Tandy Leather Factory, Inc. (NASDAQ:TLF) today reported financial results for the third quarter of 2016.  Consolidated net income for the quarter ended September 30, 2016 was $1.0 million compared to $1.1 million for the third quarter of 2015, a decrease of 10%.  Fully diluted earnings per share of $0.11 for the third quarter of 2016 was equal to that reported for last year’s third quarter.  Total sales for the quarter ended September 30, 2016 were $18.6 million, down 4% from $19.4 million in the third quarter last year.

Consolidated sales for the nine months ended September 30, 2016 were $58.8 million, down 2% from 2015’s comparable period sales of $59.9 million.  Consolidated net income for the first three quarters of 2016 increased 7% to $4.3 million or $0.46 per fully-diluted share versus $4.1 million or $0.40 per fully-diluted share in the comparable period last year.

Sales in the Retail Leathercraft segment, which consists of the Tandy Leather stores, decreased $209,000 in the third quarter, a 2% decline over last year’s third quarter.  Eighty-one stores comprised Tandy Leather’s operations on September 30, 2016 compared to eighty-two stores at September 30, 2015.  For the first nine months of 2016, Retail Leathercraft’s sales decreased $114,000, or 0.3%, from the first nine months of 2015.  Third quarter sales for the Wholesale Leathercraft segment, which consists of the Leather Factory stores, decreased 8% or $489,000, from the same quarter last year.  For the first nine months of 2016, Wholesale Leathercraft’s sales were down $1,047,000, or 5%, compared to the same period in 2015.  International Leathercraft, consisting of four stores located outside of North America, reported a sales decrease of 3%, or $29,000, compared to the third quarter of 2015.  For the year to date, International Leathercraft’s sales were up 3%, or $67,000, over the same period last year.

Consolidated gross profit margin for the current quarter was 62.5%, compared to 61.1% for the third quarter of 2015.  For the first three quarters of 2016, consolidated gross profit margin was 63.2%, improving from last year’s gross profit margin of 62.1%.  Consolidated operating expenses increased approximately 1% or $132,000 for the third quarter of 2016 compared to the comparable quarter in 2015, primarily due to higher employee compensation and benefits, rent and depreciation, offset by lower advertising and store relocation costs.  For the year to date, consolidated operating expenses decreased 1% or $196,000, compared to the same period in 2015 with decreases occurring in employee compensation and benefits, advertising, and relocation expenses, offset by higher rent and depreciation.  As a percentage of sales, consolidated operating margin decreased for the quarter to 8.3% compared to 9.6% in last year’s third quarter.  On a year-to-date basis, consolidated operating margin increased from 11.0% last year to 11.5% in the current year.

Shannon L. Greene, Chief Executive Officer, commented, “While both sales and earnings this quarter were lower than last year’s third quarter, the results were not unexpected.  Sales continue to be challenging as we have discussed all year, but our earnings are ahead of internal expectations.  Said another way, we are achieving success in growing earnings in spite of weak sales. Despite the economic uncertainty, we are planning several new stores in markets that we believe will contribute favorably to our financial results over time.”

Mark Angus, President, added, “Compared to last year’s third quarter, although our sales were weaker, our gross profit margin improved.  So we are doing the right thing to protect margins as we maneuver around the retail headwinds.  Further, as we head into the Christmas shopping season, we are closely monitoring expenses to maximize earnings.”

Tandy Leather Factory, Inc., (http://www.tandyleather.com), headquartered in Fort Worth, Texas, is a specialty retailer and wholesale distributor of a broad product line including leather, leatherworking tools, buckles and adornments for belts, leather dyes and finishes, saddle and tack hardware, and do-it-yourself kits. The Company distributes its products through its 27 Leather Factory stores, located in 18 states and 3 Canadian provinces, 82 Tandy Leather retail stores, located in 36 states and 6 Canadian provinces, and four combination wholesale/retail stores located in the United Kingdom, Australia, and Spain.  Its common stock trades on the Nasdaq with the symbol “TLF”.  To be included on Tandy Leather Factory’s email distribution list, go to http://www.b2i.us/irpass.asp?BzID=1625&to=ea&s=0.