Ennis Inc.'s Earnings Double for Quarter Ended February 28, 2013
Ennis Inc., the print and apparel company located in Midlothian, Texas, reported results for the quarter and year ended February 28, 2013.
The company's net sales for the fourth quarter were $123.6 million, an increase of 1.7 percent from $121.5 million for the same quarter last year. Print sales increased 10.2 percent for the quarter, from $72.4 million to $79.8 million, while apparel sales declined by 10.6 percent for the quarter, from $49.1 million to $43.9 million. Lowered cotton prices and elimination of some duplicate selling and administrative costs helped improve net earnings, which increased to $7.1 million for the quarter, more than double the $3.3 million in earnings from the same quarter last year.
Net sales for the full year increased from $517.0 million for the year ended February 29, 2012 to $533.5 million for the year ended February 28, 2013, or an increase of 3.2 percent. Print sales for the year increased $56.7 million or 20.4 percent, from $278.0 million to $334.7 million, while apparel sales for the year decreased $40.2 million or 16.8 percent, from $239.0 million to $198.8 million. While print margins increased from 28.4 percent to 29.2 percent, apparel margins dropped to 13.2 percent from 21.6 percent due to the higher costs of cotton last year. As a result, net earnings decreased from $31.4 million to $24.7 million for the full-year period.
"Overall we are pleased with our results for the quarter," said Keith Walters, chairman, CEO and president of Ennis Inc. "As we have stated previously, our apparel results for the fiscal year were impacted by the high cost of cotton in finished goods inventory. We attempted to match the sales price with the cost through the sale of this high cost inventory, rather than reducing our selling price below our embedded costs. Thus, we absorbed the negative financial impact over our inventory turn cycle rather than recognizing the large impact of an inventory write-down in a single quarter, as some of our competitors did. We continue to believe this was the right approach with the overall financial impact being lower than if we had taken a significant loss in one or two quarters. However, most of the higher cost cotton has made its way through our apparel's finished goods inventory and the divergence between the current purchase cost of cotton and the average cost in finished goods inventory continues to shrink. As a result, we expect our apparel margin will continue to improve, as it did this past quarter. Our print margin continued to remain healthy and improved this quarter as we started to eliminate some of the duplicate selling, general and administrative costs associated with our recent acquisitions."
The full report is available on Ennis Inc.'s website.