Vermont Teddy Bear (NASDAQ:BEAR)
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Vermont Teddy Bear Co.(R) Reports Q1 Results: Relocates certain operations of
Calyx & Corolla(R) to Vermont
SHELBURNE, Vt., Nov. 14 /PRNewswire-FirstCall/ -- The Vermont Teddy Bear
Company(R) today reported net revenues of approximately $5.0 million for the
three months ended September 30, 2003, the first quarter of its fiscal year
2004. Net revenues were approximately $5.1 million for the three months ended
September 30, 2002. The Company also reported a net loss available to common
stockholders for the quarter of $183,000, or $.04 per diluted common share, as
compared to a net loss available to common stockholders of $87,000, or $.01 per
diluted share, for the same quarter last year.
The revenue decrease of approximately $100,000 in the first quarter of the
fiscal year is attributed to decreases in the Bear-Gram(R) and Retail segments,
which were partially offset by revenue increases in the PajamaGram(R),
TastyGram(SM), Calyx & Corolla and Corporate/Wholesale segments. The Company
completed the acquisition of certain of the net assets and the business of Calyx
& Corolla, a direct marketer of premium, direct- from-the-grower flowers and
plants, on August 29, 2003.
Net revenues in the Bear-Gram segment decreased by $773,000 as a result of the
elimination of $366,000 in Bear-Gram advertising costs in the first quarter, the
Company's only quarter that does not include a major gift giving holiday.
Revenues in the Retail segment decreased by $228,000 as fewer tourists visited
the Company's factory store this past summer as compared to the prior year.
From the date of acquisition, Calyx & Corolla contributed approximately $643,000
of net revenues. The PajamaGram, TastyGram and Corporate/Wholesale segments
together contributed $254,000 of additional revenues compared to the same period
last year, albeit as marketing and selling costs in each of these segments
decreased year over year.
"As we add new sources of revenue such as the PajamaGram and Calyx & Corolla
segments, we are reallocating our advertising expenditures between segments and
seek to shift more of our ad dollars to holiday periods," said CEO Liz Robert.
"Our objective with this strategy is to improve the overall return on our
investment in marketing and selling and we have noted some success already.
While revenues declined slightly in the first quarter, overall marketing and
selling costs as a percentage of net revenues improved to 35.8% from 40.5% in
the first quarter of last year."
The Company has completed the first phase of its plan to integrate certain
operations of Calyx & Corolla into its operations in Shelburne, VT. All of
Calyx's California operations were eliminated in September when inventory and
order processing and fulfillment operations, and related information technology
and equipment were relocated to Vermont. Also in September, the Company
terminated Calyx's contract with a third party call center facility and moved
all call center operations to the Company's existing call center facilities in
Vermont. Since September, the Company has successfully transitioned Calyx's
Florida based information technology, accounting and finance, and human
resources functions to Vermont, leaving only the merchandising and brand related
marketing functions in the downsized Vero Beach, Florida offices.
The expenses reported for the relocation of Calyx operations in September total
approximately $130,000.
"Our extraordinary team of people have worked long hours over the past several
months to effectively relocate and transition the operations of our newly
acquired floral delivery business to Vermont," continued Robert. "As expected
many of these operations fit seamlessly into our existing infrastructure,
providing us the opportunity to achieve significant cost savings as we move into
our upcoming holiday season."
Consolidated gross margin in the first quarter decreased $370,000 to
approximately $2.8 million, or 55.5% of net revenues in the three month period
ended September 30, 2003, as compared to $3.1 million, or 61.6% in the same
period last year. Contributing to lower gross margins were lower net revenues
in the Bear-Gram segment and an increase in bear unit manufacturing costs as
domestic bear production volume was adjusted to lower Bear-Gram revenues. These
decreases were partially offset by improvements to gross margins in the
PajamaGram and TastyGram segments due to higher net revenues, higher unit gross
margins and improved product mix in these segments. The Company's overall gross
margin percent also decreased with the addition of the new Calyx & Corolla
segment which reported gross margin for the period at 41.8%. Calyx's gross
margin was negatively impacted by $62,000 of expenses attributed to relocating
the inventory and fulfillment operations to the Company's Shelburne, VT
location.
Marketing and selling expenses decreased to approximately $1.8 million, or 35.8%
of net revenues for the quarter, from approximately $2.1 million, or 40.5% of
net revenues for the same quarter last year. Reductions to advertising costs,
call center and customer service costs, PajamaGram and TastyGram merchandising
costs, Corporate/Wholesale marketing and selling costs, and retail store
operating costs totaled $527,000. These reductions were partially offset by
$251,000 of marketing and selling costs added with the new Calyx & Corolla
segment, which included $49,000 of relocation expenses.
General and administrative expenses for the first quarter increased to 21.5%
from 21.3% in the same period last year, primarily due to $19,000 of expenses
related to the relocation of Calyx & Corolla's information technology operations
to Shelburne, VT.
"We are transitioning our Company from being a one-note song with just Vermont
Teddy Bear Bear-Grams distributed via direct response radio, to being a symphony
with proliferating products sold under multiple brands through multiple
distribution channels," continued Robert. "As our vision of becoming the
premier gift company takes form, we seek to differentiate ourselves from our
competitors by 'delivering only premium gifts with premium service'(SM). We
derive focus from our mission of providing the best possible service in an
industry highly charged with emotion and requiring the highest degree of
personal, caring attention to the smallest of details. Our people consistently
go the extra mile with intimate knowledge of how important is the expression of
human caring to make sure each customer feels like his or her order is the only
order of the day."
A Vermont Teddy Bear Company Bear-Gram gift is a popular alternative to sending
flowers. Each Bear-Gram gift includes a customized Vermont Teddy Bear
accompanied by a personal greeting card and candy treat, all packaged in a
colorful gift box with an air hole.
Orders are placed by calling 1-800-829-BEAR or by shopping at
http://www.vermontteddybear.com/.
The PajamaGram Company is a gift delivery service where customers can pamper
their loved ones by sending pajamas and spa products in luxurious packaging by
calling 1-800-GIVE-PJS or shopping at http://www.pajamagram.com/.
The TastyGram Company specializes in the delivery of creatively packaged,
deliciously presented gourmet foods and sweets by calling 1-800-82-TASTY or
shopping at http://www.tastygram.com/
Calyx & Corolla delivers premium direct-from-the-grower floral gifts through its
catalog, by phone at 1-800-800-7788 or online at
http://www.calyxandcorolla.com/.
The foregoing can be interpreted as including forward-looking statements under
the Private Securities Litigation Reform Act of 1995. Actual future results may
differ materially from those suggested by the statements above.
Contact: Nicole L'Huillier
802-985-1362
THE VERMONT TEDDY BEAR CO., INC.
Condensed Consolidated Statements of Income
For the Three Months Ended September 30, 2003 and 2002
(Unaudited)
Sept 30, 2003 Sept 30, 2002
Net Revenues $4,979,652 $5,083,937
Cost of Goods Sold 2,217,527 1,952,256
Gross Profit 2,762,125 3,131,681
Operating Expenses:
Marketing and Selling Expenses 1,780,864 2,056,812
General and Administrative
Expenses 1,072,930 1,081,350
2,853,794 3,138,162
Operating Loss (91,669) (6,481)
Interest Income 12,025 63,462
Interest Expense (153,236) (134,291)
Other Income 488 925
Loss Before Income Taxes (232,392) (76,385)
Income Tax Provision 94,531 30,554
Net Loss (137,861) (45,831)
Preferred Stock Dividends (31,043) (27,074)
Accretion of Original Issue Discount (13,623) (13,623)
Net Loss Available to Common
Stockholders $(182,527) $(86,528)
Basic Net Loss Per Common Share ($0.04) ($0.01)
Diluted Net Loss Per Common Share ($0.04) ($0.01)
Weighted Average Number of Shares
Outstanding 4,864,555 6,859,599
Weighted Average Number of Diluted
Common Shares Outstanding 4,864,555 6,859,599
Condensed Consolidated Balance Sheet Information
September 30, June 30, September 30,
2003 2003 2002
(unaudited) (unaudited) (unaudited)
Cash and Cash Equivalents $1,897,104 $5,168,177 $9,373,498
Current Assets 10,493,544 12,338,471 17,151,144
Total Assets 24,854,263 21,022,425 26,212,179
Current Liabilities 7,028,987 6,109,936 3,619,990
Long Term Debt 7,169,788 6,613,847 5,066,159
Total Liabilities 14,336,119 12,861,127 8,891,243
Series C Preferred 178,512 164,889 630,978
Series D Preferred 2,500,000 0 0
Stockholders' Equity 7,839,632 7,996,409 16,689,958
DATASOURCE: The Vermont Teddy Bear Company
CONTACT: Nicole L'Huillier of The Vermont Teddy Bear Company, +1-802-
985-1362,
Web site: http://www.vermontteddybear.com/