Enesco Group, Inc. to Transition to Third-Party Distribution and Warehousing
November 18 2005 - 4:03PM
Business Wire
- Transition Designed to Reduce Cost Structure and Manage Operating
Expenses - Enesco Group, Inc. (NYSE:ENC), a leader in the giftware,
and home and garden decor industries, today announced the Company
will transition its distribution and warehousing operations to a
third-party logistics company. Enesco selected National
Distribution Centers (NDC), an affiliate of NFI Industries, based
in New Jersey, to manage the Company's distribution operations in
the U.S. NDC will operate a leased facility in the Indianapolis
metropolitan area, of which Enesco will occupy approximately
150,000 square feet. As part of Enesco's operating improvement plan
announced in September 2005, the transition to third-party
distribution and warehousing will allow the Company to improve
supply chain efficiencies, improve customer service, consolidate
its U.S. distribution operations, improve financial performance,
and build on the Company's core strengths of new product
development and sales. The Company will begin moving all inventory
related to its continuing product lines to the NDC facility at the
end of December 2005 and expects to be ready to ship product in
mid-January 2006. The Company believes this temporary delay in
order fulfillment will not have a material impact on revenues as
this is the time of the year during which Enesco historically has
conducted its physical inventory with delayed order fulfillment.
Closeout inventory will be distributed from the Company's current
distribution facility in Elk Grove Village, Ill. through June 2006.
Employment levels at Enesco's current distribution and warehouse
facility will be reduced by approximately 125 positions over the
six month period starting January 2006, as business needs dictate.
For the first nine months of 2005, the Company's U.S. distribution
and warehousing costs were approximately $11 million, or 12.7% of
net revenues. The Company anticipates this transition will produce
pre-tax, annualized cost savings in the range of $4 million to $6
million in the U.S. and be fully realized in 2007. These
anticipated savings were announced previously as a part of the
total of $34 million to $38 million pre-tax in U.S. cost reductions
included in Enesco's plan to improve the Company's operating
performance. Cynthia Passmore-McLaughlin, President and CEO,
commented, "A key initiative of our operating improvement plan is
to create a more efficient and cost-effective distribution model.
After carefully evaluating several alternatives, we believe that a
third-party distribution and warehousing model will work best in
terms of reducing costs and enhancing customer service. NDC
provides many advantages that are in line with these improvement
initiatives, including lower overall location costs and improved
customer service. We will be working with our customers on timing
of shipments to allow for a smooth transition between distribution
facilities." About Enesco Group, Inc. Enesco Group, Inc. is a world
leader in the giftware, and home and garden decor industries.
Serving more than 30,000 customers globally, Enesco distributes
products to a wide variety of specialty card and gift retailers,
home decor boutiques, as well as mass-market chains and direct mail
retailers. Internationally, Enesco serves markets operating in the
United Kingdom, Canada, Europe, Mexico, Australia and Asia. With
subsidiaries located in Europe and Canada, and a business unit in
Hong Kong, Enesco's international distribution network is a leader
in the industry. The Company's product lines include some of the
world's most recognizable brands, including Border Fine Arts,
Bratz, Circle of Love, Foundations, Halcyon Days, Heartwood Creek,
Jim Shore Designs, Lilliput Lane, Nickelodeon, Pooh & Friends,
Walt Disney Classics Collection, and Walt Disney Company, among
others. Further information is available on the Company's web site
at www.enesco.com. This press release contains forward-looking
statements, which reflect management's current assumptions and
beliefs and are based on information currently available to
management. The Company has tried to identify such forward-looking
statements by use of such words as "expects," "intends,"
"anticipates," "could," "estimates," "plans," and "believes," and
similar expressions, but these words are not the exclusive means of
identifying such statements. Such statements are subject to various
risks, uncertainties and other factors, which could cause actual
results to vary materially from those anticipated, estimated,
expected or projected. Important factors that may cause actual
future events or results to differ materially and adversely from
those described in the forward-looking statements include, but are
not limited to: the Company's success in developing new products
and consumer reaction to the Company's new products; the Company's
ability to secure, maintain and renew popular licenses,
particularly our Cherished Teddies, Disney and Heartwood Creek
licenses; the Company's ability to grow revenues in mass and niche
market channels; the Company's success in implementing its
comprehensive plan for operating improvement and its achievement of
its goals for cost savings and market share increases; the
Company's ability to comply with covenants contained in its credit
facility; the Company's ability to obtain a new global senior
credit facility; changes in general economic conditions, as well as
specific market conditions; fluctuations in demand for our
products; manufacturing lead times; the timing of orders and
shipments and our ability to predict customer demands; inventory
levels and purchase commitments exceeding requirements based upon
incorrect forecasts; collection of accounts receivable; changes in
the regulations and procedures affecting the importation of goods
into the United States; changes in foreign exchange rates; price
and product competition in the giftware industry; variations in
sales channels, product costs or mix of products sold; and,
possible future terrorist attacks, epidemics, or acts of war. In
addition, the Company operates in a continually changing business
environment and does not intend to update or revise the
forward-looking statements contained herein, which speak only as of
the date hereof. Additional information regarding forward-looking
statement risk factors is contained in the Company's reports and
filings with the Securities and Exchange Commission. In light of
these risks and uncertainties, the forward-looking statements
contained herein may not occur and actual results could differ
materially from those set forth herein. Accordingly, you should not
rely on these forward-looking statements as a prediction of actual
future results.
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