Snack food group Poore Brothers has seen a fall in its profitability despite a 4% rise in net revenues in the fourth quarter.
The company said net revenues set a fourth quarter record of US$17.0 million, 4% above last year’s fourth quarter of $16.4m.
However it reported a net loss of $1.1m, compared to a profit of $0.6m last year.
“The decreased profitability resulted principally from severance costs associated with departed executives, professional service fees associated with the restatement of second-quarter financial results, and inventory and obsolete product write-downs associated with slow-moving new products,” a statement said.
For the fiscal year ended December 31, 2005, net revenue increased 10% to a record $75.3m. But net income for the fiscal year decreased to $0.3m, compared with net income of $2.1m, in the prior year period.
Eric J. Kufel, CEO said: “We are disappointed with the company’s fourth quarter and fiscal 2005 performance and have taken swift action to improve the company’s profitability, including staffing reductions, process improvements and price increases on certain products. Much of the fourth quarter and fiscal year loss was associated with severance payments, professional service fees and inventory write-downs associated with new products failing to meet sales expectations. Selling, general and administrative expenses grew at a faster rate than revenue and increased trade promotion investments did not generate expected rates of growth. These issues are being addressed by streamlining the Company’s expense structure, focusing the organization on our core profit drivers, and improving the efficiency and effectiveness of our trade promotion investment process.”
The company also announced that it has authorised a share repurchase programme whereby the company may repurchase up to $3m of its outstanding common shares. The repurchase program will expire on February 14, 2007.