Lawson Products reports loss
Lawson Products said its fourth-quarter sales declined by 9% to $72.9 million compared to $80.0 million in the prior year quarter.
The company reported a net loss of $5.5 million, or 65 cents per diluted share, compared to a net loss of $0.5 million, or 6 cents per diluted share, in the prior year.
Lawson said the decrease was largely due to challenges the company encountered following the launch of its ERP system, which caused delays in its supply chain and fulfillment processes, leading to a build-up of backorders and lost sales in the quarter.
Gross profit was $39.0 million in the fourth quarter of 2011, compared to $49.8 million in the prior year period.
“Although operational issues related to our August 2011 ERP implementation impacted our financial performance during the second half of 2011, we continue to make progress on resolving many of these issues and improving our service levels," said Thomas Neri, president and chief executive officer. "The new ERP system will enhance our ability to respond to our customers’ needs and lead to increased customer satisfaction. The system is critical to provide the platform for our new website, to support the technology requirements of our new distribution center and to enable enhanced sales solutions.”
For the full year, Lawson's sales decreased by 0.6% to $315.0 million compared to $316.8 million in 2010. Gross profit as a percent of sales declined to 57.1% from 61.5% in 2010. This decline was driven by three main factors: (1) increased vendor costs that were not passed along to customers as Lawson held pricing constant to facilitate the ERP conversion; (2) an increase in outbound freight and labor costs following the ERP conversion; and (3) the company’s ongoing strategy to pursue larger customers with lower margins.
Net loss for 2011 was $4.6 million, or 54 cents per diluted share, compared to net income of $6.9 million, or 81 cents per diluted share in 2010.
“While our financial performance in the first half of 2012 will continue to be somewhat impacted by the transformational initiatives we have put in place, we have now passed the biggest hurdle. Average daily sales have been steadily increasing following the implementation of our new ERP system. Also, construction has commenced on our new, leased state-of-the-art distribution center in McCook, Illinois, which will consolidate operations of our existing Illinois facilities and provide the platform to enhance our customer service,” said Neri.
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