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SHOPSMITH REPORTS FISCAL FIRST QUARTER FINANCIAL RESULTS

 DAYTON, Ohio, July 28 /PRNewswire/ -- Shopsmith, Inc. (NASDAQ: SHOP) today reported $10.1 million in revenues for its first fiscal quarter ended July 3, 1993, down 7 percent from $10.9 million in the same quarter last year. CEO John R. Folkerth commented, "Sales of products manufactured by Shopsmith declined during the current quarter as compared to the same period last year while sales of products manufactured by others, we term them 'Allied' products, increased.
 "The reduced Shopsmith product line sales were due to lower sales of these products in retail stores, particularly in those U.S. stores not yet converted to the full-service Woodworking Unlimited format, declining sales in our Canadian operation and increased Shopsmith product pricing in the first quarter of the current year when compared with the same period last year.
 "Because of the shift in the product mix favoring the lower-margin Allied products," Folkerth continued, "our first quarter gross margin percentage was reduced from 43.1 percent last year to 40.6 in the current year. This and the sales decline were the primary causes of the increase in the net loss from $320,000 or $.14 per share in the first quarter last year to $977,000 or $.41 per share in the first quarter this year."
 Folkerth said that late in the company's prior fiscal year, major steps were initiated to turn around operating results. These were focused on improving its execution of basic retailing skills and involved upgraded signage, expanded retail hours, the integration of the U.S. and Canadian operations, much strengthened retailing disciplines, staff replacements which enhanced retail expertise and others. These steps were taken under the direction of a new marketing vice-president, Ben B. Ruby.
 "Implementation of these improvements was started in April and May," Folkerth reported, "And began to show results in June which posted a 16 percent sales increase over the same month in the prior year. The current July sales to date have also exceeded those of July in the prior year. Sales have been strongest in those stores which have been converted to the Woodworking Unlimited format and have most fully implemented the new operating methods. This is encouraging.
 "We will devote the summer to assuring that the new methods and approaches are fully implemented and that the company is positioned to take advantage of the stronger fall and winter selling season. We will also convert remaining Shopsmith stores to Woodworking Unlimited stores on a very low-cost basis."
 In February 1992, the Financial Accounting Standards Board (FASB) adopted Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," which requires a change in the method of income tax accounting. This change is required for fiscal years beginning after Dec. 15, 1992 and, accordingly, was adopted in the first quarter of the company's current fiscal year. The cumulative effect of this change on prior years was to increase reported earnings in the current first quarter by $113,900 or $.05 per share.
 Shopsmith is a leader in the production and marketing of quality multipurpose woodworking tools. The company markets approximately 4,000 products through 44 company-owned stores in the U.S., Canada and Great Britain as well as through travelling demonstration sales and mail order.
 Unaudited results for
 the three months ended July 3, June 30,
 1993 1992
 Revenues $10,124,000 $10,913,000
 Gross profit 4,114,000 4,700,000
 (Loss) before income taxes
 and cumulative effect on
 prior years of change in
 accounting for income taxes (1,091,000) (449,000)
 Net (loss) (977,000) (320,000)
 (Loss) per share $ (.41) $ (.14)
 Average shares outstanding 2,392,355 2,339,204
 -0- 7/28/93
 /CONTACT: Bill Becker, vice president, finance, Shopsmith, Inc., 513-898-6070/
 (SHOP)


CO: Shopsmith, Inc. ST: Ohio IN: REA HOU SU: ERN

BM -- CL006 -- 6610 07/28/93 08:43 EDT
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Publication:PR Newswire
Date:Jul 28, 1993
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