April Fool's! How's this gift? It's no joke. Gift industry competitor Russ Berrie & Co.
After the stock market closed yesterday, the company reported extremely poor operating results. Fourth-quarter sales sank 22.4% (yikes!) for the comparable quarter last year, and net income went from a profit of $0.43 to a loss of $0.34 a share.
In the company's SEC 10K filing, Berrie attributes the loss in sales in its gift segment (74.6% of total sales) to three factors. First, there is retailer consolidation and a declining number of independent retail outlets. Put another way, the Wal-Marts
Second, the company cited increased competition from entities that "offered lower pricing and achieved greater acceptance of their products." Competition manifests itself quite simply in retail environments -- decreased pricing power in the absence of a clearly differentiated product.
Investigate competitor BoydsCollection
Finally, the company sites "changing buying habits of consumers, marked by a shift from independent retailers to mass market retailers." The emergence of Internet retailers such as Hidden Gems recommendation RedEnvelope
The company has been downsizing ("right sizing" in their words), making acquisitions, and entering licensing agreements with such companies as Motley Fool Stock Advisor recommendation Marvel Enterprises
Given the changing competitive landscape and reasonable expectation of similar challenges going forward, Russ Berrie's fall is justified.FOOLottery!