Earnings Fall at Blyth, Inc.

Blyth, Inc. reported today second quarter net sales increased to $249.7 million compared with $248.7 million a year earlier. Net Earnings for the quarter were $12.9 million versus $18.7 million a year earlier.

Net sales for the six months ended July 31, 2001 totaled $510.8 million versus $540.1 million reported a year ago. Operating profit for the six months was $49.7 million versus $69.5 million last year. Net earnings were $28.6 million compared to $38.4 million for the prior year period. Diluted Net Earnings Per Share were $0.60, compared to $0.80 for last year’s first half.

The ongoing challenge of weak economic environments-in the U.S. in particular -which management believes significantly affected wholesale purchasing by retailers, as well as continued consumer caution, have negatively affected each of Blyth’s channels of distribution, according to the company. This resulted in slower than anticipated sales growth year-to-year in the premium channel and declines in the direct, mass and foodservice channels. Additionally, the impact of depressed European currencies reduced Blyth’s reported second quarter sales by 2%. The company’s decision last year to divest itself of its religious and citronella candle businesses also impacted the year-to-year sales comparison as these businesses traditionally experienced their strongest sales during the second quarter.

Within the mass channel, Blyth, as well as other manufacturers, continue to experience sluggishness at retail. This, combined with the loss of some sales outlets due to mass market retailer bankruptcies, along with increased competition and pricing pressure have necessitated the Company’s examination of overall inventory requirements for the mass channel.

Commenting on the second quarter sales and earnings results, Robert B. Goergen, chairman and chief executive officer, said, “Given the current retail climate in North America and Europe, high expectations for the second quarter would have been unreasonable, so our results are satisfactory. Unusual events that began last year, such as five mass retailer bankruptcies, have altered the nature of the mass channel for the foreseeable future. Although sales in this channel represent only about 10% of sales in the candles and home fragrance segment of Blyth’s business, they had a significant impact on second quarter earnings and are an important management focus.”

On a segment basis, net sales in the candles and home fragrance products businesses were $192.3 million, compared to $217.3 million in the prior year period. Net sales in the creative expressions and foodservice businesses totaled $57.3 million versus $31.4 million one year ago.. Increases in this segment of Blyth’s business were attributable to the inclusion of Midwest of Cannon Falls, which was acquired by Blyth in April.