Lakeland Industries, Inc. (LAKE) announced several important developments in its continued global transformation. The developments include consolidation of the company's domestic manufacturing operations and a significant traction for its Brazilian operations.
Christopher Ryan, Lakeland's president and chief executive officer, stated, "In advance of reporting financial results for our full fiscal year 2012 ending January 31, we are announcing important developments that beginning in our first quarter of fiscal 2013 are expected to deliver an improvement in the Company's cost structure, a reduction in overhead, and an acceleration of growth in Brazil that will drive a recovery in our consolidated revenues and profits sooner than we had previously announced. Certain of these and other developments will impact our fiscal 2012 fourth quarter financial results."
First and most important among Lakeland's recent developments is the receipt of a signed purchase order valued at around $5.3 million net of VAT taxes from the Brazilian Navy.
Further, in the fiscal 2012 fourth quarter, the company noted that it will be taking a foreign currency charge of about $200,000. From the beginning of the second half of 2011 and into the first quarter of 2013, Brazil's currency weakened against the US dollar. Lakeland said it has taken steps to reduce its exposure to foreign exchange fluctuations in Brazil.
Besides, the company said it will continue to market its expanding product lines in India, although to enhance its consolidated profitability it determined that its unprofitable India glove manufacturing subsidiary would be sold or shut down. To this end, the company reclassified the business as a discontinued operation with its third quarter financial results and recorded a pre-tax loss on disposal of approximately $880,000 for write-downs and other related expenses.
The company anticipates that additional charges relating to the discontinuance and shutdown of manufacturing operations in India will be limited to an additional $0.9 million for a total not to exceed $1.8 million. The additional charges are expected to be recorded with its fourth quarter results.
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