LIFETIME BRANDS, INC Q1 FY2025 earnings call

Key Points

• Navigating volatile macro and political environment, with mass channel challenges but e-commerce, dollar channel, and club showing growth.
• Ceased importing 45% tariff products from China, built inventory ahead of tariffs, and eliminated de minimis loophole to compete with e-commerce platforms.
• Foodservice investment showing results despite delays; international turnaround on track with Project CONCORD plan for profitability.
• Tightened cost controls, reducing over $10M in annual costs, and distribution facility transition in Maryland on track with lower CapEx.
• Actively pursuing M&A opportunities but with conservative due diligence due to environment.

Consolidated sales declined by 1.5% to $140.1 million. U.S. Segment sales decreased by 1.5% to $128.5 million, impacted by mass channel challenges but offset by growth in e-commerce, dollar channel, and club. International segment sales were approximately flat year over year, with an increase in the Asia Pacific region offset by a small decrease from UK national accounts. Gross margin decreased to 36.1% from 40.5%, with U.S. gross margin at 36.2% and international at 35.3%. Distribution expense in U.S. segment was 11.9% vs 10.5% due to labor and software costs, and in international segment was 25% vs 23.6% due to higher rent. Selling, general, and administrative expense decreased 20.3% to $31.5 million, with U.S. segment expenses down $800k and international down $500k.

Decided not to issue formal guidance for full year 2025, will evaluate later. Pulled back from formal Investor Day due to short-term environment flexibility.

• Volatile macro and political environment affecting sales and margins.
• Tariff uncertainties impacting costs and pricing.
• Supply chain risks from manufacturing shifts.
• Uncertainty in consumer spending and retail ordering patterns.

Q: Magnitude of sales decline in mass vs growth in e-commerce, club, dollar store?

A: Sling was in range of about $15 million.

Q: Dolly Parton shipments shift?

A: Occurred as expected, program strong with year-over-year growth planned.

Q: Price increase magnitude and impact?

A: Bulk increases 6-16%, impact unknown due to small average ticket.

Q: CapEx for new DC?

A: Lower than previously anticipated, but specific number not provided.

Q: Decision to not provide guidance?

A: Lack of visibility, conservative approach due to uncertain environment.

Q: Moving out of China timeline?

A: Actively moving, already shipping from many geographies, ahead of industry in transition.

Q: Elasticity of price increase?

A: Historically little impact, products inelastic in many categories.

Q: Message to shareholders?

A: Strong intrinsic value gap, strong fundamentals, long-term upside.