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Lower alkaline battery sales, due mainly to extremely competitive conditions in the alkaline category, helped push North American sales at Rayovac down 12 percent in the company's fiscal second quarter, to $78.8 million, from the $89.8 million reported in the year-ago period.
North American profitability also decreased in the second quarter, ended March 31, down to $11 million, compared with $17.8 million in the same three months a year ago. This decrease reflects the impact of lower sales volume, as well as the presence of retailer markdown monies and increased distribution expenses, said Rayovac.
During the second quarter, Rayovac took additional actions in North America to relaunch its alkaline products, simplify its consumer product pricing and reduce its cost structure to align with its new pricing strategy. The company recorded charges of about $6.8 million in the quarter.
For the six months North American sales at Rayovac also fell 12 percent, down to $185.8 million, from $212 million. The decline reflected lower alkaline and heavy-duty battery sales. Segment profitability reached $30.7 million in the six months, compared with $25.1 million a year ago. Profitability improvement in North America for the previous year mainly reflects the inclusion of a $16.1 million Kmart bad debt reserve, offset by the sales drop in the current year.
For the second quarter, consolidated Rayovac sales hit $202.3 million, compared with $121.2 million in the year-ago period. The majority of the increase was attributable to the acquisition of the consumer battery business of Europe's Varta last October.
Operating income in the second quarter was $8.8 million, compared with $12.9 million in the same quarter a year earlier. Pro forma operating income was $15.6 million, an increase of 21 percent from last year's $12.9 million. Net income for the second quarter was $300,000, down from $5.4 million in the same quarter last year. Pro forma net income hit $4.5 million, down from $5.4 million in the same three months last year.
Consolidated sales for the six months reached $462.5 million, up from $283 million the previous year.
The company reported a net loss of $300,000 for the six months, compared with a $5.8 million net profit year-on-year. Pro forma net income for the six months reached $15.3 million, off slightly from the $15.8 million recorded year over year.
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