Thursday, LeapFrog Enterprises Inc. (LF), a technology-based educational platforms provider, backing its earlier guidance for fiscal 2009 said sales are expected to be down considerably in the first three quarters of the year, as retailers drive down inventory. Further, the company provided its forecast for the first and second quarter, with sales indicated to come in below the Street expectations.
Bill Chiasson, LeapFrog's chief financial officer, said, "We are expecting substantial year-over-year sales declines in the first three quarters of the year and some gross margin pressure in the first half of the year as retailers work down inventory."
Chiasson added that there is still a lot of uncertainty with 2009, but the company expects improved cash flow, targeting a break-even net cash usage for the year.
For the first quarter, LeapFrog anticipates net sales between $26 million and $30 million and gross margin between 25% and 27%. Operating expenses are expected to decline 30% - 34% year-on-year to a range of $33 million - $35 million. Five analysts polled by Thomson Reuters currently expect the company to report revenues of $42.99 million. For the second quarter, the company forecasts net sales in the range of $35 million - $45 million, compared to analysts' estimate of $52.86 million. Gross margin is predicted to be between 30% and 33%. Operating expenses are estimated to decrease 27% - 31% year-over-year to $34 million - $36 million.
LF closed Thursday's trading at $1.49, down $0.12 or 7.45%, on a volume of 0.54 million shares on the NYSE.
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