Net income for the first nine months of fiscal 2011 was $2.8 million, or $0.18 per basic and $0.17 per diluted share, compared to $6.3 million or $0.40 per basic and diluted share for the first nine months of fiscal 2010. For the nine months ended July 3, net revenues were $125.0 million, a decrease of $25.1 million or 16.7 percent from the $150.1 million reported for the nine months ended June 27, 2010, a 39-week period.
The company attributed the net loss and drop in net revenues to lower orders from its retail and foodservice customers due to the continuing difficult economic environment; startup costs related to its new Boston Market and Target retail products; and higher prices for commodities, energy and freight; and a reduction in volume caused by a customer who took its production in-house, among other things.
"While we are optimistic about the near-term and mid-term prospects for our business, this was a difficult quarter for the company and for the food industry,” said James Rudis, chairman, president and CEO. “Consumers continue to be cautious in their spending, which impacts sales of all retailers, including our customers. The reduced volume from our retail and foodservice accounts also lessened our operating efficiencies and thus our gross margins.
During the third fiscal quarter, the company began producing 16 retail frozen food items under license from Boston Market Corporation, as well as production of 16 private-label frozen food items for sale in Target retail stores.
There is a substantial amount of Boston Market product manufactured by the previous license holder still in the retail channel. As a result, the company anticipates revenues from the brand will accelerate as the existing inventory is sold, Rudis said.
The company's net revenues from retail customers for the third quarter of fiscal 2011 decreased by $2.6 million, or 9.1 percent, to $26.1 million from the $28.7 million reported for the third quarter of fiscal 2010. This decrease was largely due to reduced sales to Safeway Inc., Jenny Craig Inc., and Pinnacle Foods Inc., and the previously disclosed decision by H. J. Heinz to self-manufacture product that had been made for it by the company.
Foodservice net revenues decreased by $1.1 million, or 8.7 percent, to $11.6 million for the third quarter of fiscal 2011, from $12.7 million for the third quarter of fiscal 2010. Airline net revenues increased by $88,000, or 4.6 percent, to $2.0 million for the third quarter of fiscal 2011, from $1.9 million for the third quarter of fiscal 2010.