New York-based confectionery and entertainment products marketer Topps Co, has announced net sales of US$87.7m for its Q1 2003 ended 1 June 2002, compared to US$86.9m year on year.
As anticipated, net sales and earnings comparisons continued to be impacted by lower consumer interest in Pokemon products, the sales of which were US$1.9m in the Q1 this year, compared to US$10.2m last year.
Income from operations in the Q1 of this year was US$10.7m, compared with US$17m in the Q1 last year. Net income was US$7.3m, or US$0.17 per diluted share, compared with US$11.6m, or US$0.26 per diluted share, in the same period a year ago.
From 3 March 2002, Topps adopted the new accounting standards that require certain trade promotion expenses to be reported as a reduction of net sales rather than as marketing expense. Adoption of these requirements reduced both net sales and marketing expense in the Q1 2003 and 2002 by US$798,000 and US$559,000, respectively, but did not affect comparative quarterly earnings. The adoption of another new financial standard eliminated the amortisation of Topp’s goodwill, and increased reported Q1 net earnings by US$392,000.
Arthur T. Shorin, chairman and CEO, commented: “Q1 results were slightly higher than our
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By GlobalDataexpectations. Nonetheless, the focus this year remains on strategic efforts to make Topps
stronger and more successful in the long term.
“Net sales of Topps’ branded (non-Pokemon) confectionery products were US$42.7m in the Q1, compared to US$43.4m for the same period last year, primarily due to lower sales of Baby Bottle Pop. Supported by a new television commercial and line extensions, including Twisted Baby Bottle Pop due to hit shelves next month, we expect sales of this brand to strengthen. Sales of Ring Pop and Push Pop posted extremely healthy double-digit growth in the period, and our new product development efforts continue.”
Shorin continued: “Consolidated net sales of collectible sports products increased to US$34.3m in the Q1 this year, over US$30.9m in the same period last year. Q1 sales benefited from the addition of our Internet businesses, solid growth of Premier League football products and the release of sticker album products featuring the English and Irish World Cup players. Sales of traditional sports cards in the US continue to be impacted by weak industry conditions.”
“Topps’ Internet business showed promise during the quarter,” Shorin added. “Our etopps marketing campaign has resulted in significantly increased sales and growth of our registered user base. Recently, we expanded our etopps television presence, rolling out to three new local markets and placing national advertising on ESPN, and we have extended our online advertising on CBS Sportsline.com. Additionally, we have consolidated thePit offices into our New York headquarters to increase efficiencies and reduce overhead costs.”
Shorin concluded: “Net sales of our entertainment products in the Q1 were US$10.3m, US$1.6m of which were from Pokemon. By comparison, entertainment sales in the Q1 2002 were US$11.2m, US$8.7m of which were from Pokemon. This year’s Q1 sales benefited from products featuring the recently released `Star Wars Episode II: Attack of the Clones’ and `Spider-Man’ movies. We are on track to introduce candy, tattoo and sticker products featuring the property `Yu-Gi-Oh!’, domestically and overseas, in the H2 of the year.”
During the Q1 the company repurchased 291,000 shares of its stock at an average price of US$9.92 per share. Since October 1999, Topps has repurchased approximately 6.3 million shares as part of its stock buy back programme.
