Variflex Expects Large Loss for Fourth Quarter

A Moorpark company that manufactures skate, bicycle and snowboard equipment said it expects to report a substantial fourth-quarter loss, due mainly to excess inventory at the retail level.

Variflex Inc. officials said the net loss for the fourth quarter, which ended July 31, will be between $1.1 million and $1.3 million, or 18 to 21 cents per share, on sales of about $13 million.

The fiscal year-end showing is expected to be a net income of between $500,000 and $700,000, or 8 to 11 cents per share, on sales of about $72 million, they said.

For the fiscal fourth quarter ended July 31, 1995, Variflex reported net income of $546,000, or 9 cents per share, on net sales of $18.5 million. For the fiscal year ended July 31, 1995, the company reported net income of $6.9 million, or $1.15 per share, on net sales of $100 million.

Variflex President Jay Losi said the company has taken a number of steps aimed at clearing out slow-moving products.

“Our fourth-quarter results reflect significant markdown credits and returns to help several of our customers make way for our new models on their shelves,” Losi said. “Additionally, we had close-out sales and write-downs relating to excess inventory in-house.”

Losi said these actions are typical for the market.

“The retail marketplace remains a challenge not only to Variflex, but to the rest of our industry,” he said.

Variflex recently announced a joint manufacturing and marketing agreement with Barfoot Snoboards. Also, officials said Variflex’s new in-line skate order for Wal-Mart will ship in time for the holiday season.