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Blyth reports disappointing third quarter sales

Improved outlook for fiscal year 2008

Blyth Inc., a Greenwich, Conn.-based designer and marketer of candles, home fragrance and home decor, reported declining third quarter results, commented on fiscal year 2007 and its expectations for fiscal year 2008.

Net sales for the third quarter, ended Oct. 31, declined nearly 10% to $297.9 million from $328.5 million last year. Excluding the 2005 impact of selling Impact Plastics, third quarter sales dipped 3% primarily due to lower comparable sales in the North American direct selling and wholesale home fragrance markets. International sales represented 20% of total sales in the third quarter, versus 16% last year, reflecting growth in PartyLite’s international markets.

North American wholesale mass channel restructuring charges of $5.2 million, recorded in the current fiscal quarter, include $4.8 million related to inventory write-downs, equipment impairment and severance. Net loss for the quarter was $200,000 versus net earnings of $23 million a year earlier.

“Fiscal year 2007 continues to be very challenging for Blyth,” Robert B. Goergen, CEO and chairman of the board, said. “While we are disappointed in our third quarter operating performance, numerous initiatives are underway across the company that we believe are setting the stage for improved results in the future.” 

For Fiscal Year 2007, earnings per share are expected to be a loss in the range of $2.50 to $2.60. This estimate includes the effect of a goodwill impairment charge of $0.65 per share recorded in the second quarter, an estimated $2.80 per share loss on the sale and discontinued operations of Blyth's European Wholesale businesses and restructuring charges in the North American Wholesale mass channel home fragrance business of approximately 30 cents to 35 cents per share. Excluding those effects, fiscal year 2007 earnings per share are expected to range from $1.20 to $1.25. Cash flow from operations of approximately $80 million for the full fiscal year is anticipated. Capital spending of approximately $20 million is also expected for fiscal year 2007.

For Fiscal Year 2008, management expects earnings per share of $1.20 to $1.30. This estimate reflects anticipated restructuring charges of about 10 cents to 15 cents per share related to the North American Wholesale mass channel home fragrance business. Based on continuing operations, excluding the anticipated restructuring and impairment charges, earnings per share are expected to be $1.35 to $1.40, or a 12% increase versus management’s fiscal year 2007 comparable projection of $1.20 to $1.25.

“Like most of our competitors, the globalization of the Home Expressions market has required adjustments to our cost structure,” Goergen said. “Our management team has made significant efforts to meet those challenges, resulting in the turnarounds underway in several of our businesses."

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