Summer Infant reports $3.5M loss in 2Q

WOONSOCKET – Summer Infant reported a $3.5 million loss in the second quarter, or 19 cents per share, and a 1.4 revenue decline. In comparison, profit in the second quarter 2014 was $315,000, or 2 cents per share.
Second-quarter revenue dropped to $51.8 million compared with $52.6 million during the same period a year ago.
The juvenile product seller for the newborn to age 3 group blamed the revenue dip on lower sales of licensed, private label and furniture non-core business, reduced-price sales tied to bank-approved inventory reduction efforts and delayed orders from a significant customer.
The company said it also sold or eliminated approximately $6.5 million of excess inventory during the quarter, negatively impacting both sales and margins.
“It’s been very busy at Summer Infant since last quarter, and we’ve accomplished a great deal in a relatively short period of time,” Bob Stebenne, CEO, said in a statement. “After completing the refinancing of our credit agreements – which will improve bottom line results going forward – we tackled a number of operational issues, including excess inventory. We successfully sold or eliminated approximately $6.5 million of idle inventory in the second quarter and are working to address any remaining such inventory, although the associated charges are largely behind us. Unfortunately, due to the timing of certain orders from a key customer, our overall inventory levels did not fall as much as anticipated – and so addressing this remains a priority for the third quarter.
“Overall, our strategy of focusing on core-branded products remains an integral part of our plan to accelerate top line growth and drive margin expansion. At the same time, we are taking steps to reduce costs, streamline our operations and improve working capital – all with the goal of eliminating additional expense going forward.”
General and administrative expenses rose to $12 million from $9.9 million last year mainly due to increased legal costs as well as ongoing investments in marketing and new product development, the company said.
Summer Infant explained that the legal expenses are from a legal complaint filed in May in which it sued former CEO and board member Carol Bramson as well as two other former company executives and company consultants in federal court alleging theft and misappropriation of trade secrets. Summer Infant alleges that they were planning to create a competing company.

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