‘Special item’ prompts loss for Lance, Inc.
BakingBusiness.com, May 5, 2010
by Keith Nunes
CHARLOTTE, N.C. — Lance, Inc., the manufacturer of Lance, Cape Cod, Tom’s, Archway and Stella D’oro branded snacks, experienced a loss of $770,000 during the first quarter of fiscal 2010. The loss in the period ended March 27 compared unfavorably to net income of $6,452,000, equal to 21c per share on the common stock, the company reported during the first quarter of fiscal 2009. The company said an after-tax expense of $1.9 million associated with an unsuccessful bid for an acquisition contributed to the loss. Excluding the special item, the company said its net income was $1,200,000, equal to 4c per share on the common stock.
Sales for the quarter were $221,617,000, up 3% from the first quarter of fiscal 2009 when the company posted sales of $215,809,000.
“We are disappointed that our first-quarter revenue, profit margin and e.p.s. were well below our expectations,” said David V. Singer, president and chief executive officer. “Our non-branded sales were impacted by more aggressive promotional pricing by branded competitors. Our branded sales suffered from less effective promotions in an increasingly competitive environment.
“Because we expected higher sales in the first quarter, we committed additional costs to support future growth. The combination of higher costs, softer-than-planned volume, and less productive promotions lowered our profit margin significantly in the quarter. Since this margin squeeze occurred in our seasonally weakest quarter, our e.p.s. suffered significantly. We are taking steps to reduce our operating costs, making changes to our promotional approach to improve productivity, and taking actions to support our volume growth.”
Due to its first-quarter results, Lance revised its revenue estimate for the full year 2010 to a range of $930 million to $950 million, and its earnings per diluted share to a range of $1.10 to $1.25, excluding special items. Prior estimates that were announced on Feb. 10 reflected full-year net revenue between approximately $965 million and $990 million and earnings per diluted share between approximately $1.41 and $1.53, excluding special items.