Small appliance maker Applica Incorporated announced that first-quarter sales for 2005 were U.S. $112.5 million, a decrease of 12.5 percent from sales of $128.5 million in the same period in 2004.
As previously announced, Applica initiated a product and customer profitability review that resulted in an expected decrease in sales in the first quarter. Additionally, the sales of both the Hong Kong-based manufacturing operations in July 2004 and the Jerdon division in October 2004 contributed to lower sales.
Applica's gross profit margin decreased 16.7 percent in the 3-month period ended March 31, 2005 compared to 26.1 percent for the same period in 2004. According to the company, gross margins were negatively impacted by inventory write-downs of $9.4 million related to lower-than-anticipated consumer demand of certain products.
Applica reported a net loss for the first quarter of 2005 of $23.0 million, or $0.95 per diluted share, compared to a net loss of $4.5 million, or $0.19 per diluted share, for the 2004 first quarter.
"We previously announced that we would report a larger net loss than anticipated in the first quarter," Harry D. Schulman, president and CEO, said. "The loss was primarily the result of inventory write- downs, the majority of which were related to our ultrasonic stain removal appliance. The decisions we made in the first quarter will allow our product managers to focus on, and accelerate the introduction of, the next generation of this product."
Applica also announced that starting this quarter and in the future, the company will no longer provide quarterly or annual earnings guidance. Further, Applica will not update its outlook for full-year earnings expectations for 2005 as the year progresses.
"Due to the difficulty in predicting the impact of transition and other issues on our company, we will no longer be providing guidance," Mr. Schulman said. "In our quarterly calls, we will continue to provide investors with our perspective on trends in the industry and our operations, our strategic initiatives and those factors critical to understanding our business and operating environment."
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