Q.E.P. CO., INC. REPORTS FISCAL 2023 SIX MONTH AND SECOND QUARTER FINANCIAL RESULTS
Six Month Net Sales of $232.6 million
Six Month Net Income of $0.5 million
BOCA RATON, FLORIDA — October 17, 2022 — Q.E.P. CO., INC. (OTCQX: QEPC) (the “Company” or “QEP”) today reported its consolidated results of operations for the first six months and second quarter of its fiscal year 2023, which ended on August 31, 2022.
QEP reported net sales of $232.6 million for the six months ended August 31, 2022, an increase of $5.3 million or 2.3% from the $227.3 million reported in the same period of fiscal 2022. The Company reported net sales of $115.5 million for the quarter ended August 31, 2022, an increase of $2.6 million or 2.4% from the $112.9 million reported in the same period of fiscal 2022. The increase in net sales for the first six months and second quarter of fiscal 2023 compared to the prior year reflects year-over-year price increases that were implemented to mitigate the impact of inflationary pressures. These price increases were partially offset by lower sales volume and the currency translation impact of the stronger U.S. Dollar during the current period.
Lewis Gould, Executive Chairman, commented on the Company’s results, “While the inflationary pressures and volatile global supply chain that adversely impacted our financial results during the first half of the year are showing some signs of abating, economic conditions remain challenging. As the operating environment continues to evolve, our team of dedicated employees remains committed to implementing our strategic plan, which includes channel and product expansion, distribution facilities consolidation and investment in core product categories.”
The Company’s gross profit for the first six months of fiscal 2023 was $60.1 million compared to $62.3 million in the corresponding fiscal 2022 period, a decrease of $2.2 million or 3.5%. Gross profit for the second quarter of fiscal 2023 was $29.2 million, representing a decrease of $1.8 million or 5.7%, from $31.0 million in the corresponding fiscal 2022 period. The Company’s gross margin as a percentage of net sales for the first six months and second quarter of fiscal year 2023 was 25.8% and 25.3%, respectively, which decreased from 27.4% and 27.5% in the corresponding prior fiscal year periods, respectively. The decrease in gross margin as a percentage of net sales was due to inbound freight and other product cost increases that have not been fully recovered through customer price increases and other cost reduction initiatives implemented during the first six months and second quarter of fiscal 2023.
Operating expenses for the first six months and second quarter of fiscal 2023 were $58.5 million and $29.4 million, respectively, or 25.1% and 25.4% of net sales in those periods, compared to $54.7 million and $27.4 million, respectively, or 24.1% and 24.3% of net sales in the comparable fiscal 2022 periods. The increase in operating expenses was due to higher outbound freight costs directly related to higher fuel costs. Additionally, the Company had higher personnel and marketing costs as it continues to reinvest in sales support infrastructure, including marketing displays and samples, to support the recent launch of certain flooring product lines.