Q.E.P. CO., INC. REPORTS FISCAL 2023 YEAR-END SALES AND EARNINGS
BOCA RATON, FLORIDA — June 5, 2023 — Q.E.P. CO., INC. (OTCQX: QEPC) (the “Company” or “QEP”) today reported its consolidated results of operations for its fiscal year ended February 28, 2023.
QEP reported net sales of $433.7 million for the year ended February 28, 2023, a decrease of $11.9 million or 2.7% from the $445.6 million reported in fiscal 2021. The fiscal 2023 decrease in net sales compared to the prior fiscal year reflects lower sales volume in the latter half of the year, principally in the Company’s North America flooring business, and the currency translation impact of the strong U.S. Dollar, which were only partially offset by year-over-year price increases to customers. As a percentage of net sales, gross margin was 26.3% in fiscal 2023, as compared to 27.1% in fiscal 2022.
Lewis Gould, Executive Chairman, commented on the Company’s results, “Although profitability was disappointing for the full fiscal year, there were positive signs in closing the year as supply chain logistics and inbound costs improved, inventory levels declined and the Company reduced its debt. Notwithstanding this, elevated inflation and high interest rates remain a concern as we enter the new fiscal year.”
Mr. Gould concluded, “We remain focused on our strategic profit improvement initiatives, including expanding our primary sales channels, investing in core product categories and evaluating our global footprint, along with taking action on under-performing manufactured and foreign sourced product lines.”
The Company’s gross profit for fiscal 2023 was $114.0 million, representing a decrease of $6.7 million or 5.6% from $120.7 million in fiscal 2022. The decrease in gross profit was due to increased inbound freight and other product cost increases during the earlier part of fiscal 2023 that were not fully recovered through price increases to customers or cost reduction initiatives.
Operating expenses were $110.1 million or 25.4% of net sales for fiscal 2023 and $106.9 million or 24.0% of net sales for fiscal 2022. The increase in operating expenses was due to increases in outbound freight costs caused by higher fuel costs. Additionally, the Company had higher personnel and marketing costs, including product displays and samples to support recently launched flooring product lines.
The increase in interest expense during fiscal 2023 as compared to fiscal 2022 was due to an increase in borrowings under the Company’s credit facilities and higher interest rates during fiscal 2023.
The provision for income taxes as a percentage of income before taxes was 104.4% for fiscal 2023, as compared to 23.4% for fiscal 2022. Fiscal 2023 includes a full valuation allowance on operating losses generated by the Company’s Canadian operation.