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Lenox Q1 Sales Drop, Loss Narrows

By Staff -- Gifts and Dec, 5/7/2008 2:52:00 PM

Eden Prairie, MN — Tabletop and gift vendor Lenox Group Inc. reported net sales for the first quarter of $71.4 million, compared with $86.4 million for the prior year period. Net loss was $9.1 million, compared with a net loss of $13 million in the prior period. Lenox’s business is seasonal and historically operates at a net loss in the first quarter of its fiscal year.

Marc Pfefferle, interim CEO, attributed the drop in sales to lower inventory liquidation sales, the economy, and what he described as “a gradual decline in the overall fine china and collectibles categories, as well as a continued contraction of the gift and specialty channel.” He attributed the reduced loss to improved gross margins (in turn due to improved product mix, more efficient sourcing, better plant performance and reduced operating expenses. In 2008, Pfefferle said, Lenox plans to introduce "innovative" new products, license into new product categories and better balance sales by channel.

The company also plans to “explore strategic alternatives” such as sale of the company in 2008, a process it forecasts will take about six months from its January inception.

Lenox wholesale net sales decreased $5.5 million, or 11 percent, in the first quarter. Sales of Department 56 branded product increased year-over-year due to Lenox’s decision to bring in inventory earlier than last year. Wholesale gross profit increased $2.1 million in the first quarter, to 46 percent of net sales. Retail net sales decreased $7.2 million, or 44 percent, due to a 38 percent reduction in same store sales.

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