The Topps Co, an international marketer of consumer products, has posted its financial results for the fourth quarter and fiscal year ended 2 March 2002.
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For the Q4 of fiscal 2002, net sales were US$60.9m, compared with US$60.5m for the same period last year. Pokemon sales in the quarter were US$3.1m versus US$9.6m last year. Income from operations in the Q4 was US$1.4m, compared with US$0.6m in the Q4 last year. Net income was US$1.4m, or US$0.03 per diluted share, compared with US$8.6m, or US$0.19 per diluted share, in the same period a year ago. This year’s Q4 benefited from the favorable outcome of a legal settlement related to the Internet business, which contributed US$2.4m pre-tax, while last year’s Q4 included a US$5.8m income tax credit.
For the FY, net sales were US$302.9m, compared to US$439.3m last year. Total Pokemon sales for fiscal 2002 were US$24.1m compared with US$179.6m last year. Income from operations for the FY was US$36.6m, compared with US$121.9m last year. Net income was US$28.5m, or US$0.64 per diluted share, compared with US$88.5m, or US$1.91 per diluted share, in fiscal 2001.
Arthur T. Shorin, Topps’ Chairman and CEO, commented: “We are pleased with our results for the year. Topps’ branded (non-Pokemon) confectionery sales increased 22% to US$32.3m in the Q4, and 12% for the FY. Growth for both periods reflected strong gains in the US of our Ring Pop, Push Pop and Baby Bottle Pop brands. Additionally, sales benefited from the introduction of seasonal candy products at Christmas, Valentine’s Day and Easter. Currently, creme flavored Twisted Ring Pop, Twisted Push Pop and Pro Flip Pop are hitting candy shelves, and other introductions are planned for fiscal 2003 including two new Baby Bottle Pop line extensions.”
Shorin continued: “Consolidated Q4 net sales of collectible sports products, which this year included etopps, thePit and Topps Vault, were US$23.8m, compared to US$22.8m in last year’s Q4. Inclusion of sales from our new Internet businesses, solid growth of Premier League products and baseball promotions with Post Cereal and Nestlé contributed to modest gains. However, for the FY, collectible sports products recorded net sales of US$118.4m, compared to US$122.9m last year, reflecting continuing softness in the traditional sports card market. Building on our recent international success, next month we will debut a sticker album collection featuring Team England.
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By GlobalData“On the Internet front, financial results were better than our Q3 estimates, largely the result of the aforementioned legal settlement, reduced costs and slightly better sales. An etopps marketing campaign aimed at attracting new users was launched 1 April.”
Shorin added: “Net sales of the company’s entertainment products in the Q4 were US$4m, US$1.4m of which resulted from the reversal of the Pokemon returns provision. For the FY, entertainment product sales were US$29.7m versus US$143.8m last year.”
Shorin continued, “We are very pleased with fiscal 2002 financial results. Moreover, our balance sheet is solid with US$121m in cash and no debt as of 2 March 2002.
“Looking ahead, fiscal 2003 will be a year of strategic investment. We plan to grow Topps’ confectionery business further by continuing our successful three-pronged focus on branded product, expanded distribution and effective advertising spending, principally on television.
“We also plan to build greater product diversity by creating a non-lollipop brand for launch within the next 18 months and will maintain efforts to make an appropriate candy acquisition.
“In sports, we will operate on three specific fronts: we will invest further in our Internet businesses to realize their full potential and continue their integration to reduce overhead costs; we will compete vigorously in the traditional card market which is declining more precipitously than before; and we will build a `Sports Business Development’ group aimed at leveraging the powerful Topps franchise and creating new products (sports card and non-sports card) relevant to a significantly broader consumer base.
“In entertainment, we will be opportunistic yet selective, an approach which has yielded success over the past several years, operating within current product forms such as traditional style cards and sticker collections but reaching beyond them as well.”
Shorin concluded: “Investing this way underscores our commitment to growth although, based on realities and longer-term priorities, we are not expecting 2003 financials to reach 2002 levels. As we implement our strategy and corresponding action plan, however, we expect that Topps will be a stronger, more successful company.”
Topps also announced that during the Q4 it repurchased 724,500 shares at an average price of US$9.75 each. For the FY, it bought back approximately 2.8 million shares at an average price of US$10.39.
