Q.E.P. CO., INC. REPORTS FISCAL 2024 FIRST QUARTER FINANCIAL RESULTS
Quarterly Net Sales of $103.3 million/Net Income of $0.9 million
BOCA RATON, FLORIDA — July 17, 2023 — Q.E.P. CO., INC. (OTCQX: QEPC) (the “Company” or “QEP”) today reported its consolidated results of operations for the first quarter of fiscal year 2024, which ended on May 31, 2023.
QEP reported net sales of $103.3 million for the quarter ended May 31, 2023, a decrease of $13.8 million or 11.8% compared to $117.1 million in the first quarter of fiscal 2023. The decrease in net sales was primarily due to lower demand in the North America retail and flooring dealer segments, along with the currency translation impact of the stronger U.S. Dollar in the current period.
Lewis Gould, Executive Chairman, commented on the Company’s results, “Although sales improved compared to the previous two quarters, the Company’s topline net sales in the current quarter as compared to a year ago were negatively impacted by the adverse effect of inflation on consumer spending and the increased cost of borrowing. Importantly, gross profit margin improved as supply chain disruptions eased and inbound freight costs declined. Supply chain improvements allowed the Company to reduce its inventory levels and realize the associated reduction in borrowing.”
Mr. Gould concluded, “The Company remains focused on addressing under-performing manufactured and foreign sourced flooring product lines, along with evaluating its global footprint in order to reduce operational complexity.”
The Company’s gross profit for the first quarter of fiscal 2024 was $29.3 million, representing a decrease of $1.5 million, or 5.0% from $30.9 million in the first quarter of fiscal 2023. As a percentage of net sales, gross margin increased to 28.4% in the first quarter of fiscal 2024, as compared to 26.4% in the first quarter of fiscal 2023. The increase in gross margin as a percentage of net sales was due to lower inbound freight costs.
Operating expenses for the first quarter of fiscal 2024 and 2023 were $27.3 million or 26.5% of net sales and $29.1 million or 24.9% of net sales, respectively. The first quarter of fiscal 2024 operating expenses reflect lower variable shipping costs and marketing display expense that was partially offset by higher personnel costs.
The higher interest expense during the first quarter of fiscal 2024 compared to the first quarter of fiscal 2023 was due to higher interest rates during the current period.
The provision for income taxes as a percentage of income before taxes was 28.0% for both the first quarter of fiscal 2024 and the first quarter of fiscal 2023.