On Monday (NASDAQ:MNDY), Canaccord Genuity (TSX:CF) adjusted its outlook on Lifetime Brands (NASDAQ:LCUT), a global provider of kitchenware, tableware, and other products, by reducing its price target from $9.00 to $7.00. Despite this change, the firm maintained a Buy rating on the stock. The revision followed the company's release of its third-quarter results before the market opened on Friday, which did not meet market expectations.
Lifetime Brands reported sales that were approximately 7% below the consensus, and its adjusted EBITDA fell around 18% short of expectations. The company's performance was affected by soft end markets, a less than stellar back-to-school season, and a delay by Dollar General (NYSE:DG) in shipping products from the Dolly Parton program, which is now expected to occur in the first quarter of 2025.
The management of Lifetime Brands expressed a cautious optimism about the upcoming holiday season, citing forecasted increases from third-party data. This optimism comes despite the company experiencing sales declines in 10 of the past 11 quarters. Canaccord Genuity expressed skepticism regarding the company's expectation for a 9% return to growth in the fourth quarter, as suggested by the midpoint of the revised guidance.
In light of these developments, Canaccord Genuity acknowledged that supporting the stock is becoming increasingly challenging. However, the firm decided to maintain its Buy rating, citing the stock's low price and the potential for even minor positive news to significantly impact the stock's performance. The market will be watching closely to see if Lifetime Brands can capitalize on the holiday season and reverse its recent trend of declining sales.
In other recent news, Lifetime Brands reported a mixed Q3 performance with net sales dropping to $183.8 million, a 4.1% decrease from the same quarter in the previous year. Despite this, the company saw growth in its e-commerce sales, which rose to $34.4 million, and international sales, which increased by 10.9%. The company's net income fell to $300,000, a significant decrease from $4.2 million in the previous year's quarter.
Lifetime Brands has adjusted its full-year sales forecast to range between $680 million and $700 million. The company is also expanding its plastics manufacturing facility in Mexico and diversifying sourcing away from China. Management expressed optimism for potential market share growth and demand recovery in 2025.
The company is also actively seeking mergers and acquisitions to broaden its international presence. Despite facing challenges such as a downturn in the food service division and postponed programs with Dollar General, Lifetime Brands remains focused on growth opportunities and operational efficiency.
InvestingPro Insights
Recent InvestingPro data provides additional context to Lifetime Brands' (NASDAQ:LCUT) current situation. The company's market capitalization stands at $133.38 million, reflecting its recent challenges. Despite the recent setbacks, InvestingPro Tips highlight that Lifetime Brands has maintained dividend payments for 14 consecutive years, offering a current dividend yield of 2.82%. This commitment to shareholder returns could be seen as a positive sign amidst the company's struggles.
The stock's valuation metrics present a mixed picture. With a Price to Book ratio of 0.6, the stock may be considered undervalued by some investors. However, the negative P/E ratio of -6.63 for the last twelve months ending Q3 2024 underscores the company's profitability issues, aligning with Canaccord Genuity's concerns.
On a more optimistic note, an InvestingPro Tip suggests that net income is expected to grow this year, and analysts predict the company will return to profitability. This projection could support Canaccord Genuity's decision to maintain a Buy rating despite lowering the price target.
For investors seeking a deeper understanding of Lifetime Brands' prospects, InvestingPro offers 5 additional tips that could provide valuable insights into the company's financial health and market position.
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