Yankee Candle Q1 Sales Up

Sales of $119.3 million during the period reflected a 12% increase from $106.5 million a year earlier and wholesale revenues climbed 11% to $67.4 million. Income, however, remained sluggish, rising just 3% to $10.8 million or 23 cents per share, from $10.5 million or 21 cents, compared to the same period last year. Those earnings missed the average 24 cents per share first quarter profits predicted by analysts.

"Yankee recorded another quarter of strong and record results," Craig W. Rydin, Yankee's chairman and chief executive officer told investors in a conference call Wednesday. Rydin said the firm's wholesale segment posted significantly strong sales growth of 11% during the quarter on top of the 14% growth in sales during the first quarter of 2004.

Spurring first quarter sales was the introduction of several new fragrances, novelty candle holders and gift products. The company also intends to introduce a line of potpourri, room perfumes and car fresheners during the second quarter.

But while the company met expectations for earnings and sales during the first quarter, Rydin said it fell short in gross retail margins which were hurt by deep discounting following the holidays. The firm's stock also dipped $1.96, or 6.4%, closing at $28.49 per share following Wednesday's announcements.

The drop in share price comes after the company said it borrowed $40 million to buy 1.3 million shares of its own stock during the quarter, which raised its long term debt to $120 million. Additional stock repurchases are possible this year, the firm said, under a $100 million stock buyback plan.

The company, which opened 13 new stores in the first quarter of 2005 for a total of 357 stores in 42 states, said it plans to add 2 new store openings during the second quarter of the year.