Enesco (NYSE:ENC)
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- Transition Designed to Reduce Cost Structure and Manage
Operating Expenses -
Enesco Group, Inc. (NYSE:ENC), a leader in the giftware, and home
and garden decor industries, today announced the Company will
transition its distribution and warehousing operations to a
third-party logistics company. Enesco selected National Distribution
Centers (NDC), an affiliate of NFI Industries, based in New Jersey, to
manage the Company's distribution operations in the U.S. NDC will
operate a leased facility in the Indianapolis metropolitan area, of
which Enesco will occupy approximately 150,000 square feet.
As part of Enesco's operating improvement plan announced in
September 2005, the transition to third-party distribution and
warehousing will allow the Company to improve supply chain
efficiencies, improve customer service, consolidate its U.S.
distribution operations, improve financial performance, and build on
the Company's core strengths of new product development and sales.
The Company will begin moving all inventory related to its
continuing product lines to the NDC facility at the end of December
2005 and expects to be ready to ship product in mid-January 2006. The
Company believes this temporary delay in order fulfillment will not
have a material impact on revenues as this is the time of the year
during which Enesco historically has conducted its physical inventory
with delayed order fulfillment.
Closeout inventory will be distributed from the Company's current
distribution facility in Elk Grove Village, Ill. through June 2006.
Employment levels at Enesco's current distribution and warehouse
facility will be reduced by approximately 125 positions over the six
month period starting January 2006, as business needs dictate.
For the first nine months of 2005, the Company's U.S. distribution
and warehousing costs were approximately $11 million, or 12.7% of net
revenues. The Company anticipates this transition will produce
pre-tax, annualized cost savings in the range of $4 million to $6
million in the U.S. and be fully realized in 2007. These anticipated
savings were announced previously as a part of the total of $34
million to $38 million pre-tax in U.S. cost reductions included in
Enesco's plan to improve the Company's operating performance.
Cynthia Passmore-McLaughlin, President and CEO, commented, "A key
initiative of our operating improvement plan is to create a more
efficient and cost-effective distribution model. After carefully
evaluating several alternatives, we believe that a third-party
distribution and warehousing model will work best in terms of reducing
costs and enhancing customer service. NDC provides many advantages
that are in line with these improvement initiatives, including lower
overall location costs and improved customer service. We will be
working with our customers on timing of shipments to allow for a
smooth transition between distribution facilities."
About Enesco Group, Inc.
Enesco Group, Inc. is a world leader in the giftware, and home and
garden decor industries. Serving more than 30,000 customers globally,
Enesco distributes products to a wide variety of specialty card and
gift retailers, home decor boutiques, as well as mass-market chains
and direct mail retailers. Internationally, Enesco serves markets
operating in the United Kingdom, Canada, Europe, Mexico, Australia and
Asia. With subsidiaries located in Europe and Canada, and a business
unit in Hong Kong, Enesco's international distribution network is a
leader in the industry. The Company's product lines include some of
the world's most recognizable brands, including Border Fine Arts,
Bratz, Circle of Love, Foundations, Halcyon Days, Heartwood Creek, Jim
Shore Designs, Lilliput Lane, Nickelodeon, Pooh & Friends, Walt Disney
Classics Collection, and Walt Disney Company, among others. Further
information is available on the Company's web site at www.enesco.com.
This press release contains forward-looking statements, which
reflect management's current assumptions and beliefs and are based on
information currently available to management. The Company has tried
to identify such forward-looking statements by use of such words as
"expects," "intends," "anticipates," "could," "estimates," "plans,"
and "believes," and similar expressions, but these words are not the
exclusive means of identifying such statements. Such statements are
subject to various risks, uncertainties and other factors, which could
cause actual results to vary materially from those anticipated,
estimated, expected or projected. Important factors that may cause
actual future events or results to differ materially and adversely
from those described in the forward-looking statements include, but
are not limited to: the Company's success in developing new products
and consumer reaction to the Company's new products; the Company's
ability to secure, maintain and renew popular licenses, particularly
our Cherished Teddies, Disney and Heartwood Creek licenses; the
Company's ability to grow revenues in mass and niche market channels;
the Company's success in implementing its comprehensive plan for
operating improvement and its achievement of its goals for cost
savings and market share increases; the Company's ability to comply
with covenants contained in its credit facility; the Company's ability
to obtain a new global senior credit facility; changes in general
economic conditions, as well as specific market conditions;
fluctuations in demand for our products; manufacturing lead times; the
timing of orders and shipments and our ability to predict customer
demands; inventory levels and purchase commitments exceeding
requirements based upon incorrect forecasts; collection of accounts
receivable; changes in the regulations and procedures affecting the
importation of goods into the United States; changes in foreign
exchange rates; price and product competition in the giftware
industry; variations in sales channels, product costs or mix of
products sold; and, possible future terrorist attacks, epidemics, or
acts of war. In addition, the Company operates in a continually
changing business environment and does not intend to update or revise
the forward-looking statements contained herein, which speak only as
of the date hereof. Additional information regarding forward-looking
statement risk factors is contained in the Company's reports and
filings with the Securities and Exchange Commission. In light of these
risks and uncertainties, the forward-looking statements contained
herein may not occur and actual results could differ materially from
those set forth herein. Accordingly, you should not rely on these
forward-looking statements as a prediction of actual future results.