NEW YORK – Dramatically higher fourth-quarter profits added an exclamation mark to a year of dramatically improved results at Swank Inc.
The leather goods and accessories firm Tuesday reported that net income in the three months ended Dec. 31 nearly tripled to $9.9 million, or $1.63 a diluted share, from $3.5 million, or 56 cents, in the year-ago quarter. Stripping out a nonrecurring tax benefit in the more recent year, income was up 59.7% to $5.6 million from $3.5 million. Sales were up 21.4% to $37.3 million in the quarter from $30.7 million a year ago.
For the full year, net income nearly quadrupled, to $14 million, or $2.36 a diluted share, from $3.6 million, or 59 cents. Without the one-time tax benefit, income mushroomed to $9.8 million from $3.6 million. Sales were up 21.6% to $119.1 million from $97.9 million as belts, jewelry and personal leather goods all logged net sales growth of more than 20%, according to John Tulin, president.
Gross margin increased to 36.6% of sales from 35.7% during the quarter and to 34.8% from 33.6% during the year.
Highlights of the year included the launch of Chaps and Donald Trump jewelry, expansion of private label programs and the signing of a license with Tumi for belts and jewelry, to launch later this year. The company also benefitted from greater private label penetration in the belt category with Federated Department Stores, Sears and Kohl’s.
Tulin said in a statement that the firm would be “exploring a variety of additional business opportunities in 2007 aimed primarily at further expanding our market share and enhancing the efficiency of the company’s supply chain.”
In a phone interview with MRketplace.com, Tulin responded to questions about possible new licenses or acquisitions by saying, “If something came along that was the right size, the right culture and offered possibilities for synergy, something that could add value, we’d be all over it. But there isn’t a lot out there that fits that description.”
He also cautioned that the success of the past few years wasn’t being taken for granted: “It’s easy to get giddy and self-satisfied, but we’ve had enough ups and down at Swank over the years that we don’t get arrogant. Our conversations with customers about Tumi have exceeded expectations and we’re very pleased about getting our luxury business off the ground with that brand and with our success with Ted Baker, but we haven’t even taken orders for Tumi yet. People are excited about the product, though.”
In over-the-counter trading Tuesday, shares of Swank rose $1.30, or 11.6%, to close at $12.50.
Other brands in the Swank portfolio include Tommy Hilfiger, Nautica, Geoffrey Beene, Guess and Claiborne.