Farmer Brothers (FARM) Q4 Loss Wider Than Expected, Sales Up Y/Y
Farmer Bros. Co. FARM reported fourth-quarter fiscal 2023 results, wherein the top line came in line with the Zacks Consensus Estimate and the bottom line missed the same. In the quarter, while the top line increased year over year, the bottom line fell.
Q4 in Detail
Farmer Brothers posted an adjusted loss per share of 84 cents, wider than the Zacks Consensus Estimate of a loss of 61 cents per share. The company posted earnings of a penny per share in the year-ago quarter.
Net sales of $85.5 million increased 1.1% on a year-over-year basis. Management cited that effective pricing actions contributed to the company’s revenue growth, which was partially offset by lower volumes. Net sales came in at par with the Zacks Consensus Estimate.
The gross profit declined 22.8% year over year to $27.8 million. Meanwhile, the gross margin contracted 1,010 basis points (bps) to 32.5% from 42.6% in the prior-year quarter.
The company’s total cost of sales in the reported quarter was $57.7 million, up 18.7% year over year. The metric, as a percentage of net sales, increased by approximately 1000 bps to 67.5%. Selling, general and administrative (SG&A) expenses were relatively stable at $35.4 million. SG&A as a percentage of net sales decreased by approximately 40 bps to 41.4%.
The company’s loss from operations was $10.1 million for the quarter under discussion, compared with a loss of $0.7 million in the year-ago quarter. The interest expenses increased to $3 million from $1 million in the prior-year quarter.
Farmer Brothers Company Price, Consensus and EPS Surprise
Farmer Brothers Company price-consensus-eps-surprise-chart | Farmer Brothers Company Quote
Financials
Farmer Brothers ended the fiscal fourth quarter with cash and cash equivalents of $5.2 million and inventories of $49.3 million. Total shareholders’ equity was $38.1 million as of Jun 30, 2023.
In fiscal 2023, the company’s net cash used in operating activities was $6.9 million compared with $11.5 million in the year-ago period. Capital expenditures totaled $15 million in fiscal 2023, almost in line with the year-ago figure.
Depreciation and amortization expenses were $22.1 million in fiscal 2023 compared with $23.8 million in the year-ago period.
Guidance
FARM anticipates benefiting from favorable pricing actions, improving margins, new product traction and better leverage of its operating cost structure in the second quarter of fiscal 2024 and throughout the fiscal year. These factors are expected to enable the company to return to positive free cash flow and profitability.
Shares of this Zacks Rank #3 (Hold) company have decreased by 34.1% in the past three months compared with the industry’s decline of 8.5%.
Eye These Solid Picks
We have highlighted three top-ranked stocks, namely Abercrombie & Fitch ANF, American Eagle Outfitters AEO and Boot Barn BOOT.
Abercrombie & Fitch, a leading casual apparel retailer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Abercrombie & Fitch’s current financial-year sales and earnings per share (EPS) suggests growth of 10.4% and 1,644%, respectively, from the year-ago reported figures. ANF delivered an earnings surprise of 724.8% in the last reported quarter.
American Eagle Outfitters, a retailer of casual apparel, accessories and footwear, currently sports a Zacks Rank #1. AEO delivered an earnings surprise of 43.2% in the last reported quarter.
The Zacks Consensus Estimate for American Eagle Outfitters’ current financial-year sales and EPS suggests growth of 1.3% and 24.7%, respectively, from the year-ago reported figures.
Boot Barn, a fashion retailer of apparel and accessories, currently flaunts a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 13.5%, on average.
The Zacks Consensus Estimate for Boot Barn’s current financial-year sales suggests growth of 7.8% from the year-ago reported figure.
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