TANDY LEATHER FACTORY INC (TLF)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 revenue was $20.5M, down slightly year over year from $20.8M, with gross profit of $10.8M and EPS of $0.04 versus $0.23 in Q4 2023 . Full-year 2024 revenue was $74.4M (-2.4% YoY), gross margin 56.2%, and net income $0.8M .
• Management expects significant relocation and leasing costs (HQ and flagship store moves) to negatively impact profitability in 2025, targeting a rebound in sales and profits in 2026 .
• TLF monetized its HQ asset, entered a 10-year lease in Benbrook, TX (approx. 134k sq. ft.) with initial rent of about $111,000 per month (including taxes/maintenance), and paid a special $1.50 cash dividend (paid Feb 18, 2025; ex-div Feb 19, 2025) .
• Year-end cash rose to $13.3M (from $12.2M), while inventory fell to $35.6M (from $38.0M), reflecting working capital improvements despite softer retail and pressure on gross margins .
• Wall Street consensus estimates via S&P Global were unavailable for Q4 2024; estimate comparison not provided.

What Went Well and What Went Wrong

What Went Well

• Liquidity improved: year-end cash reached $13.3M, up from $12.2M, while inventory declined to $35.6M from $38.0M, supporting balance sheet strength .
• Strategic asset monetization and capital return: HQ sale completed and special dividend of $1.50 per share paid; management may consider an additional special dividend post moves (board to evaluate) .
• Management outlook and focus: “Looking ahead to 2025, we hope to drive improved sales in our stores and e-commerce channel and plan to decrease the number of store moves…” .

What Went Wrong

• Margin compression and earnings decline: Q4 gross profit fell to $10.8M from $11.5M YoY, and EPS declined to $0.04 from $0.23 YoY; full-year gross margin dropped to 56.2% from 59.2% .
• Ongoing consumer softness: “Our customers are still spending less on discretionary items and our traffic is down… increased promotional activity as we respond to weaker consumer demand” (Q3 commentary) .
• 2025 profitability headwind: “We expect that significant costs… will negatively impact our ability to be profitable in 2025” due to HQ/flagship moves and leasing transition .

Financial Results

Revenue and EPS (Quarterly)

Gross Profit and Gross Margin

KPIs

Full-Year 2024 Summary (for context)

Guidance Changes

Earnings Call Themes & Trends

Note: The company directed investors to submit questions via email; no call transcript was provided in filings. Commentary below derives from press releases and 8-Ks.

Management Commentary

• “While we were able to remain profitable and increase our year-end cash, we are disappointed with the Company’s results… We were able to return substantial value to our stockholders with the sale of our corporate headquarters building… and the payment… of a substantial dividend of $1.50 per share.” — Johan Hedberg, CEO .
• “Looking ahead to 2025… we expect that significant costs relating to the move… and shifting from owning to leasing those properties, will negatively impact our ability to be profitable in 2025… Our goal is… to position the Company for a rebound in both sales and profits in 2026.” — Johan Hedberg, CEO .
• “Our new space is better sized for Tandy’s operations… allowed us to monetize an under-utilized asset… We are pleased to… return a substantial portion of the sale proceeds to our stockholders… After we have successfully executed our headquarters and flagship store moves, the board will consider paying an additional special dividend.” — Jeff Gramm, Chairman .
• Prior quarter context: “Our customers are still spending less on discretionary items and our traffic is down… increased promotional activity as we respond to weaker consumer demand.” — Janet Carr, former CEO (Q3) .

Q&A Highlights

• The company encouraged investors to send questions to its investor relations email address ([email protected]), indicating engagement outside of a formal call format .
• Management emphasized operational execution priorities: HQ/flagship relocations, cost management under new lease structure, and reaccelerating store/e-commerce sales .
• Dividend mechanics clarified: ex-dividend date set for Feb 19, 2025 due to dividend size (>25% of market price), with price adjustment per Nasdaq UPC Rule 11140 .

Estimates Context

• Wall Street consensus estimates via S&P Global for Q4 2024 were unavailable during this session; as a result, we cannot provide an estimates comparison or declare beats/misses relative to consensus.

Key Takeaways for Investors

• Near-term profitability risk: Management explicitly expects 2025 profitability to be negatively impacted by relocation and leasing costs before targeting a rebound in 2026 .
• Capital return catalyst: A $1.50 special dividend was paid on Feb 18, 2025; the ex-div date was Feb 19, 2025, and the board may consider an additional special dividend post moves .
• Operational transition: HQ sold; 10-year Benbrook lease with initial rent roughly $111,000/month including taxes/maintenance; expect operational disruption during the moves into Sep 2025 .
• Demand/margin dynamics: Continued consumer softness and elevated promotions pressured margins versus 2023; full-year gross margin fell to 56.2% .
• Liquidity improved: Year-end cash increased to $13.3M, and inventory decreased to $35.6M, enhancing flexibility amid transitional opex increases .
• Sales trajectory: Q4 revenue improved sequentially versus Q3 ($20.5M vs $17.4M), but was slightly below Q4 2023 ($20.8M), suggesting stabilization but not yet growth .
• Monitoring points: Execution of HQ/flagship moves, store relocation cadence (decelerating in 2025), e-commerce sales initiatives, and potential further capital returns are key catalysts and risks to track .