|
|
|
Swiss Army Brands (NASDAQ:SABI)
One Research Drive
P.O. Box 874
Shelton 06484-0874
President: J. Merrick Taggart
Revenues (1997): $118.7 million
Earnings (loss) 1997: ($4.0 million)
No. employees: 193
|
Business New Haven
8/10/98
By: BNH
|
Swiss Army Brands has come a long way since its first business activities of distributing equipment to butcher shops more than a century ago.
Previously named after the original entrepreneurs, the Forschners, the company officially became Swiss Army Brands Inc. (SABI) in 1996. But a new name was not the only change.
The company has long enjoyed the recognition and reputation of the famous Swiss Army brand name. However, as the 1990s draw to a close, this name recognition alone could no longer carry the business to profitability.
The bottom line in 1996 was negatively impacted by a $9.9 million special charge for discontinued inventory, inessential investments and out-of-date displays and other assets. The company experienced an operating loss of $5.4 million. Without the special charges its operating income would have been $2.1 million. The company closed the year with a net loss of $5.3 million (64 cents per share).
Writeoffs continued in 1997. The $2.1 million charge included $1.3 million for discontinued inventory and $0.8 million for restructuring charges. Sales for the year, at $118.7 million, represented a nine-percent decrease from 1996 revenues of $130.0 million.
A 17-percent drop in sales of the Swiss Army knife, and six-percent declines in sales for both the watch and cutlery product lines contributed to the lower total sales figures. Operating losses came in at $6.9 million, with net losses at $4.0 million (45 cents per share).
Management has taken steps to improve the company's sales and financial performance. In addition to restructuring and write-offs, management hired specialists such as new public relations and advertising agencies, as well as marketing, packaging and engineering consultants. New products were introduced, including additional Swiss Army brand watch styles, the Victorinox Swiss Card, Victorinox Swiss Tool and a special cut-resistant glove for sale to the food-service industry.
The company also concluded an unprecedented agreement with the Swiss Federal Military Department whereby Swiss Army Brands Inc. became the sole licensee of the “Swiss Army” trademark for sunglasses, watches and other consumer items.
Actions taken during the past two years may be starting to pay off. For the first quarter ended March 31, the company shows a slight improvement. Net sales of $24.6 million represented a two-percent increase over first quarter 1997 sales of $24.2 million. The increase in sales is largely attributed to their new Victorinox Swiss Card and Victorinox Swiss Tool.
As well, a gross profit of $9.3 million represented a two-percent hike over the first quarter of 1997. An operating loss of $1.1 million for the first quarter 1998 marked an improvement over last year's operating loss of $1.8 million. As a result of a pre-tax gain of $1.5 million from the company's investment in a privately held firm, the company posted a net income of $286,000 (three cents per share). Disregarding this extraordinary item, the company would have incurred a net loss.
The stock price has been struggling and is currently trading in the $11 range. This is nevertheless an improvement over mid-1997, when the stock price bottomed at about 9 1/8. The company has not been able to sustain an annual EPS in the $1-plus range since 1994.
However, 1998 is a year of renewed promise. The company's balance sheet indicates a good working capital position and no long-term debt. Management has corrected a supply glitch for the company's new Swiss Army tool, which had negatively impacted sales figures late last year.
In addition to its current products, the company is introducing a Swiss Army Armageddon line of sunglasses and 15 additional styles to the line of Swiss Army watches. If the company is able to sustain improved financial performance, this may ultimately result in an improved stock price.
|
Go FirstGo PreviousGo
NextGo LastGo
to Index
|
|
