Ennis Reports Fiscal Year Financials
Net Increase Of 3.2%
Counselor Top 40 supplier Ennis (asi/52493) announced this week that its net sales increased from $517.0 million for the year ended February 29, 2012 to $533.5 million for the year ended February 28, 2013. The 3.2% revenue increase for Ennis, which is a wholesales printing and apparel manufacturer that is the parent to industry suppliers Alstyle Apparel (asi/34817) and Admore (asi/32050), came from positive results from its print segment. The company's print sales for the just-completed fiscal year increased by 20.4%, while its apparel sales fell over the 12 months by 16.8%.
The company also took a hit to its consolidated margin in its fiscal 2013, which fell by nearly two percentage points to 23.3%. Again, Ennis' apparel segment was the main impetus for the decline, as its apparel margin decreased from 21.6% in 2012 to 13.2% in 2013 due to the higher cost of cotton in finished goods and reduced sales volume stemming from sale-side pressure, the company said.
"Our apparel results for the fiscal year were impacted by the high cost of cotton in finished goods inventory," said Keith Walters, chairman, president and CEO of Ennis, as well as a member of Counselor's Power 50. "We attempted to match the sales price with the cost through the sale of this high-cost inventory, rather than reducing our selling price below our embedded costs. Thus, we absorbed the negative financial impact over our inventory turn cycle rather than recognizing the large impact of an inventory write-down in a single quarter, as some of our competitors did."
Walters, though, said that the company's inventory is now more balanced and it foresees increases to come in its apparel sales and margins. "Most of the higher-cost cotton has made its way through our apparel's finished goods inventory and the divergence between the current purchase cost of cotton and the average cost in finished goods inventory continues to shrink," he said. "As a result, we expect our apparel margin will continue to improve, as it did this past quarter. Our print margin continued to remain healthy and improved this quarter."
Ennis ranks as the fifth-largest supplier on Counselor's Top 40, reporting more than $300 million in annual North American ad specialty sales.