Salton, Inc. (Lake Forest, IL, U.S.) announced its results for the first fiscal quarter ended Sept. 28, 2003. The small appliance maker reported net sales of U.S. $238.5 million for the quarter, versus $200.1 million for the same period in fiscal 2003.
According to the company, the increase in net sales was due primarily to continued expansion of the company's international operations that offset a net 10-percent revenue decline in the U.S. The international expansion resulted primarily from the company's inclusion of sales of Amalgamated Appliance Holdings Limited (AMAP) as a result of the to increasing its ownership interest in AMAP to 52.6 percent on May 16, 2003 as well as increased sales in Australia.
Salton reported net income of $741,000, or $0.07 per share ($0.05 per diluted share), versus net income of $3.9 million or $0.35 per share ($0.26 per diluted share) for the first quarter of fiscal 2003. Gross profit margins were lower than the same period in 2003, due largely to price reductions ahead of product cost reductions, which were announced in the third quarter of 2003, the company said. As Salton projected, gross profit margins improved from 22.5 percent of net sales in the fourth quarter of 2003, to 26.9 percent of net sales in the first quarter of 2004, primarily due to the ongoing realization of lower product acquisition costs.
"While the retail environment remains challenging, we are encouraged by our continued expansion and growth in our international operations," said Leonhard Dreimann, CEO of Salton, Inc. "We were able to return to profitability during the quarter primarily as a result of U.S. margin improvements as our lower sourcing costs aligned more with our initiatives to reduce selling prices in 2003. Our transition to lower sourcing costs is expected to be completed by the middle of the current quarter, which should help margins return to more normalized levels."
"We believe with the results of the first quarter, we are positioning the company well for an economic recovery, and further gains in gross margins and profitability in the near future" said Mr. Dreimann. "We have significantly lowered our acquisition costs for many of our product lines, positioning us to capture market share without reducing margins. Our international expansion and results were quite strong.
“We believe that we are in the early stages of many promising markets such as Australia, where sales have increased from $3.5 million just two years ago to what we expect to be over $30 million this fiscal year. Expansion in Europe, opening a Salton Branch in Brazil as well as distribution agreements in India and China will provide further growth for the Company. The Company commenced initial shipments of the Melitta One:One™ single-cup pod-operated coffee maker and the Westinghouse Beyond™ Unplugged™ upright vacuum cleaner. Both of these products had good sell-ins to retailers, and we have recently begun our announced aggressive ad campaigns in support. We also continue to invest aggressively in research and development to maintain our reputation as an innovator in household products," he added.
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