Boyds Teddy Bear Gifts & Collectibles Reports Fourth Quarter 2004 Financial Results

The Boyds Collection, Ltd., designer and manufacturer of unique, whimsical and "Folksy With Attitude" teddy bear gifts and collectibles, recently released its financial results for the fourth quarter, ended December 31, 2004. In the fourth quarter of 2004, net sales declined $0.1 million to $21.9 million from $22.0 million in the fourth quarter of 2003. Wholesale net sales in the fourth quarter were $16.0 million, a decrease of $1.4 million, or 8%, from $17.4 million in the fourth quarter of 2003.

According to the company, the decline was primarily attributed to lower bookings as Boyds transitioned to its new sales model in late October of 2004. Additionally, net sales in the retail segment increased $1.3 million, or 29%, to $5.9 million in the fourth quarter of 2004 compared to $4.6 million in the fourth quarter of 2003. This increase of $1.3 million was a reflection of the opening of the company's second Boyds Teddy Bear gifts store location in Pigeon Forge, Tennessee, beginning in November 2004.

On a comparable store basis, retail sales declined by $0.4 million, or 9%, versus the same quarter in 2003. The decline was attributed by the company to lower tourist traffic to the Gettysburg area Boyds Teddy Bears gift store during the fourth quarter. Additionally, Boyds reported a net loss of $2.3 million, or a loss of $0.04 per diluted share, in the fourth quarter of 2004 compared to a net loss of $1.8 million, or a loss of $0.03 per diluted share, in the same period in 2003. The decline in net income for the fourth quarter of 2004 was due primarily to $0.8 million in restructuring charges for the company's sales force and international operations, $0.4 million in a year-end physical inventory charge, a $0.7 million increase in transportation costs due to higher fuel prices, and $0.5 million pre-opening/operating costs associated with the Pigeon Forge, Tennessee Boyds Bear Country gift store. These costs were partially offset by a $1.8 million charge in 2003 for the change in the Boyds Bear CEO.

Chief Executive Officer of Boyds, Jan L. Murley, stated, "In the past few years, the retail environment in which Boyds operates has changed dramatically, characterized by a greater shift towards consumers seeking gift related products in national, mass market stores. We are aggressively working to address this shift and better position our company within this marketplace. Among the actions we have taken are accelerating the pace of introduction of new, innovative product lines at gift price points and recruiting senior management with broad experience in the consumer gift retail sector."