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Blyth Posts Quarter Results; Reaffirms 2008 EPS Outlook
Posted: August 31, 2007Blyth, Inc. reported that net sales for the second quarter ended July 31, 2007 declined approximately 11% to $234.9 million compared to $262.6 million for the prior year period. The sale of the Blyth HomeScents International (BHI) North American mass channel candle business had a 4 percentage point negative impact on second quarter net sales. Lower second quarter sales in PartyLite’s U.S. market was the principal factor for the second quarter sales decline. In addition, lower sales in the company’s wholesale segment were partially offset by sales growth in the catalog and Internet segment. Foreign exchange had a 2 percentage point favorable impact on second quarter net sales. International sales represented 30% of total sales in the second quarter this year and 26% last year.
Second quarter operating profit was $7.7 million in 2007 versus an operating loss of $27.7 million in 2006. Last year’s loss included a non-cash, pre-tax goodwill impairment charge of $36.8 million from the write-down of goodwill associated with Blyth’s North American Wholesale businesses. In addition, the BHI North American mass channel candle business experienced a loss of $5.0 million this year and $3.6 million last year. Excluding the goodwill impairment charge from last year, as well as BHI’s losses from both years, Operating income for the second quarter would have been $12.7 million this year versus $12.7 million last year. Net earnings for the second quarter were $3.2 million versus a net loss of $89.4 million a year earlier.
Net sales for the six months ending July 31, 2007 declined 7% to $505.2 million from $542.9 million reported for the same period a year ago. The sale of the BHI North American mass channel candle business had a 3 percentage point negative impact on Net Sales for the first six months. Net income for the first six months was $14.9 million compared to a net loss of $120.0 million last year. As previously noted, last year’s loss reflects the discontinued operations and the goodwill impairment charges related to Blyth’s Wholesale segment.
"During the second quarter, which is typically the smallest quarter for the company, we were able to control costs aggressively, resulting in improved year-to-date operating profit versus last year," said Robert B. Goergen, chairman of the board and CEO, Blyth. "We are seeing the effects of continued weakness in the housing sector, resulting in softness in home decor purchases, as well as overall lower discretionary consumer spending that may relate to higher gasoline prices. We will endeavor to offset the impact of these forces with continued expense management and selective promotional activity."
Management reaffirmed fiscal year 2008 guidance of earnings of $1.02 - $1.12 per share, or $1.32 - $1.37 per share excluding restructuring and impairment charges.