the second quarter of 2014. Consolidated net income for the quarter ended June 30, 2014 was $1.8 million compared to consolidated net income of $1.6 million for the second quarter of 2013, an increase of 8%. Fully diluted earnings per share for the quarter were $0.17, compared to $0.16 in the second quarter of last year. Total sales for the quarter ended June 30, 2014 were $19.7 million, up 4% from $19.0 million in the second quarter last year.  

Consolidated sales for the six months ended June 30, 2014 were $39.5 million, up 3% from 2013's first half sales of $38.2 million. Consolidated net income for the first half of 2014 was up 13% to $3.6 million or $0.35 per fully-diluted share versus $3.2 million or $0.32 per fully-diluted share in the comparable period last year.       

Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, increased $959,000 in the second quarter, a 9% improvement over last year's second quarter. Eighty stores comprised Tandy Leather's operations on June 30, 2014. For the first six months of 2014, Retail Leathercraft's sales increased $1.4 million, or 6%, over the first six months of 2013. Second quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores and national account group, were down 4%, or $271,000, from the same quarter last year. For the first six months of 2014, Wholesale Leathercraft's sales were down $177,000, or 1%, compared to the same period in 2013. International Leathercraft, consisting of three stores located in the United Kingdom, Spain and Australia, reported a sales increase of 4%, or $42,000, compared to the second quarter of 2013. For the year, International Leathercraft's sales were up 8%, or $152,000, over the same period last year. 

Consolidated gross profit margin for the current quarter was 64.9%, up from 62.8% for the second quarter of 2013. For the first two quarters of this year, consolidated gross profit margin was 64.5%, increasing from last year's gross profit margin of 62.4%. Consolidated operating expenses rose approximately 6% and 5% for the quarter and the year, respectively, or $549,000 in the current quarter and $988,000 for the first six months over the same periods a year ago. For the second quarter, the significant increases in expenses occurred in employee compensation, advertising and marketing, depreciation, and store rent and utilities. For the year, expenses increases occurred in employee compensation, travel, depreciation, advertising and marketing, and store rent. As a percentage of sales, consolidated operating margin improved for the quarter to 13.5% compared to 12.4% last year's second quarter. On a year-to-date basis, consolidated operating margin increased from 13% last year to 14.2% in the current year.

Jon Thompson, Chief Executive Officer and President, commented, "We are pleased with our second quarter results overall. Our gross profit margins for the quarter and the year are the highest in our history. That is the result of customer mix (retail versus wholesale) and product mix (sales of leather versus non-leather products). Our inventory investment is higher than normal for this time of the year. That is because we began the build-up for the fourth quarter earlier this year and we have had the opportunity to make some unexpected purchases of some of our stock leathers at very aggressive pricing. That will continue to support our strong gross profit margins as we move through the rest of the year."

Chief Financial Officer and Treasurer, Shannon Greene, added, "Operating expenses have increased slightly faster than sales so far this year – primarily in three areas: employee compensation, advertising and marketing, and store rents and utilities. Employee compensation is up due to an increase in employee headcount at the stores and higher store manager pay based on store profit. Our advertising and marketing expenses historically tend to be higher in the first half of the year and the increase in rent and utilities is the result of the store relocations into larger space, rather than an increase in rental rates themselves.  We will continue to monitor expenses closely, always looking for ways to reduce costs where we can without affecting the customer experience." 

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, 80 Tandy Leather retail stores, located in 36 states and 6 Canadian provinces, and three combination wholesale/retail stores located in the United Kingdom, Australia, and Spain. Its common stock trades on the Nasdaq with the symbol "TLF". To be included on Tandy Leather Factory's email distribution list, go to http://www.b2i.us/irpass.asp?BzID=1625&to=ea&s=0.

This news release may contain statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results and events may differ from those projected as a result of certain risks and uncertainties. These risks and uncertainties include but are not limited to: changes in general economic conditions, negative trends in general consumer-spending levels, failure to realize the anticipated benefits of opening retail stores; availability of hides and leathers and resultant price fluctuations; change in customer preferences for our product, and other factors disclosed in our filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.