LITTLETON, MA - March 30, 2009 - Dover Saddlery, Inc. (NASDAQ: DOVR), the leading multichannel retailer of equestrian products, today announced financial results for the fourth quarter and fiscal year ended December 31, 2008.
Fourth quarter results
Total revenues for the fourth quarter of 2008 were $21.4 million compared to $22.9 million for the fourth quarter of 2007, a decrease of 6.8%. It is important to note that retail revenues increased 8.7% to $6.2 million, primarily due to the opening of new stores in 2007 and 2008, while same-store sales declined 11.8% due to a decline in consumer confidence and spending levels.
On a non-GAAP basis the company reported net income of $353,000, or $0.07 per diluted share. This followed a GAAP net income of $920,000 or $0.18 cents a share for the fourth quarter of 2007. In addition, the fourth quarter of 2008 generated an estimated federal taxable income of $625,000.
On a GAAP basis, in the fourth quarter of 2008, a non-cash goodwill impairment charge of $14.3 million was recorded. This resulted in a GAAP net loss of $(13.9) million, or $(2.68) a share.
"In the fourth quarter of 2008 we recorded a non-cash goodwill impairment charge of $14.3 million," said Stephen L. Day, president and CEO of Dover Saddlery. "This charge was required under current accounting rules regarding impairment because our market capitalization declined to a level below our book value. However I do not believe our market capitalization today reflects the true long-term value of our company, in spite of obvious risk and volatility in the short term resulting from current economic conditions."
"During 2008, the value of Dover Saddlery's common stock, like most common stocks, was significantly impacted by the deteriorating economy," Mr. Day continued. "Under GAAP accounting, the goodwill carried on the balance sheet was determined to be impaired, due to a reduction in its fair value compared to its book carrying value. While the goodwill impairment charge reduced reported earnings for the fourth quarter of 2008, it does not affect Dover Saddlery's liquidity, cash flows, cash earnings or debt covenants."
A reconciliation of net income calculated in accordance with GAAP and non-GAAP measures is provided in the tables accompanying this press release.
Full Year Results
Total revenues for the fiscal year 2008 were $78 million compared to $81.4 million for 2007. This decrease was attributable to the weak economic environment as experienced by most retailers, particularly in the fourth quarter.
Retail store revenues increased by 11.4% to $22.2 million. This increase was attributable to the opening of new Dover Saddlery retail stores in 2007 and 2008. Same store sales declined by 4.7% due to lower than usual store traffic in the latter part of the year.
On a non-GAAP basis, net income for 2008 was $418,000 or $0.08 per diluted share This followed GAAP net income of $825,000 or $0.16 per diluted share in year 2007. The full year 2008 performance generated an estimated federal taxable income of $775,000.
The non-cash, goodwill impairment charge of $14.3 million, recorded in the fourth quarter, resulted in a GAAP net loss for the fiscal year 2008 of $(13.8) million, or $(2.68) per share. While the goodwill impairment charge reduced reported earnings for 2008, it does not affect Dover Saddlery's liquidity, cash flows, cash earnings or debt covenants.
"2008 was a difficult operating environment for our industry as a result of numerous external factors which led to all time historical lows in consumer confidence, resulting in a contraction in specialty retail consumer spending," Mr. Day observed. "As a result, the Company has developed several short term strategies to maintain or expand market share, reduce operating costs and reduce capital expenditures. We are pleased that the loyalty of our customers and strength of our brand, combined with our aggressive cost control, resulted in a non-GAAP income from operations of $2.36 million and a positive non-GAAP net income for the year." (See the accompanying table for reconciliation to GAAP.)
Mr. Day continued, "Regarding our retail-rollout, in order to focus on profitability and await an expected more favorable lease environment, we are currently not planning to open additional stores in 2009 unless an exceptionally good opportunity arises. At the end of 2008, Dover Saddlery had completed 25% of its initial retail rollout target of 50 locations, and in spite of a challenging retailing environment, all stores are performing well."
Business Outlook 2009
Until there is greater long-term visibility on the consumer environment, the Company is not providing guidance on business prospects in 2009.
Today's Teleconference and Webcast
Dover Saddlery will be hosting a conference call at 8:30 A.M. ET today to discuss the fourth quarter and full year 2008 results. Investors are invited to listen to the earnings conference call over the Internet through the company's website at http://investor.shareholder.com/DOVR/ this web cast will be archived for a year.
About Dover Saddlery, Inc. Dover Saddlery, Inc. (NASDAQ:DOVR - News) is the leading multichannel retailer of equestrian products in the United States. Founded in 1975 in Wellesley, Massachusetts, by United States Equestrian team members, Dover Saddlery has grown to become The Source® for equestrian products. Dover offers a broad and distinctive selection of competitively priced, brand-name products for horse and rider through catalogs, the Internet and company-owned retail stores. Dover Saddlery, Inc. serves the English rider and through Smith Brothers, the Western rider. The Source®, Dover Saddlery® and Smith Brothers® are registered marks of Dover Saddlery.
For more information, please call 1-978-952-8062 or visit www.DoverSaddlery.com.
This press release includes "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including without limitation statements made about the Company's business outlook for fiscal 2009, the prospects for overall revenue growth and profitability, and the opening of and revenue growth from new stores. All statements other than statements of historical fact included in this press release regarding the company's strategies, plans, objectives, expectations, and future operating results are forward-looking statements. Although Dover believes that the expectations reflected in such forward-looking statements are reasonable at this time, it can give no assurance that such expectations will prove to have been correct. These forward-looking statements involve significant risks and uncertainties, including those discussed in this release and others that can be found in "Item 1A Risk Factors" of Dover Saddlery's Annual Report on Form 10-K for the fiscal year ended December 31, 2008. Dover Saddlery is providing this information as of this date and does not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise. No forward-looking statement can be guaranteed and actual results may differ materially from those Dover Saddlery projects.
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