The Topps Company reported an increase in net income of nearly 50% for the first quarter (which for Topps, ended on May 27th). Net sales for the Entertainment division increased 10.8% to $38.3 million versus $34.5 million in the prior-year period due in large part to increases in U.S. sports cards (baseball cards were up 27% in Q1 thanks in large part to an agreement with Major League Baseball that reduced the number of licensees and releases) and European sports product sales (World Cup). WizKids' sales remained 'soft' as the company's comparative results (versus last year) 'continued to be affected by industry-wide softness in the gaming category.'
Topps also reported the recent implementation of a company-wide headcount reduction program, which is expected to generate cost savings of $3.3 million per year. The recent staff reductions at WizKids (see 'WizKids Cutting Staff') are evidently a part of this company-wide belt-tightening. Topps has announced a series of measures to reduce its annual expenses by $9 million, and it appears that the company's belt-tightening is already having an effect. With sales of its confectionery unit down 3% (the new Bazooka Joe has been less than a stellar performer), Topps still managed to nearly double its net income and paid a regular quarterly cash dividend of 4 cents per share versus 2 cents per share in the prior-year.
The increase in net profit and cash dividend should help the current Topps management somewhat in its proxy fight against the hedge funds Pembridge Capital and Crescendo Partners who plan to wage a proxy fight against Topps at the company's July 28th shareholder meeting (see 'Topps Back in Proxy Fight').
