Craft yarn producer Spinrite Income Fund announced its financial results for the 13 weeks ended December 31, 2005, and for the combined 52 weeks ended December 31, 2005.
"During the fourth quarter, we encountered significant challenges related to lower consumer spending and high retail inventories primarily in the fancy yarn segment," said Dario Margve, President and Chief Executive Officer.
"In the first half of 2005, growth in the craft yarn category was very strong, particularly in the fancy yarn segment, and the Fund s financial performance reflected this growth."
"Retailers responded by building inventory positions, however, consumer spending in the fancy yarn category declined sharply late in the year. As a result, retailers found themselves with unusually high inventory levels and significantly reduced their orders; this adversely impacted our sales and inventory levels."
"Promotions have been implemented to help reduce inventories which we expect will adversely impact margins," said Mr. Margve. "While declining fancy yarn sales may lead to a contraction of the yarn category in 2006, we believe that Spinrite is well-positioned to increase market share, particularly in the U.S., on the strength of our diverse product offerings and multi-brand strategy."
The Fund began operations on February 8, 2005 when it indirectly purchased approximately 80percent of the securities of Spinrite Limited Partnership. The combined operating results for the 52 weeks ended December 31, 2005 is comprised of the Funds active operations for the 327-day period from February 8 through December 31, 2005, and Spinrite Limited Partnerships results of operations from January 1 to February 7, 2005.
"During the fourth quarter, we encountered significant challenges related to lower consumer spending and high retail inventories primarily in the fancy yarn segment," said Dario Margve, President and Chief Executive Officer.
"In the first half of 2005, growth in the craft yarn category was very strong, particularly in the fancy yarn segment, and the Fund s financial performance reflected this growth."
"Retailers responded by building inventory positions, however, consumer spending in the fancy yarn category declined sharply late in the year. As a result, retailers found themselves with unusually high inventory levels and significantly reduced their orders; this adversely impacted our sales and inventory levels."
"Promotions have been implemented to help reduce inventories which we expect will adversely impact margins," said Mr. Margve. "While declining fancy yarn sales may lead to a contraction of the yarn category in 2006, we believe that Spinrite is well-positioned to increase market share, particularly in the U.S., on the strength of our diverse product offerings and multi-brand strategy."
The Fund began operations on February 8, 2005 when it indirectly purchased approximately 80percent of the securities of Spinrite Limited Partnership. The combined operating results for the 52 weeks ended December 31, 2005 is comprised of the Funds active operations for the 327-day period from February 8 through December 31, 2005, and Spinrite Limited Partnerships results of operations from January 1 to February 7, 2005.
