The firm reported Q3 adj. EPS of $0.19 vs. $0.36 in Q3 2022.
Revenue fell 5.5% Y/Y to $28.39M, hurt by declines in the disposable product line by $4M and currency headwinds of $1.6M.
Gross margin was 43.3% vs. 41.3% in Q2, helped by improved product mix and pricing power, lowering freight rates and increase in direct container sales.
"Macroeconomic headwinds continued to hold back revenue growth potential in FY23. This is particularly true in European and Asian markets as rising inflation and energy costs, along with zero tolerance COVID policies, respectively weigh heavily on industrial markets in these regions," said CEO Charlie Roberson in the earnings call.
The company expects these conditions will continue through H1 next year. Roberson said the industrial decline in Europe and Asia will be "somewhat mitigated by a transference of some industrial activity to other regions, specifically India".
Roberson clarified that India contributes a relatively small percentage of Lakeland's ( LAKE ) revenue due to "bureaucracy and some conflict as far as which products they want to utilize".
Lakeland's ( LAKE ) inventory level remained flat sequentially and it is working to reduce these levels heading into FY24.
"While certain pricing levers may be used to reduce disposable inventory levels, these efforts will be highly targeted and recoverable. We remain confident that we will be able to maintain gross profit margins at or above our consolidated global target of 40%," said CFO Allen Dillard.
Shares of Lakeland ( LAKE ) fell ~32% in the last six months.
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Lakeland Industries stock falls over 10% on weak earnings, disappointing outlook