Tofutti sales slide post–Trader Joe's pullout

Tofutti sales slide post–Trader Joe's pullout

Sales in both the 13- and 26-week periods continued to be impacted by the decision of Trader Joe's, formerly the company's largest customer, to discontinue stocking branded goods in mid-2011.

Tofutti Brands Inc. announced its results for the 13- and 26-week periods ended June 30, 2012.

Tofutti Brands reported net sales for the 13 weeks ended June 30, 2012 of $3,699,000, a decrease of $751,000, or 17 percent, from the sales level realized for the 13 weeks ended July 2, 2011. Net sales for the 26-week period ended June 30, 2012 decreased to approximately $7.0 million from approximately $8.5 million for the 26-week period ended July 2, 2011. Sales in both the 13- and 26-week periods continued to be impacted by the decision of Trader Joe's, formerly the company's largest customer, to discontinue stocking branded goods in mid-2011. In addition, sales were negatively impacted due to the discontinuance of marginally profitable products.

The company's gross profit and gross profit percentage for the 13-week period ending July 2, 2011 were approximately $1,133,000 and 31 percent, respectively, compared to $1,231,000 and 28 percent, respectively, for the period ending July 2, 2011. The decrease in gross profit was due to the decrease in sales, while the increase in gross profit percentage was due to the positive effect of price increases put into effect in the second quarter coupled with our ongoing program to eliminate marginally profitable products. The company's gross profit and gross profit percentage for the 26-week period ending June 30, 2012 were approximately $1,946,000 and 28 percent, respectively, compared to $2,314,000 and 27 percent, respectively, for the period ending July 2, 2011.

For the 13-week period ended June 30, 2012, the company reported a loss of $165,000 before an income tax benefit of $67,000 compared to income before income taxes of $139,000 for the 13-week period ended July 2, 2011. As a result, the company recorded a net loss of $98,000 ($(0.02) per share on a basic and diluted basis) for the 13 weeks ended June 30, 2012 compared to net income of $83,000 ($0.02 per share on a basic and diluted basis) for the 13 weeks ended July 2, 2011. The company reported a loss of $506,000 before an income tax benefit of $197,000 for the 26-week period ended June 30, 2012 compared to income before income taxes of $28,000 for the 26-week period ended July 2, 2011. The company's net loss for the 26 weeks ended June 30, 2012 was $309,000 ($(0.06) per share on a basic and diluted basis) compared to $17,000 ($0.00 per share on a basic and diluted basis) for the 26 weeks ended July 2, 2011.

As of June 30, 2012, the company's working capital was approximately $4.1 million, with approximately $0.3 million in cash and cash equivalents, compared with working capital of $4.4 million and approximately $1.6 million in cash and cash equivalents at December 31, 2011. The decrease in cash and cash equivalents is attributable in great measure to the $817,000 increase in inventory due to the buildup of inventory for the summer selling season and of new products that are being introduced during the third quarter.

Mr. David Mintz, Chairman and Chief Executive Officer of the company stated, "Our results for the first six months of 2012 continue to reflect the impact of the loss of Trader Joe's as a customer. During the first six months of 2012, our gross margin percentage improved due to the positive effect of price increases put into effect in the second quarter coupled with our ongoing program to eliminate marginally profitable products. We believe that our sales and gross margins will improve during the remainder of fiscal 2012 due to the roll-out of our new products and price increases instituted in the second quarter of the year, and other price increases, which range from 5 percent to 10 percent, will become effective at various times in the third quarter of this year. We are expanding the distribution of our new Tofutti Jumbo and Mini Raviolis, made with BETTER THAN RICOTTA®, our non-dairy ricotta cheese product, into new markets. Our new stick novelty, the Hooray Hooray Bar, sweetened with Stevia, a natural sugar replacer, continues to be well received by our customers."

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