Ennis Earnings Drop Nearly 20 Percent for Second Quarter
Ennis Inc., Midlothian, Texas, reported financial results for the three- and six-month periods this week. The company reported that net income decreased nearly 20 percent for the quarter over the same period last year.
For the quarter ended August 31, 2011, Ennis reported $9.7 million in net earnings, compared to $12.1 million for the same period last year. The six-month earnings were down roughly 16 percent, $21.1 million for 2011 versus $25.1 million in 2010. Revenue for the period fell approximately 9 percent, to $130.3 million.
The company attributed the change mostly to dramatically increased materials costs for the apparel division, resulting from higher cotton prices across the board. "Our apparel raw material cost, on a comparable basis, was up approximately 50 percent, with continued increases expected over the next six months as the impact of the higher priced cotton makes its way through inventory," said Keith Walters, chairman, CEO and president of Ennis, in a press release.
Ennis' apparel division, which includes promotional products apparel supplier Alstyle Apparel, felt the brunt of the loss. In addition to the increases costs, the company experienced decreased apparel sales in the quarter, falling 17 percent to $61.2 million.
"Whether this is just a temporary situation or one we will have to manage for an extended period of time is unknown. As we indicated previously, manufacturers' ability to navigate through this period of higher cotton costs was dependent upon many factors, one being the continued economic recovery. The current softness in the marketplace will make this an even more challenging task for all concerned," Walters stated.
Ennis' print division remained steady for the quarter, with a slight increase in print sales, up to $69.2 million from $69.1 million in 2010. In addition, print profit margins increased slightly from 28.2 percent to 28.6 percent. Walters said the overall costs and profits for all divisions were "as expected."