Sour Quarter, Tasty Year For Harry & David

Food gifts mailer Harry & David might have ended its fiscal 2007 on a down note, but results for the year made up for it.

Fourth-quarter net sales at Harry & David Holdings decreased 3.1%, to $62.9 million for the 13 weeks ended June 30. Officials for the Medford, OR-based merchant attributed the slight decrease to fewer catalog and Internet sales from the direct marketing segment, as well as the timing of the Easter holiday, which resulted in more third-quarter sales than fourth quarter. The company incurred a net loss of $7.8 million, compared to a let loss of $22.0 million in the fourth quarter of 2006.

Fourth-quarter net sales in the direct marketing division, which includes the Harry & David food gifts catalogs and Website, along with business-to-business and outbound telemarketing sales, fell 4.5%, to $38.6 million. Harry & David Stores’ segment net sales decreased 2.3%, to $22.0 million, while same-store sales slipped 5.6% during the same period.

For the fiscal year ended June 30, net sales rose 7%, to $561.0 million compared with $524.4 million in fiscal 2006. Net income was $30.7 million, compared with a net loss of $5.7 million last year. Fiscal year sales in the diret marketing division increased nearly 4%, to $384.4 million, due to increased delivery and processing revenue, increased retail prices, and a combination of lower markdowns and discounts, according to the company. “Fiscal 2007 marked a year of continued sales growth and significantly improved profitability,” CEO Bill Williams said. “Our strong year-over-year performance reflects the successful execution of our key profitability and productivity initiatives. Due to favorable adjustments in our product pricing and markdown strategies, better inventory management and more efficient manufacturing and fulfillment, we achieved sales gains and significant gross margin increases in our core Harry & David direct marketing segment.”

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