Tandy Leather Factory Reports 2016 Financial Results In-line with 2016 Revenue and Earnings Guidance

FORT WORTH, Texas, March 09, 2017 (GLOBE NEWSWIRE) -- Tandy Leather Factory, Inc. (NASDAQ:TLF) today reported financial results for the fourth quarter and year ended December 31, 2016.  A conference call will be conducted by senior management at 10:00 a.m. Eastern Time on March 10, 2017.  Dial-in details have been provided previously.

Consolidated net income for the quarter was $2.1 million, decreasing 12% from the fourth quarter of 2015.  Fully diluted earnings per share for the quarter were $0.23, down $0.01 compared to the same quarter of the previous year.  Total sales for the quarter ended December 31, 2016 decreased 1% to $24.1 million from $24.2 million for same quarter of 2015.  Consolidated sales for the year ended December 31, 2016 were $82.9 million, down 1% from 2015 sales of $84.2 million.  Consolidated net income for 2016 was $6.4 million or $0.69 per fully-diluted share versus $6.4 million or $0.63 per fully-diluted share for 2015.       

Sales in the Retail Leathercraft division for the fourth quarter of 2016 increased $70,000 over the previous year's fourth quarter, a 0.5% improvement.  Same store sales in the fourth quarter of 2016 increased 1% over the same period in the prior year. Eighty-four Tandy Leather retail stores comprised Retail Leathercraft’s operations at December 31, 2016, compared to eighty-two at December 31, 2015.  For the year, Retail Leathercraft’s sales decreased slightly, or $44,000, over 2015.  The 80 comparable stores’ 2016 sales improved slightly, or 0.1%, over sales reported for 2015.

Fourth quarter sales for the Wholesale Leathercraft division decreased $336,000 over the same quarter of 2015, a 4% decline.  Same store sales decreased 2%.  There were twenty-seven stores in the segment at December 31, 2016, compared to twenty-eight stores at December 31, 2015.  For the year, Wholesale Leathercraft’s sales were down $1.4 million, or 5%.   2016 same store sales decreased 3%.

International Leathercraft’s fourth quarter sales increased $123,000 over the same quarter of 2015, a 13% improvement.  Same stores sales in the fourth quarter of 2016 increased 13%.  There were four stores in the segment at both December 31, 2016 and 2015.  For the year, International Leathercraft’s sales increased 5% to $3.9 million from $3.7 million in 2015.  2016 same store sales decreased 3%. 

Consolidated gross profit margin for the fourth quarter was 60.2%, decreasing from 61.2% in 2015’s fourth quarter.  For 2016, consolidated gross profit margin was 62.4%, improving from the previous year's gross profit margin of 61.9%.  Consolidated operating expenses for the fourth quarter of 2016 were 45.5% of sales, increasing $12,000 or 0.1% over the same quarter of 2015.  Operating expenses totaled 49.9% of sales for 2016, decreasing $0.2 million, or 0.4% over 2015. 

Shannon L. Greene, Chief Executive Officer, commented, "While we were pleased that our 2016 sales were at the top end of our guidance range, our EPS came in at the lower end.  Our bottom line was impacted by a better than expected response to our holiday promotions which drove higher sales, but the overall product mix compressed our gross profit.  In addition, at the beginning of December, we increased  our store managers’ base compensation by nearly 40%  to comply with the expected FLSA overtime rules that have since been delayed.  However, we believe that investing in our people is the right thing to do and will ultimately deliver long-term value.  Further, as we look to 2017, our priorities remain on improving our customer experience, increasing our brand awareness and strengthening our financial performance.  To that end, we are in the process of restructuring our store management, adding a level of middle management in the field while reducing several store operation positions at our corporate office.  We believe this investment, while negatively impacting our short-term outlook, will position us for future growth.  Each of our new district managers have a proven track record of successful top-line and bottom-line growth while being a leader in product and leathercraft knowledge and in support of our store associates.”    

Tina Castillo, Chief Financial Officer, added, “While we faced tough headwinds on the revenue side all year, as reflected in the 1% decrease in sales, our net income did not suffer.  This was the result of both an improvement in our gross profit which our team worked all year to maximize and a decrease in our operating expenses from lower overall spend.  For 2017, we will continue to focus on protecting our gross profit margins and controlling expenses.  However, with the investment in our district restructuring plan and the effect of the FLSA wage increases, we expect to see an increase in our operating expenses.  We believe 2017 will be a year of investment to lay a foundation for profitable growth.”     

Financial Outlook:

The following statements are based on TLF's current expectations as of March 9, 2017.  These statements are forward-looking statements and should be read in conjunction with the cautionary information about these statements that appears below.

Estimated consolidated net sales for 2017 will be in the range of $84-85 million.  EPS for 2017 are expected to be in the range of $0.56 to $0.58.  Average shares outstanding, both basic and diluted, in 2017 are estimated to be approximately 9.2 million.  The Company assumes an effective tax rate for the year between 36% and 37%.

Tandy Leather Factory, Inc., (http://www.tandyleather.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 28 Leather Factory stores, located in 18 states and 3 Canadian provinces, 84 Tandy Leather retail stores, located in 38 states and 6 Canadian provinces, and four combination wholesale/retail stores located in the United Kingdom, Australia, and Spain.  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.

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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