Boosted by sales of $456,000 from a direct-mail campaign, total revenues at Trudy Corp. jumped 88.1%, to $892,506, for the third quarter ended December 31, 2001. The increase in sales, however, did not translate into profits, with Trudy reporting a net loss of $230,666 in the most recent period, compared to a net loss of $229,000 in the third quarter of fiscal 2001.
The company's expenses skyrocketed in the quarter, to $746,483 from $203,420 in last year's third quarter. The higher expenditures were due to costs associated with launching the direct-mail program as well as to developing a Web site for Trudy's Soundprints imprint. Although the direct-marketing program increased revenues, sales did not meet Trudy's expectations, and the campaign resulted in a loss. A major factor in the disappointing performance of the direct-mail effort was timing; the catalogues reached consumers' homes the week of September 10, and the attacks of September 11 hurt response rates. Trudy executives said they plan to restructure the direct-mail operation in fiscal 2003 to reduce expenses and hope to use the mailings to draw customers to the Soundprints Web site.
For the nine-month period, revenues rose 135%, to $2.6 million, and Trudy's net loss was cut to $300,679, from $720,767 in the comparable period in fiscal 2001. Despite the improved performance, Trudy remains in a precarious financial condition, and, in its quarterly filing with the Securities and Exchange Commission, the company reported that it has hired the investment banking firm of Columbus Capital to advise the company on strategic initiatives, including a possible merger.
