Thursday, Richelieu Hardware Co. (RCH.TO), announced its first quarter financial results, reporting a decline in earnings, hurt by lower sales as internal sales dropped 3.2%. The company further said that it has frozen employees salary.
The Montreal, Canada-based company reported net income for the first quarter of C$4.35 million or C$0.20 per share, down from C$6.63 million or C$0.29 per share in the year-ago quarter.
Comprehensive income totaled C$5.9 million, on account of a latent foreign exchange gain of C$1.5 million on translation of the financial statements of its subsidiary in the U.S.
Consolidated sales for the quarter decreased 2% to C$94.15 million from C$96.08 million in the prior-year quarter, primarily due to a 3.2% internal decrease, whereas the growth-by-acquisition was 1.2%, reflecting the contribution of Top Supplies, Inc. and Acroma Sales Ltd, acquired on April 7 and July 28, 2008 respectively.
Sales to manufacturers totaled C$77.1 million, down 1.8% from the same quarter of 2008. Sales to hardware retailers including renovation superstores decreased 3.1% to C$17.0 million over the year-ago period.
Sales in Canada, which accounted for 80.8% of the consolidated sales, declined 3.6% in the first quarter of 2009, while sales in the U.S. were down 14.5% over the prior-year quarter.
The company said that the first quarter witnessed a slowdown in activity in three geographic markets, namely Central and Western Canada and the U.S., which were further affected by the economic crisis.
Cost of sales, warehouse, selling and administrative expenses for the quarter increased to C$86.11 million from C$85.51 million in the same quarter last year.
The company said that it has adopted preventive and proactive measures, including rigorous control of the company's gross margins, a cost-reduction program and a freeze on officers' and managers' salaries.
Shares of Richelieu Hardware are currently trading at C$15.85, down C$0.61 or 3.71% on the Toronto Stock Exchange.
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