LINCOLN – Business and personal accessories manufacturer A.T. Cross Co. (Nasdaq: ATX) posted a third-quarter profit of $1.76 million, a decrease of 25.55 percent from the year-ago period’s $2.36 million, on revenue that rose 10.99 percent to $38.97 million.
Earnings per diluted share fell to 11 cents in the fiscal quarter ended Sept. 27, from 15 cents in both the year-ago period and the 2008 second quarter. (READ MORE) Third-quarter results in each year “were favorably impacted by the recognition of tax benefits, the realization of which was previously considered uncertain,” A.T. Cross said. Excluding those benefits – which amounted to one-time gains of 2 cents per share in the quarter just ended and 6 cents per share in the 2007 third quarter (READ MORE) – the company’s earnings were unchanged from a year ago at 9 cents per diluted share.
“We were pleased with our performance in the third quarter, as both divisions reported improved revenue results in what has developed into a very difficult retail market,” President and CEO David G. Whalen said in a statement accompanying the earnings release last night. “We believe that this performance is a result of the power of our brands and the ongoing improvements we are making to our operating model: During 2008, we have grown our accessories and writing-instrument business, lowered our cost structure, grown our optical businesses and successfully leveraged our recent acquisition” of sports-sunglasses maker Native Eyewear Inc., which closed March 25. (READ MORE)
The Cross Optical Group posted a segment profit of $1.84 million, a 45.54-percent increase from the 2007 third quarter’s $1.27 million. The segment’s sales – boosted by the first-quarter acquisition of Native Eyewear – rose 39.84 percent to $12.34 million.
The Cross Accessories Division (CAD) posted a third-quarter profit of $621,000, a 36.04-percent decline from its year-ago profit of $971,000. Sales of the division’s writing instruments and accessories edged up 1.31 percent year over year to $26.63 million as businesses and consumers, wary about the economy, cut back on luxury purchases.
Highlights of the quarter included the transfer of the company’s common stock from the American Stock Exchange (Amex) to the Nasdaq market, where it continues to trade under the symbol “ATX.” (READ MORE)
In addition, “the company has achieved a net reduction of inventory even with the addition of $1.3 million of inventory for the Native business,” thanks to “an $8.2 million improvement in the inventory position of the Cross Accessory Division,” A.T. Cross said in its report. Meanwhile, “the company’s long-term debt increased to $21.7 million versus $3.3 million at this time last year, due primarily to the Native acquisition.” And under interest and other income, A.T. Cross posted an expense of $243,000 for the quarter just ended compared with a year-ago gain of $33,000.
“Our third quarter came in generally as we expected,” Whalen said. “However, we began to see lower than anticipated revenue in the Cross Accessory Division in late September, as the marketplace began to brace for a difficult holiday season. While we believe we are well positioned, that new trend appears to be continuing.”
The combination of slowing sales and the “strengthening U.S. dollar” have spurred A.T. Cross to take “a more cautious view of the CAD business during its peak holiday season,” the CEO added. “Therefore, we are revising our full-year EPS guidance.”
For all of 2008, the company now projects sales growth of 6 percent to 8 percent – matching its February forecast, but far short of its July prediction of 9 percent to 12 percent growth – and full-year earnings of 40 cents to 45 cents per diluted share, before restructuring charges.
For all of 2008, A.T. Cross now projects sales growth of 9 percent to 12 percent – compared with its April estimate of 10 percent to 12 percent and its February prediction of 6 percent to 8 percent growth (READ MORE) – and full-year earnings of 49 cents to 51 cents per share.
A.T. Cross Co. (Nasdaq: ATX) is a designer and maker of branded personal and business accessories including Cross-branded writing instruments, leather goods and time pieces, as well as sunglasses under the Costa Del Mar and Native Eyewear brands. Additional information is available at www.cross.com.
