Tandy Leather Factory Reports 1st Quarter 2009 Earnings up 19%

Business Wire, May 07, 2009

FORT WORTH, Texas -- Tandy Leather Factory, Inc. (AMEX: TLF) today reported financial results for the first quarter of 2009. Net income for the quarter ended March 31, 2009 was $697,917, up from net income of $584,000 in the first quarter of 2008. Fully-diluted earnings per share for the quarter were $0.06 in the current quarter, compared to $0.05 in last year’s first quarter. Total sales for the first quarter were $13.3 million, matching that of the first quarter of last year.

Sales from the Retail Leathercraft division, consisting of the Tandy Leather retail store chain, increased $333,000 in the first quarter, up 5% from last year's first quarter sales. The store chain consisted of seventy-four stores as of March 31, 2009, compared to seventy-two retail stores a year ago. First quarter sales for the Wholesale Leathercraft division, consisting of the Leather Factory wholesale centers and the National Account group, decreased $451,000, or 7% from the same quarter last year. International Leathercraft, consisting of one store located in the United Kingdom, added sales of $293,000 for the quarter. The UK store was opened in February 2008.

Consolidated gross profit margins increased slightly from 58.4% in the first quarter of 2008 to 58.5% in the first quarter of 2009. Operating expenses decreased from $7.0 million in the first quarter of 2008 to $6.8 million in the first quarter of 2009, decreasing as a percentage of revenue from 52.9% in 2008 to 50.7% in 2009.

Ron Morgan, Chief Executive Officer, commented, “We are fairly pleased with our first quarter results, particularly the reduction in operating expenses we achieved. That is what it is going to take to be successful in the current business environment. We will continue to trim costs where we can as it remains very difficult to predict sales. I am especially pleased with the performance of our UK store as it is generating an operating profit after only a year in existence.”

Shannon L. Greene, Chief Financial Officer, added, “Our total cash continues to increase, up another $800,000 this quarter to $11.6 million. All divisions were profitable for the quarter, which indicates that we have been successful in making the necessary adjustments in our operating expenses in response to the weak sales trend. In three of the last four quarters, our earnings have been higher than in the prior year’s comparable quarters. As a result, we are confident in our ability to maintain profitability even in this tough economy.”

Tandy Leather Factory, Inc., (http://www.tandyleatherfactory.com), headquartered in Fort Worth, Texas, is a specialty retailer and wholesale distributor of a broad product line including leather, leatherworking tools, buckles and adornments for belts, leather dyes and finishes, saddle and tack hardware, and do-it-yourself kits. The Company distributes its products through its 29 Leather Factory stores, located in 19 states and 3 Canadian provinces, 74 Tandy Leather retail stores, located in 35 states and 5 Canadian provinces, one combination wholesale/retail store located in the United Kingdom, and Mid-Continent Leather Sales, one store located in Oklahoma. Its common stock trades on the American Stock Exchange with the symbol "TLF." To be included on Tandy Leather Factory’s email distribution list, go to http://www.b2i.us/irpass.asp?BzID=1625&to=ea&s=0.

This news release may contain statements regarding future events, occurrences, circumstances, activities, performance, outcomes and results that are considered “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. Actual results and events may differ from those projected as a result of certain risks and uncertainties. These risks and uncertainties include but are not limited to: changes in general economic conditions, negative trends in general consumer-spending levels, failure to realize the anticipated benefits of opening retail stores; availability of hides and leathers and resultant price fluctuations; change in customer preferences for our product, and other factors disclosed in our filings with the Securities and Exchange Commission. These forward-looking statements are made only as of the date hereof, and except as required by law, we do not intend to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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