Q.E.P. CO., INC. REPORTS FISCAL 2024 SIX MONTH AND SECOND QUARTER FINANCIAL RESULTS
Six Month Net Sales of $202.7 million/Net Income of $2.6 million
BOCA RATON, FLORIDA — October 16, 2023 — 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 2024, which ended on August 31, 2023.
QEP reported net sales of $202.7 million for the six months ended August 31, 2023, a decrease of $29.9 million or 12.9% from the $232.6 million reported in the same period of fiscal 2023. The Company reported net sales of $99.4 million for the quarter ended August 31, 2023, a decrease of $16.1 million or 13.9% from the $115.5 million reported in the same period 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 general softening of sales in the non- North America segments and the currency translation impact of the stronger U.S. Dollar in the current period.
Lewis Gould, Executive Chairman, commented on the Company’s results, “The Company’s topline net sales in the current year continue to be negatively impacted by the difficult macroeconomic backdrop, including the effect of inflation on consumer spending and the higher cost of borrowing. Despite this, gross profit margin improved as inbound freight costs declined to traditionally normal levels. Supply chain improvements have also allowed the Company to reduce its inventory levels and realize the associated reduction in borrowing.”
Mr. Gould concluded, “Additionally, I am pleased that the Company’s leadership team has executed on our strategy as outlined in recent press releases of addressing under-performing flooring product lines, along with re-aligning our global footprint, as evidenced by our recent exit from the North America flooring market and the divestment of our UK operations. We remain focused on completing the implementation of this strategy as our roadmap for a renewed emphasis on our core business aimed at increasing profitability and stockholder value.”
The Company’s gross profit for the first six months of fiscal 2024 was $58.7 million compared to $60.1 million in the corresponding fiscal 2023 period, a decrease of $1.4 million or 2.3%. Gross profit for the second quarter of fiscal 2024 was $29.4 million, representing an increase of $0.1 million or less than 0.1%, from $29.2 million in the corresponding fiscal 2023 period. The Company’s gross margin as a percentage of net sales for the first six months and second quarter of fiscal year 2024 was 29.0% and 29.5%, respectively, which increased from 25.8% and 25.3% in the corresponding prior fiscal year periods, respectively. The increase in gross margin as a percentage of net sales was largely due to lower inbound freight costs.
Operating expenses for the first six months and second quarter of fiscal 2024 were $53.7 million and $26.4 million, respectively, or 26.5% and 26.6% of net sales in those periods, compared to $58.5 million and $29.4 million, respectively, or 25.1% and 25.4% of net sales in the comparable fiscal 2023 periods. The reduction in operating expenses reflect lower variable shipping costs and marketing display expenses that were partially offset by higher personnel costs during the current period.