Lifetime Brands FY, Q4 Net Fall; Acquires La Cafetiere
March 13, 2014,
GARDEN CITY, N.Y.-Higher expenses and an increased provision for income taxes slashed Lifetime Brands' bottom line for both the fiscal year and the fourth quarter, which ended on Dec. 31.
Along with announcing its financial results, Lifetime also said it has acquired U.K.-based La Cafetiere from The Greenfield Group Limited, including exclusive distribution rights. La Cafetiere designs and distributes products to brew and serve coffee and tea under the La Cafetiere and Randwyck brands.
Net income for the year fell 55.7 percent to $9.3 million, and for the quarter it was down 38 percent to $9.4 million. Selling, general and administrative expenses were up 15.1 percent in dollars and 154 basis points as a percentage of sales, to 20.5 percent. Lifetime's provision for income taxes rose 138.1 percent in the quarter and 76.2 percent for the year.
Net sales gained 6.5 percent in the quarter to $164.9 million, bringing net sales for the year to $502.7 million, up 3.3 percent. Jeffrey Siegel, Lifetime's chairman and CEO, said the company's results felt the pressure from the struggling U.S. economy, the imposition of higher duties on ceramic products by the European Union, a write-down in the fair value of the company's investment in Grupo Vasconia in Mexico, overall weakness in the Mexican economy, which affected Grupo Vasconia, and greater-than-expected expenses in connection with Grupo Vasconia's integration of Almexa, an aluminum company which it acquired in 2012.
These factors "masked fundamental improvements in our operating model ... which we believe have positioned the company to achieve substantially higher sales and earnings in the years ahead," Siegel said. He cited three recent acquisitions which he said should benefit Lifetime's results this year. Along with La Cafetiere, the company purchased Kitchen Craft, a supplier of kitchenware products and accessories in the United Kingdom, in January. Last month, Lifetime acquired Built NY, bringing into its fold that company's line of bags, totes, cases and sleeves.
Siegel also noted that Lifetime is set to launch 10 new brands and "a large number" of new products at the International Home + Housewares Show, which will begin this weekend. He added that the continuing improvement in the U.K. economy should bolster Creative Tops' business. In Asia, Lifetime has received a trading license in China and will become "a major supplier" to Walmart's China stores beginning in the second half of the year, Siegel said.