R.G. Barry Corporation, the American producer of Dearforms and other slippers, is working on a new plan for international expansion after reaping the fruits of recent strategic initiatives, such as the acquisition of Foot Petals, a line of premium insoles and comfort products, and Baggallini, a brand of handbags, totes and travel accessories. It has also moved away from underperforming segments of the existing footwear business.
In the fourth quarter of its financial year, ended on July 2, the company raised its turnover by 42 percent to $23.5 million and reduced its net losses by nearly 50 percent to $863,000, as compared to the same period a year ago. The gross margin improved marginally to 37.4 percent.
While the new acquisitions added $8.4 million in extra revenues in the quarter, accompanied by a gross margin of 58.6 percent, an amount of $1.3 million was eliminated from the company's normal footwear revenues, but they would have carried a lower gross margin of 25.8 percent.
The improved results did not prevent the company from reporting a 20 percent drop in net earnings to $7.5 million for the full financial year on 4.7 percent higher revenues of $129.6 million. The gross margin declined to 37.2 percent from 41.5 percent the previous year, but the management is confident that it will go back up to around 40 percent in the present fiscal year, and that operating margins will also improve as R.G. Barry's business now extends “over a much broader, less price-sensitive and less seasonal cross-section of the accessories universe.”
Greg Tunney, president and chief executive, gave an interesting description of the new strategy. “Our change from a one-dimensional, modest-growth slipper company to a faster-growing, multi-dimensional developer of great, fashionable, solution-oriented accessories brands and products has added an additional degree of balance to our traditionally first-half-heavy seasonal operating pattern,” he said.
In another strategic move, R.G. Barry is shifting all of its warehouse and distribution duties for footwear to its logistics supplier, UTi Worldwide, in a new agreement that runs through 2016. The company will shut down its distribution facility in San Angelo, Texas, which handled about 20 percent of the company's footwear business, while UTi's facilities in Fontana, California, took care of the rest. R.G. Barry's Texas center, which employs about 30 people, will shut down by May 31, 2012, incurring minimal, non-material costs.
The company said that the move will allow it to be more flexible and to get to the market more quickly, as it consolidates its distribution operations next to the port where its goods come in.