Blyth Quarterly Sales Down From $118 Million To $103 Million

Robert Goergen Jr,CEO,Blyth


Blyth, Inc. (NYSE:  BTH), a direct-to-consumer company and leading designer and marketer of candles and accessories for the home and health, wellness and beauty products, household convenience items and personalized gifts sold through the direct selling and direct marketing channels, today reported sales and earnings for the first quarter of 2015.

Net sales for the three months ended March 31, 2015 decreased approximately 12% to $103.7 million from $118.2 million for the comparable prior year period.  Sales for the quarter were negatively impacted by the strengthening U.S. Dollar, particularly against the euro, by approximately 9%, or $10.7 million.

Commenting on the first quarter results, Robert B. Goergen, Jr., Chief Executive Officer noted, While our Catalog & Internet segment sales gained over the prior year period, our Candles & Home Decor segment sales were negatively affected by the increasing strength of the U.S. dollar versus the euro, as well as the lower number of independent sales Consultants. 

Absent the adverse currency impact, we experienced year-over-year sales growth in all of our emerging markets as well as in several of our mature markets, including Germany, Austria, the U.K. and Australia.

Mr. Goergen also noted, As the global economy remains uneven and the strong dollar mutes our global profit contribution, our operating profit was anticipated to decline versus last year; thus, we initiated ambitious restructuring and gross margin improvement programs that should benefit profitability going forward.  In the first quarter we announced the successful migration of all candle production to our Batavia, Illinois facility, which we anticipate will result in annualized savings of $8.0 million.  We also announced that the Greenwich corporate headquarters will be relocated to Plymouth, MA, and occupy space in a building owned by PartyLite.  The one-time costs of the move of our headquarters, to be incurred in 2015, including severance, outplacement and relocation expenses, will be approximately $2.1 million.

Turning to Blyth's Catalog & Internet business, Silver Star Brands, Mr. Goergen said, The first quarter increase in revenue is promising.  The Native Remedies® brand of herbal dietary supplements and homeopathic products, acquired in early 2015, is integrating seamlessly into our existing business. 

In addition to growing our health, wellness and beauty segment, we are creating opportunities for our home decor business.  Our Exposures® brand recently announced a partnership with celebrity event stylist David Tutera on a chic collection of home decor.

Blyth's operating loss for the first quarter was $9.1 million this year versus $0.1 million last year.   During the first quarter, the Company recorded restructuring and impairment charges of $2.5 million at PartyLite's manufacturing plant in Cumbria, U.K. related to the consolidation of candle production into one Global Center of Manufacturing Excellence, in Batavia, Illinois.  The Company also recorded charges of $0.6 million for the integration of Native Remedies, a brand acquired during the first quarter under the Silver Star Brands umbrella.   Excluding these charges, first quarter operating loss this year was $6.0 million versus $0.1 million last year.  A stronger U.S. dollar negatively impacted the operating loss for the first quarter by approximately $1.0 million.  

Net Loss Attributable to Blyth, Inc. was $12.5 million for the three months ended March 31, 2015 compared to a loss of $2.8 million in the prior year period.  Diluted Net Earnings per Share Attributable to Blyth, Inc. were a loss of $0.77 per share for the three months ended March 31, 2015 compared to $0.17 per share in the prior year period.  During the respective first quarters, the Company recorded the following after-tax charges per share:

Normalized earnings from continuing operations were a loss of $9.7 million, or $0.60 per share, in this year's first quarter versus a loss of $0.7 million, or $0.04 per share, in the comparable period last year.

2015 First Quarter Segment Performance

In the Candles & Home Décor segment, PartyLite sales were $65.7 million in the first quarter versus $80.9 million for the same period last year, a decline of 19%.  This decline reflects the 7% year-over-year decline in independent sales Consultants to approximately 43,000 and the relative strength of the U.S. dollar versus the euro, which averaged an 18% increase over the prior year's first quarter.  PartyLite's European sales during the quarter decreased 3% in local currency, or 20% in U.S. dollars.  PartyLite's European active independent sales Consultants totaled approximately 25,500 at the end of the first quarter, a 6% decline from the year-earlier period.  PartyLite's North American sales, comprised of the U.S. and Canada, declined 22% versus the prior year period.  Active North American independent sales Consultants totaled approximately 12,500 at the end of the first quarter versus approximately 14,500 at the end of last year's comparable quarter.  PartyLite's Australian sales, at $4.1 million, declined 6%, reflecting the strength of the U.S. dollar; sales in local currency, however, increased 7% year-over-year, consistent with the 7% growth in active independent sales Consultants which totaled approximately 2,900 versus 2,700 at the end of 2014's first quarter.

First quarter operating loss for the Candles & Home Décor segment was $6.3 million versus operating profit of $1.2 million in last year's first quarter.  Excluding this year's impairment and restructuring charges at PartyLite's Cumbria, U.K. manufacturing facility of $2.5 million, and allocated corporate expenses of $2.2 million this year and $2.9 million last year, PartyLite's operating loss was $1.6 millionthis year versus profit of $4.1 million last year.

Commenting on the performance of the Candles & Home Décor segment, Robert B. Goergen, Jr., Chief Executive Officer of Blyth and President, PartyLite Worldwide said, In Europe, sales declined 3% in local currency while the Consultant base declined 6%.  While changes in sales and in the Consultant base usually track closely together, we believe that the first quarter differential is a positive indicator, reflecting both growth in leadership and increased Consultant productivity.  Consultant count increased in our emerging markets of Italy, Poland, Czech Republic and Slovakia; and, while year-over-year Consultant count declined in our mature markets, the decline during the first quarter was at a lesser rate in every market when compared to 2014's first quarter.  In addition, eCommerce sales experienced growth in the quarter.  While European profits declined versus last year, the steps taken to close the Cumbria U.K.candle manufacturing plant and move all candle production to our Batavia, Illinois Global Center of Manufacturing Excellence are already showing a reduction in cost and building a platform for improving profitability worldwide.

Turning to North America, Mr. Goergen continued, both Consultant count and sponsorships were down in the first quarter, which led to the decline in sales and in turn, a decline in profits. However, similar to the positive trend noted in Europe, we are encouraged by an even stronger result in quarterly North American leadership growth.  In both the U.S. and Canadian markets, we experienced more new leaders at many levels of leadership, with year-over-year leader growth at 20%.  Moreover, North American leadership grew 11% during the first quarter versus a 6% decline during the comparable prior year period.  In addition, we have established compelling new incentives in the second quarter which, along with new product initiatives, are expected to have a positive impact on sales later this year.

In the Catalog & Internet segment, first quarter net sales increased 2% to $38.0 million from the prior year's level of $37.4 million.  The year-over-year increase reflected sales of Native Remedies, partially offset by differences in fiscal periods which excluded the strong post-holiday week in 2015's first quarter.  Operating loss in the first quarter in this segment was $2.8 million this year versus $1.4 millionlast year.  Excluding integration costs for Native Remedies of $0.6 million and allocated corporate expenses of $1.1 million both this year and last year, Silver Star Brands' operating loss was $1.1 million this year versus $0.2 million last year.  Increased outbound freight rates as well as unanticipated costs related to the recent West Coast port slowdown negatively affected profitability due to higher order cancellations and the additional shipping costs related to backorders.

The sum of the individual and segment amounts may not equal the reported totals for the first quarter for Blyth overall due to rounding.

Blyth, Inc., headquartered in Greenwich, CT, USA, is a direct-to-consumer business focused on the direct selling and direct marketing channels.  It designs and markets candles and accessories for the home and also designs and markets health, wellness and beauty products, household convenience items and personalized gifts through the Catalog/Internet channel.  Its products are sold direct to the consumer under the PartyLite® brand and to consumers in the catalog/Internet channel under the Miles Kimball®, Walter Drake®, Easy Comforts®, As We Change®, Native Remedies® and Exposures® brands.

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