Why greater leather sales mean smaller profit for Tandy
05/12/2014
The retailer, which operates about 100 stores, said its profit will decline from its original forecast because leather has the lowest margin of all the products it sells.
CEO Jon Thompson said: "The more leather we sell, the lower the gross profit margin we achieve. It's strictly a function of the product mix.”
Shannon Greene, chief financial officer, added: "We can predict somewhat the mix of product our customers are going to buy based on our targeted advertising campaigns and our fourth quarter campaigns are featuring our large supply of leather. If the customers purchase enough other product when they buy leather, our gross profit margins and operating margin could be better than we are estimating now.
"Regardless, even though we are revising our earnings estimate downward, we still expect our 2014 earnings to be higher than our 2013 earnings."
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