Tandy Leather Factory Reports Decline in Revenue and Profitability for Q3 and Nine Months Ended September 30, 2024

Tandy Leather Factory, Inc. reported its financial results for the third quarter and the nine months ended September 30, 2024, reflecting a decline in both revenue and profitability compared to the same periods in 2023.

For the three months ended September 30, 2024, net sales totaled $17,351,000, a decrease of $191,000 or 1.1% from $17,542,000 in the prior year. Gross profit for the quarter was $10,022,000, down $916,000 or 8.4% year-over-year. The gross margin percentage also fell significantly, decreasing by 460 basis points due to increased promotional activity and changes in inventory cost capitalization. Operating expenses rose to $10,289,000, an increase of $231,000 or 2.3%, primarily driven by higher employment costs. Consequently, the company reported an operating loss of $267,000 for the quarter, a decline of $1,147,000 compared to an income of $880,000 in Q3 2023. The net loss for the quarter was $132,000, contrasting with a net income of $636,000 in the same period last year.

For the nine months ended September 30, 2024, consolidated net sales were $53,913,000, down $1,471,000 or 2.7% from $55,384,000 in 2023. Gross profit for this period decreased by $2,717,000 or 8.1%, resulting in a gross margin percentage of 57.4%, down from 60.8% in the prior year. Operating expenses for the nine-month period were $30,515,000, a slight decrease of $512,000 or 1.8%. The company reported income from operations of $445,000, down $2,206,000 or 83.3% from $2,650,000 in the previous year. Net income for the nine months was $495,000, a significant drop from $1,831,000 in 2023.

As of September 30, 2024, Tandy Leather's cash and cash equivalents stood at $10,055,000, down from $12,159,000 at the end of 2023. The company operated 100 retail stores, a decrease from 103 stores a year earlier, with two stores temporarily closed for relocation. The company has focused on improving its brand proposition and operational foundation while managing operating expenses and gross margin.

In terms of strategic developments, Tandy Leather renewed a credit facility with JPMorgan Chase Bank for up to $5,000,000, maturing on October 31, 2024, and approved a new share repurchase program allowing for the repurchase of up to $5 million in common stock until September 30, 2026. The effective tax rate for the nine months ended September 30, 2024, was 26.5%, compared to 28.0% for the same period in 2023.