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Tofutti Brands Inc Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: April 5, 2012 10:48PM
Tofutti Brands Inc (TOF) filed Annual Report for the period ended 2011-12-31. Tofutti Brands has a market cap of $9.6 million; its shares were traded at around $1.91 with a P/E ratio of 92.3 and P/S ratio of 0.5. Tofutti Brands had an annual average earning growth of 0.5% over the past 5 years.
Highlight of Business Operations:Our sales to health food distributors in fiscal 2011 decreased to approximately $8,276,000, or 52% of total sales, as compared to approximately $9,078,000, or 51% of total sales, in fiscal 2010. In fiscal 2011, sales to Trader Joes decreased to approximately $1,420,000, or 9% of sales, as compared to approximately $3,377,000, or 19% of sales in fiscal 2010. The reduction in sales to Trader Joes, formerly our largest customer, was primarily due to the determination of Trader Joes to cease selling branded goods. Our sales to the kosher market increased to approximately $1,624,000, or 10% of sales, in fiscal 2011, from sales of approximately $798,000, or 5% of sales, in fiscal 2010.
During fiscal 2011, we shipped TOFUTTI nondairy products to distributors in Australia, Brazil, Canada, China, England, Israel, Mexico, Panama and Trinidad. Our distributor in England is our master distributor for all of Europe and part of the Middle East, excluding Israel, and sells our products to approximately twenty other countries. Sales to foreign distributors increased to approximately $2,049,000, or 13% of sales, in fiscal 2011, as compared to approximately $1,652,000, or 9% of sales, in fiscal 2010. We conduct all of our foreign business in U.S. dollars. Therefore, our future export sales could be adversely affected by an increase in the value of the U.S. dollar against local currencies, which could increase the local currency price of our products.
We Depend on a Few Key Customers for a Significant Portion of Our Sales. During the fiscal years ended December 31, 2011 and January 1, 2011, Trader Joes accounted for 9% and 19% of our net sales, respectively. In 2011, we were informed that Trader Joes would no longer purchase our products as they determined to replace our products with their own private label substitutes. We do not expect to record any sales to Trader Joes in 2012. Our failure to replace some of our historical Trader Joes revenues could have a material adverse effect on our company.
Our gross profit in the year ended December 31, 2011 decreased by $957,000 to $4,485,000, reflecting the lower level of sales. Our gross profit percentage for the year ended December 31, 2011 was 28% compared to 31% for the year ended January 1, 2011. This decrease in gross profit percentage was due to an increase in certain material and packaging costs in the 2011 period compared to the 2010 period. Freight out expense increased to $1,033,000 for the year ended December 31, 2011 compared with $981,000 for the year ended January 1, 2011. While the actual dollar cost of freight increased slightly in 2011, its cost as a percentage of sales increased from 5.5% in 2010 to 6.5% in 2011. Due to the expected high cost of fuel, we anticipate that our freight cost as a percentage of sales will approximate
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