Tag - Dfz

Triad Guaranty Inc. (Nasdaq: TGIC), National Security Group (Nasdaq: NSEC) and NovaStar Financial Inc. (NYSE: NFI) are among the biggest percentage losers in Tuesday's trading among companies with market capitalizations under $500 million.

Here are today's biggest percentage gainers:

During a midday conference call, executives of R.G. Barry Corp. (AMEX: DFZ), which makes Dearfoams slippers, said the company plans to achieve sales growth through increased investments in product development, marketing, advertising and merchandising.

In an early Tuesday release, R.G. Barry said it expects sales growth in the range of 4% to 8% during fiscal 2008, which began June 30. The guidance represents sales of between $109.5 million and $113.8 million, compared with $105.3 million in fiscal 2007.

To achieve this growth, CEO Greg Tunney said during the call that R.G. Barry has a major initiative with a large retail partner that could “meaningfully increase sales relationship this retailer.” The project involves transitioning existing inventory from the retailer system and taking returns while “simultaneously flowing new products into this customer’s distribution centers and stores,” he said.

“This project is an important undertaking,” Tunney said. “We expect to see some impact from it each quarter of 2008 and its overall result has been factored into 2008 guidance.”

R.G. Barry’s Terrasoles outdoor footwear is beginning to get retail space, he said, and is being sold through independent retailers, sporting good stores and catalogs such as Mason’s and L.L. Bean. The company should have better information on customer acceptance of Terrasoles in three months, he said.

Additionally, Tunney said R.G. Barry recently became the exclusive North American licensee for the European luxury canvas footwear brand Superga. The firm plans to leverage Superga’s design capabilities and supplier base to enter a category and a retail arena where it has no presence, the chief executive said. Superga shoes will begin appearing in department stores, shoe chains and boutiques in spring 2008.

The company also said it expects NCAA-licensed clogs to give a modest revenue boost in fiscal 2008, but to provide a better impact in fiscal 2009. The clogs, which will bear the names and mascots of university sports teams, will be sold in college bookstores and retailers.

To finance these initiatives, Tunney said R.G. Barry is increasing its selling and general administrative expense budget by 10%, or $3 million, to about $33.4 million, from $30.4 million in fiscal 2007. The company’s guidance takes into account recent economic uncertainty expressed in mixed industry forecasts for the second half of calendar 2007, he said.

Responding to an analyst’s question, CFO Dan Viren said the guidance numbers anticipate some organic growth from the business initiatives.

R.G. Barry sold its French subsidiaries, Escapade and Fargeot, during the fourth quarter. Still, the footwear maker has not ruled out an acquisition in the future, Viren said.

“An acquisition would need to make strategic sense through growth opportunities, ROI benchmarks and be accretive to earnings,” Viren said.

RG Barry Corp. (AMEX: DFZ), maker of Dearfoams, the coziest $18 slippers on the market, is full of comfort, indeed. The Pickerington, Ohio-based company has been very, very good to investors so far in 2007. And if sales of its rejuvenated Terrasoles brand are successful, what joy! There’ll be glad tidings for all at the end of the year.

Small-cap growth investors can find promise in an innovative marketing strategy for a virtually new product, Terrasoles, backed by an established company that dominates its category. Dearfoams has very strong brand recognition and a loyal customer base. RG Barry, founded in 1947, has an estimated 40% of the U.S. slipper market.
 
So far this year, excitement about Terrasoles has pushed RG Barry shares up 48%; the stock recently rose to more than $10 per share from $7 just before second-quarter 2007 results were released Feb. 13. The three-year gain is near 300%, compared with 24.4% for the S and P 500 and close to 14% for the footwear category. Market capitalization is now near $110 million.

The company raised expectations in February, when it predicted net sales would increase 6% to 8% this fiscal year, up from 5% to 7% estimated previously. RG Barry said earnings should be up 28% to 32%--a steep rise from earlier guidance of 8% to 12%. Year-ago net sales were $106 million, and earnings were 78 cents per share. Year-ago comparisons are against 2005 because of a change in the company’s fiscal year.