Rockville, Maryland-based confectioner Sherwood Brands has seen a drop in sales for its first nine months of fiscal 2002, ended 30 April 2002, to US$48.29m from US$54.56m in the same period of FY 2001, primarily reflecting lower-than-expected shipments of candy and gift items to a major chain store customer in the Q2 and and Q3.
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Gross margin was approximately 29% for both periods. Net income for this year’s first nine months was US$1.64m, compared to net income of US$2.72m for the first nine months of 2001.
For the Q3 ended 30 April 2002, sales fell to US$11.31m from US$14m for the Q3 2001. Gross margin was around 20% for both periods. The net loss for this year’s Q3 was US$694,000, which included non-recurring moving expenses of US$394,000 before taxes. For the Q3 2001, net income was US$297,000.
President and CEO Uziel Frydman said: “Following several years of sustained high revenue and earnings growth, Sherwood Brands’ performance for FY 2002 has been affected by the weak economy in general and significantly delayed shipments to one major customer in particular. Still, we managed to accomplish most of our primary objectives. We expect the recent acquisitions of Asher Candy and the assets of KR Candy to add around US$13m to Sherwood’s revenue base beginning in FY 2003. These transactions are the latest but by no means the last steps in our strategy to combine internal growth with acquisitions to build Sherwood into a far larger and more profitable company.”
Frydman continued: “We also are nearing completion of the consolidation of certain of our candy manufacturing operations into our new facility in Chase City, Virginia. The KR Candy assets already have been moved to this new plant, and we expect all of our Rhode Island operations to be consolidated into Chase City by the end of this month. The cost of these moves was lower than budgeted, and we continue to expect the consolidation to generate US$1m in annual savings beginning in FY 2003.
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By GlobalData“We also have completed the integration of the Asher Candy operations, which are located in New Hyde Park, New York, into Sherwood Brands’ logistics system. Asher Candy is now producing and selling 100% of its capacity. We plan to increase this capacity significantly in FY 2003.
“In addition, we are experiencing strong demand for our new line of licensed products, which include both candies and seasonal gift baskets. We are negotiating for additional licenses that will allow us to further expand this business, which we expect to become another significant contributor to Sherwood’s growth beginning in the new fiscal year.
“So while results for FY 2002 are below our expectations, FY 2003 is shaping up to be an exceptional year with record earnings and revenue to reach US$67m.”
