Dover Saddlery has a market cap of $23.2 million; its shares were traded at around $4.38 with a P/E ratio of 12.9 and P/S ratio of 0.3. Dover Saddlery had an annual average earning growth of 3.5% over the past 5 years.
Highlight of Business Operations:Total revenues increased $1.0 million, or 5.8%, to $18.3 million for the three months ended March 31, 2012 from $17.3 million for the three months ended March 31, 2011. Revenues in our direct market channel decreased $0.6 million, or 5.0%, to $11.5 million from $12.1 million in the corresponding period in 2011. Revenues in our retail market channel increased $1.6 million, or 30.8%, to $6.8 million from $5.2 million in 2011. The decrease in our direct market channel was due to weakness in consumer spending in this channel. The increase in revenues from our retail market channel was due to strong sales growth from our newer stores as they mature, two additional retail stores and promotions. Same store sales for the three month period increased 16.1% over the prior year. In addition, breakage income of $727,094, including a cumulative impact of $684,007, was recognized during the three months ending March 31, 2012. There was no breakage recorded for the same period in 2011.
Gross profit for the three months ended March 31, 2012 increased $0.5 million, or 7.5%, to $7.1 million as compared to the corresponding period in 2011. Gross profit, as a percentage of revenues, for the three months ended March 31, 2012 increased 0.6% to 38.6% from 38.0% for the corresponding period in 2011. The increase in gross profit as a percentage of revenues was attributable to increased revenue from the breakage income recorded in Q1 2012.
Selling, general and administrative expenses increased $0.6 million, or 10.4% to $6.5 million for the three months ended March 31, 2012 from $5.9 million for the three months ended March 31, 2011. SG&A expenses, as a percentage of revenues, increased to 35.7% of revenues from 34.2% of revenues for the corresponding period in 2011 as a result of increased costs in 2012 and slow sales growth. SG&A increased primarily as a result of an additional $578,000 in marketing costs.
Net income from investment activities consists of the Companys share of net earnings or loss of its affiliate as they occur. The Companys net investment gain for the three months ending March 31, 2012 was $7,000, an increase of $28,000 over its net investment loss of $21,000 in 2011. The Companys investment income or loss from investment activities are related to our investments in Hobby Horse Clothing Company, Inc. (HH) and Horsepharm, LLC.
The net income for the first quarter of 2012 increased by $96,000, or 76.7%, to $221,000, compared to $125,000 in the first quarter of 2011. This increase in the net income was due primarily to increased revenue from the retail market channel and gift certificate breakage, offset by SG&A expenses related to marketing costs. The resulting quarterly income per diluted share increased to $0.04 in the first quarter of 2012 compared to $0.02 per diluted share for the corresponding period in 2011.
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