Shares of Summer Infant Inc. (SUMR), now known as SUMR Brands, plunged to a 4-year low of $0.65 on Friday as investors were unsatisfied with the company’s earnings results for the first quarter of 2019. The results were hurt by the negative impact of tariffs and lost sales due to the liquidation of Toys “R” Us.
Till now, the company has experienced declining sales, huge legal fees incurred in a fight with prior management, and write-offs from the Toys “R” Us bankruptcy. The company, which markets branded juvenile health, safety, and wellness products, has suffered from expenses related to the litigation and severance as well as from the write-down of inventory being liquidated.
During last year April, the market has feared the Toys “R” Us liquidation would bankrupt Summer Infant, which can be seen from the stock’s fall to as low as 72 cents from a high of $2.25 in 2017 and $4.50 in 2014. In response, Summer Infant made job cuts and taken streamlining operations for saving about $1.6 million annually.
For the first quarter, the company reported a narrower loss helped by lower general and administrative expenses. Net sales rose by 1% with growth across all major customers and most key product categories offsetting the negative impact from tariffs and lost sales due to the liquidation of Toys “R” Us.
The company saw year-over-year growth across all major customers and core product categories such as gates, potties, bathers, and positioners. During the first quarter, the company launched its ‘born free’ brand of innovative products and hired a new head of sales for North America, Scott Doerstling. Scott brings over 20 years’ experience in the juvenile industry across many premier consumer products companies.
The company further streamlined its corporate structure by selectively lowering its workforce by roughly 7% this quarter, to eliminate redundancies and focus on core capabilities. While still facing some uncertainty due to ongoing tariffs on Chinese goods, Summer Infant ended the quarter with increasing demand and strengthening point-of-sale trends.
Shares of Summer Infant opened lower on Friday and is trading in the red territory on the Nasdaq. The stock has fallen over 28% in the past year and over 16% in the past three months.