Spinrite finds growth in fancy crafts yarn category
31 Mar '06
3 min read
Revenue for the fourth quarter was $25.8 million, a decrease of $9.7 million, or 27.3percent, compared to the same period in 2004. Sales in the quarter were negatively impacted by a decline in consumer spending on fancy yarns and high retail inventory positions. Demand for fancy yarns in the second half of 2005 was much lower than in the first two quarters of the year.
Gross profit percentage for the fourth quarter was 17.2percent compared to 30.5percent for the same quarter in 2004. The decline in gross profit percentage was due primarily to an inventory write-down of approximately $2.5 million recorded at December 31, 2005 and production inefficiencies associated with sales declines.
Gross profit for 2005 increased 3.2percent to $45.4 million, up from $44 million last year. Gross profit percentage was 34.5percent compared to 37.0percent in 2004. This decrease is attributed to the inventory write-down recorded in the fourth quarter; overhead costs and labour inefficiencies associated with sales declines in the fourth quarter; higher outsourcing costs; and higher labour costs associated with production downtime due to extreme hot weather during the second and third quarters.
“Due to lower fancy yarn sales and high factory and retail inventory levels, it was necessary to take an inventory write-down,” said Ryan Newell, Chief Financial Officer. “We also took other proactive steps to address current business conditions, including an 8percent reduction in our work force in January.”
Toronto based craft yarn company Spinrite supports its market with patterns that provide customers with creative ideas for knitted products.
marketing@alchempro.com
