FORT WORTH, Texas, May 12, 2011 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (Nasdaq:TLF) today reported financial results for the first quarter of 2011. Net income for the quarter ended March 31, 2011 was $1,151,000, up from net income of $948,000 in the first quarter of 2010, an increase of 21%. Fully-diluted earnings per share for the quarter were $0.11 in the current quarter, compared to $0.09 in last year's first quarter. Total sales for the first quarter were $15.9 million, an increase of 8.9% compared to 2010's first quarter sales of $14.6 million.
Sales from the Retail Leathercraft division, consisting of the Tandy Leather retail store chain, increased $1 million in the first quarter, up 14% from last year's first quarter sales. The store chain consisted of seventy-six stores as of March 31, 2011 and 2010. First quarter sales for the Wholesale Leathercraft division, consisting of the Leather Factory wholesale stores and the National Account group, increased $133,000, or 2% from the same quarter last year. International Leathercraft, consisting of one store located in the United Kingdom, added sales of $509,000 for the quarter, a 32% increase over last year's first quarter sales of $384,000.
Consolidated gross profit margin decreased from 61.5% in the first quarter of 2010 to 60.0% in the first quarter of 2011 due to rising product costs. Operating expenses increased $172,000 in the first quarter of 2011 to $7.6 million compared to $7.4 million in the first quarter of 2010, decreasing as a percentage of revenue from 51.0% in 2010 to 47.9% in 2011.
Jon Thompson, Chief Executive Officer and President, commented, "The first quarter was successful as both sales and earnings increased. Further, all three divisions contributed to the sales gain and earnings growth. Gross margin is down slightly as we have discussed in our last several news releases. Product costs are on the rise and we expect they will remain high through the remainder of the year. Our buyers are working hard to limit cost increases as much as possible, but it is getting more difficult. Until we can adjust selling prices in the fourth quarter, the pressure on margins continues."
Shannon L. Greene, Chief Financial Officer, added, "We controlled our operating expenses well for the quarter as they only rose 2% compared to a year ago. With pressure on gross margin, it is even more important to keep operating expenses in check to maximize earnings. Our inventory levels are higher than we would prefer, however, we prepared for a nationwide Open House event in early April that accounted for a large portion of the inventory reduction originally expected in March. Also, in order to protect margins as much as possible, we will continue to purchase larger quantities of our stock leathers as they become available if we can negotiate aggressive pricing by buying in bulk and paying cash. Despite the challenges, we believe we are on track to meet our 2011 guidance."
Tandy Leather Factory, Inc., (http://www.tandyleatherfactory.com ), headquartered in Fort Worth, Texas, is a specialty retailer and wholesale distributor of a broad product line including leather, leatherworking tools, buckles and adornments for belts, leather dyes and finishes, saddle and tack hardware, and do-it-yourself kits. The Company distributes its products through its 29 Leather Factory stores, located in 19 states and 3 Canadian provinces, 76 Tandy Leather retail stores, located in 36 states and 6 Canadian provinces, and one combination wholesale/retail store located in the United Kingdom. Its common stock trades on the Nasdaq with the symbol "TLF". To be included on Tandy Leather Factory's email distribution list, go to http://www.b2i.us/irpass.asp?BzID=1625&to=ea&s=0.
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This news release may contain statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995. Actual results and events may differ from those projected as a result of certain risks and uncertainties. These risks and uncertainties include but are not limited to: changes in general economic conditions, negative trends in general consumer-spending levels, failure to realize the anticipated benefits of opening retail stores; availability of hides and leathers and resultant price fluctuations; change in customer preferences for our product, and other factors disclosed in our filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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CONTACT: Shannon L. Greene, Tandy Leather Factory, Inc. (817) 872-3200 or sgreene@tandyleather.com Mark Gilbert, Magellan Fin, LLC (317) 867-2839 or MGilbert@MagellanFin.com
