TANDYCRAFTS, INC. REPORTS THIRD QUARTER RESULTS WHICH INCLUDES
ANNOUNCED REPOSITIONING CHARGE FOR JOSHUA'S CHRISTIAN STORE CHAIN
Fort Worth, Texas. April 28, 1997 -- TANDYCRAFTS, INC. (NYSE: TAC) today
reported a net loss of $5,701,000, or $0.45 per share, for its fiscal third
quarter ended March 31, 1997, compared to net income of $364,000, or $0.03 per
share, for the same quarter last year. The results for the quarter include
pretax charges of $5.3 million to reposition the Company's Joshua's Christian
Stores chain. Those charges include markdowns resulting from the liquidation of
discontinued merchandise and certain costs associated with the closing of 13
under-performing stores. Sales for the quarter were $54,456,000, representing a
13.5% increase when compared to the same quarter last year, excluding divested
operations. Retail sales for the quarter increased 5.6% while manufacturing
sales increased 24.8%. Same-store sales were down 6.8% at Tandy Leather, while
the Company's Sav-On Office Supplies and Joshua's Christian Stores chains
achieved same-store sales gains of 19.7% and 15.1%, respectively, for the
quarter. At manufacturing, the Frames and Framed Art division achieved a sales
increase of 30.7% while TWI achieved a 14.1% sales increase.
In commenting on the quarter, Michael J. Walsh, Chief Executive, stated "The
results for the quarter reflect certain actions which we believe, while
negatively impacting the quarter's results, will place the Company's operating
units on a much firmer and profitable foundation going forward and position the
Company to achieve a strong rebound in fiscal 1998. Of these actions, the $5.3
million in pre-tax repositioning charges related to the Joshua's Christian
Stores chain are the most significant, however, the quarterly results also
reflect an investment in consolidating and relocating certain operations within
the TWI division which will result in significant annual savings. Additional
one-time severance expenses were also incurred as a result of personnel
reductions. We believe that the benefit of these personnel reductions and other
expense reductions will be reflected in future periods."
Mr. Walsh also stated, "Sav-On Office Supplies continues to show strong results
with double digit same-store sales gains and an increase in operating income of
$562,000, or 146%, for the quarter. On the manufacturing side, the Picture
Frames and Framed Art division experienced increased production costs related to
the development of new products, which negatively impacted margins. The
licensed products group, which was negatively impacted by expenses associated
with the relocation and consolidation of certain manufacturing operations, was
also negatively impacted by certain one-time charges related to the write-down
of remaining 1996 Olympic product."
For the nine months ended March 31, 1997, the Company reported a net loss of
$2,619,000 or $0.21 per share compared to a net loss of $12,006,000 or $1.01 per
share for the same period of fiscal 1996. The results for the prior year period
included restructuring charges of $12.3 million, after tax, or $1.03 per share.
Excluding the restructure charges taken during the last two fiscal years, the
Company's net income increased $532,000 or 180% for the nine months ended March
31, 1997 compared to the same period in the previous year.
Certain statements contained herein which are not historical facts are forward
looking statements that involve risks and uncertainties including, but not
limited to, customer demand and trends, related inventory risks due to shifts in
customer demand, risks associated with new business opportunities, competition,
dependence on key personnel, the performance of each operating unit,
relationships with key customers, commodity price fluctuations, new product
introductions, interest rate fluctuations, recessionary factors, seasonality and
other risks disclosed in the Company's latest annual report on Form 10-K filed
with the Securities and Exchange Commission.
Tandycrafts, Inc. is a specialty retailer and manufacturer. Included in its
Specialty Retail segment are Tandy Leather Company, Joshua's Christian Stores,
and Sav-On Office Supplies. The Specialty Manufacturing segment is comprised of
two manufacturing divisions: Picture Frames and Framed Art and Tandy Wholesale
International ("TWI").
(Table to follow)
Three Months Ended Nine Months Ended
---------------------- ----------------------
March 31, March 31, March 31, March 31,
1997 1996 1997 1996
---------- ---------- ---------- ----------
Net sales $ 54,456 $ 53,556 $ 185,472 $ 190,252
Operating costs and expenses:
Cost of goods sold 41,128 32,834 123,548 119,532
Selling, general and
administrative 20,062 18,186 59,499 62,362
Restructuring charge - (501) - 18,317
Depreciation and amortization 1,315 1,482 4,078 4,722
---------- ---------- ---------- ----------
Total operating costs
and expenses 62,505 52,001 187,125 204,933
---------- ---------- ---------- ----------
Operating income (loss) (8,049) 1,555 (1,653) (14,681)
Interest expense, net 720 996 2,375 3,198
---------- ---------- ---------- ----------
Income (loss) before
income taxes (8,769) 559 (4,028) (17,879)
Provision for income taxes (3,068) 195 (1,409) (5,873)
---------- ---------- ---------- ----------
Net income $ (5,701) $ 364 $ (2,619) $ (12,006)
========== ========== ========== ==========
Net income (loss) per share $ (0.45) $ .03 $ (0.21) $ (1.01)
========== ========== ========== ==========
Weighted average common and
common equivalent shares 12,565 12,109 12,369 11,937
====== ====== ====== ======
Joshua's Sav-On
Tandy Leather Christian Office
Retail Bookstores Supplies
------------ ----------- -----------
Number of stores 170 71 36
QUARTER:
- -------
Net sales 9,622 7,257 9,331
Same store sales gains / (losses) (6.8)% 15.1% 19.7%
NINE MONTHS:
- -----------
Net sales 30,753 24,415 27,358
Same store sales gains / (losses) (6.1)% 2.0% 23.7%
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