GRIMSBY, ONTARIO -- (Marketwire) -- 02/11/13 -- This news release contains forward-looking information that is based upon assumptions and is subject to risks and uncertainties as indicated in the cautionary note contained elsewhere in this news release.
Andrew Peller Limited (TSX: ADW.A)(TSX: ADW.B) (the "Company") announced today continued strong operating and financial performance for the three and nine months ended December 31, 2012.
FISCAL 2013 HIGHLIGHTS:
-- Sales up 4.4% on solid growth through majority of trade channels-- Sales have increased in 41 of the last 43 quarters-- Net earnings up 14.9% to $15.6 million or $1.12 per Class A Share-- Launch of new brands to contribute to further organic growth-- Peller Estates remains top-selling wine brand across Canada-- Export sales bolstered by new business with Sunwing Vacations and prestigious international awards for ice wine
"The third quarter remains our strongest period of the year due to seasonal sales and we were very pleased to generate a solid 4.2% predominantly organic growth in sales for the quarter compared to last year," commented John Peller, President and CEO. "We expect to see another record year of growth and profitability for the 2013 fiscal year and continued strong performance going forward."
Sales for the third quarter of fiscal 2013 rose 4.2% to $79.8 million from $76.6 million in the prior year. For the nine months ended December 31, 2012 sales increased 4.4% to $225.6 million from $216.0 million last year. For the nine-month period, the increases in revenues are due primarily to the contribution from the licensing agreement with the Wayne Gretzky winery effective November 8, 2011, the acquisition of Cellar Craft that was effective October 28, 2011 as well as solid organic growth arising from new product introductions, particularly skinnygrape, increased sales of premium blended and varietal table wine brands sold through provincial liquor boards, growth in sales at the Company's retail store network, and strong export sales.
Gross margin was 38.6% of sales in the third quarter and for the first nine months of fiscal 2013 compared to 40.1% and 39.5% respectively in the same periods last year. Gross margin percentage was negatively affected by higher costs for wine purchased on international markets in fiscal 2013 as well as increased price competition in certain markets. The decrease in gross margin percentage was partially offset by the positive impact of sales of higher margin products and successful cost control initiatives to reduce distribution, operating, and packaging expenses. During fiscal 2013 the Company implemented programs to enhance a number of supply chain and distribution contracts that it expects will contribute to improved profitability over the long term. The special levy implemented by the Ontario government on July 1, 2010 served to reduce sales and gross margin by approximately $1.5 million and $1.9 million in the first nine months of fiscal 2013 and fiscal 2012 respectively.
Selling and administrative expenses increased in the third quarter and first nine months of fiscal 2013 due to an increase in advertising and promotional initiatives across all trade channels and an increase in consulting expenses incurred to implement cost control and information technology initiatives. As a percentage of sales, selling and administrative expenses for the nine months ended December 31, 2012 were 25.1%, down marginally from 25.5% in the prior year.