By Sarah Falson
LAKE FOREST, USA: Small appliance-maker Salton has announced its second quarter sales for the period ended December 2006 reached only $190.9 million, which is $39.5 million lower than the $230.4 million in sales reported for the same period the year before.
"There was $8.9 million of planned reductions of discounted non-core products including certain housewares and personal care product lines," said the report.
"The majority of the remaining reductions in net sales resulted primarily from specific product level decisions involving opening price point items and other lower margin lines. These actions involved changes to promotional activities, elimination of items and price increases to compensate for higher material costs."
The report says that there were also some delays in receiving product from its suppliers early in the quarter due to "liquidity contraints".
However, the report also says that these decreases in gross profit were partially offset by a "$1.5 million decline in distribution expenses resulting from the previous domestic restructuring efforts, as well as lower sales and inventory levels."
Selling and administrative costs are reported as down by $46.3 million for the second quarter of fiscal 2007 compared to $53.6 million for the same period the year before.
"US operations reduced selling, general and administrative expenses by $3.7 million primarily driven by a $2.6 million decline in promotional expenditures such as television, certain other media and cooperative advertising expenses. The remaining reduction was a result of decreased expenditures in Europe in an effort to align costs with current business levels."
No mention was made specifically of the Australian Salton subsidiary located in Victoria.
Salton has recently merged with small appliance-maker, Applica, which distributed Black & Decker appliances in Europe and the USA. The transaction should be completed by 30 June 2007.
"Our fiscal second quarter results continue to reflect the highly challenging nature of the small appliance industry," said Salton USA CEO, Leonhard Dreimann.
"Recent declines in the housing market have had a direct impact on our industry and our business. We have successfully eliminated many underperforming product lines and depsite these market pressures, along with continued high costs for raw materials, we are very satisfied with our progress in the area of cost reduction and product rationalisation."
Dreimann said that the recently announced combination with Applica with also improve the company’s competetiveness in a market which is rapidly consolidating.
"We expect the combination to result in expanded brand portfolios, a strengthened international presence, improved capital structure and a lower cost structure."
Salton has had phenomenal success with its George Forman range of health grills.