Release Date: November 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Lifetime Brands Inc (LCUT, Financial) experienced robust market share growth in e-commerce, with a 10.7% increase in U.S. e-commerce sales during the third quarter.
- The company reported a successful execution of its international strategy, with a 10.9% increase in international sales driven by new placements at large retailers.
- Lifetime Brands Inc (LCUT) maintained steady gross margins of approximately 37% despite challenging market conditions.
- The company is making progress in its supply chain initiatives, including sourcing 25% of goods outside of China and expanding manufacturing in Mexico.
- Lifetime Brands Inc (LCUT) is actively pursuing M&A opportunities, focusing on areas that align with its long-term strategic goals.
Negative Points
- Net sales for the third quarter decreased to $183.8 million from $191.7 million in the same period last year, impacted by softness in end markets and delayed shipments.
- The company revised its full-year 2024 sales guidance downward due to delayed shipments and destocking by retailers.
- Distribution expenses increased significantly, with a notable $3 million year-over-year rise, partly due to non-recurring costs.
- The international segment, while showing sales growth, still reported an operating loss, indicating ongoing challenges in achieving profitability.
- The food service business experienced a downturn due to market conditions, leading to delayed capital projects and purchasing decisions.
Q & A Highlights
Q: Can you explain the impact of delayed shipments on the third quarter sales shortfall, particularly in the mass retail channel and the Dolly Parton shipments?
A: The sales shortfall was primarily due to softness in the mass channel, where orders were not as expected. Additionally, the delay in the Dolly Parton shipments, which were pushed to the first quarter of 2025, also contributed to the change in guidance. (Robert Kay, CEO)
Q: Distribution expenses increased significantly year-over-year. Can you provide more details on this increase and expectations going forward?
A: The increase in distribution expenses was partly due to a large assessment related to asset retirement obligations and inefficiencies during the implementation of a new warehouse management system. Approximately $2 million of the increase is non-recurring. (Laurence Winoker, CFO)
Q: What are your expectations for the international segment, and how does it factor into your new guidance?
A: The international segment will not make a profit this year, but both top and bottom lines are expected to improve year-over-year. The bigger impact will be seen next year, which will be discussed when we release future guidance. (Robert Kay, CEO)
Q: What drives the expected improvement in sales in Q4, with guidance calling for 9% growth at the midpoint?
A: The fourth quarter is traditionally strong, and some programs delayed by retailers are expected to shift into Q4. This is largely a timing issue, as programs can shift between quarters. (Laurence Winoker, CFO)
Q: What will it take to sustainably grow the business long-term after a few lean years?
A: Consumer confidence and demand are key drivers. While the market has been challenging, we have maintained or gained market share. The food service segment is expected to rebound, and increased consumer spending, potentially from stimulus, would benefit our business. (Robert Kay, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
