Nov 06, 2009 (Mail Tribune - McClatchy-Tribune Information Services via COMTEX News Network) --

It's too early to gauge Harry & David Holdings Inc.'s coming holiday activity and revenue, but if recent trends continue, it could be a slow Christmas.

Harry & David Thursday reported a fiscal first quarter 2010 loss of $21.7 million for the period ending Sept. 26. The Medford-based gourmet-food and gift company lost $15.2 million in a similar period last year.

Slow sales are not unusual for the company in a quarter not known for its gift-buying holidays. The real test comes this quarter, with its big holiday finale.

During a conference call with market analysts, President and Chief Executive Officer Bill Williams said he couldn't predict how holiday sales would stack up against last year's $307.7 million figure for the second quarter.

"We're in an uncertain period," Williams said. "The sales challenges that emerged last year have not been reversed. If you use last year as a base line, there is more chance to be under last year than above last year. We are responding by reducing expenses wherever possible."

Harry & David's pre-tax loss for the first quarter was $22 million, compared to a pre-tax loss from continuing operations of $24.6 million reported in the same period last year. Net sales for the 13-week period dropped 12.1 percent to $46.3 million, compared to $52.6 million for the same period last year.

The average order size was down "by low double-digits" during the period, Williams said. "We've changed advertising and marketing for (the present) period so it's very difficult to draw conclusions."

The number of sales catalogs and the offerings they contain have been reduced this season.

"We have reduced our overall assortment considerably," Williams said. "There are fewer items in the catalog, but we still have a full array of price points up to and including the Fruit of the Month. But we are more heavily weighted toward lower price points."

Chief Finance Officer Ed Dunlap said part of the year-over-year decline in store revenue during the period was due to having eight fewer stores. He added the existing 136 will remain in operation. Dunlap said the company will hold capital expenditures to between $3 million and $4 million during the fiscal year with most of it going into remodeling and maintenance.

The company said its raw material and finished goods inventory declined 17.7 percent to $82.9 million at the end of quarter, versus $100.7 million last year. Capital expenditures declined to $500,000 during the period, compared with $1.7 million a year earlier.

Harry & David said it had a cash balance of $2 million versus $28 million in the same period last year, reflecting a $26 million reduction in its revolving credit line to $47 million.

Reach reporter Greg Stiles at 776-4463 or e-mail business@mailtribune.com.

To see more of the Mail Tribune, or to subscribe to the newspaper, go to
http://www.mailtribune.com. Copyright (c) 2009, Mail Tribune, Medford, Ore.
Distributed by McClatchy-Tribune Information Services. For reprints, email
tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax
to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave.,
Suite 303, Glenview, IL 60025, USA.

Copyright (C) 2009, Mail Tribune, Medford, Ore.