WOONSOCKET – Summer Infant Inc. (Nasdaq: SUMR, SUMRW) today announced an austerity plan that includes the sale-leaseback of its corporate headquarters and plans to trim its staff by about 10 percent. Jason P. Macari, the company’s chairman and CEO, cited “the unprecedented economic challenges we are facing.”
The actions follow “a comprehensive review of its operations,” Summer Infant said. In its annual report, issued March 11, the juvenile products maker posted a record annual profit of $4.90 million. But it also expressed concern about rising commodity costs and declining consumer spending, saying it was looking for ways to “streamline” its business. (READ MORE)
Summer Infant already has completed the sale of its facility at 1275 Park East Drive, on the Woonsocket side of Highland Corporate Park – an office and light-industrial development at the Woonsocket-Cumberland line – where the company moved in early 2007 from its former home in North Smithfield. Proceeds of the sale will be used to pay down outstanding debt, paring interest costs and providing “greater borrowing flexibility.”
Faith Realty LLC – a company owned by Macari – purchased the property for $4.05 million. The real estate firm then signed a seven-year lease allowing Summer Infant to remain in the purpose-built facility “for approximately the same amount it currently pays in principal and interest,” the manufacturer said.
The purchase price – “determined by several independent appraisals of the property – approximates the net book value of the building on the company’s books, and therefore will result in an immaterial P&L impact,” Summer Infant added.
In other measures announced today:
• The company “has implemented a work force reduction of approximately 10 percent,” aimed at reducing annual costs by about $1 million per year. The staff cuts are “being phased in over the next few months.”
• It also “has initiated a plan to consolidate certain warehousing activities.” That measure, slated to take effect in the fourth quarter, is also expected to save about $1 million per year once fully implemented.
“While we remain very confident in our 2009 product lineup and our competitive position, given the uncertainty in the macroeconomic environment, we feel it is prudent to adjust our cost structure,” Macari said in a statement this morning.
“We appreciate the dedication and commitment of all of our employees – thus, the decision to reduce our staff is a very difficult one,” the CEO added. “We regret having to take these actions.
“However, we believe these cost-cutting measures are necessary, as it is critical that we position our business to maximize our profitability without sacrificing the quality of our products or the service we provide for our customers. In addition, we are very pleased to have successfully completed the sale-leaseback transaction, which demonstrates our commitment to paying down debt and improving our capital structure.”
Going forward, Macari said, the company will “continue to take steps to manage our cost structure in this difficult environment.”
Summer Infant Inc. (Nasdaq: SUMR, SUMRW) designs and makes audio-video monitors, safety gates, bed rails, infant thermometers, booster and potty seats and other products for toddler and infants. Additional information is available at www.SummerInfant.com.
