# Tandy Leather Factory Inc: Form 10-Q for the period ended Jun 30, 2025

- Company: [Tandy Leather Factory Inc](/companies/tlf.md) (CIK 909724)
- Form: 10-Q
- Filed: 2025-08-12
- Accepted by EDGAR: Aug 11, 2025, 17:53 ET
- Period: 2025-06-30
- Accession: 0001140361-25-030265
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/909724/000114036125030265/ef20050403_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/909724/000114036125030265/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-06-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2025-04-01 to 2025-06-30 | $17.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Revenue | 6 months, 2025-01-01 to 2025-06-30 | $36.8m | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2025-04-01 to 2025-06-30 | $7.2m | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 6 months, 2025-01-01 to 2025-06-30 | $15.5m | us-gaap:CostOfGoodsAndServicesSold |
| Gross profit | 3 months, 2025-04-01 to 2025-06-30 | $10.6m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2025-01-01 to 2025-06-30 | $21.3m | us-gaap:GrossProfit |
| Operating income | 3 months, 2025-04-01 to 2025-06-30 | $66.0k | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2025-01-01 to 2025-06-30 | $328.0k | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2025-04-01 to 2025-06-30 | $19.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2025-01-01 to 2025-06-30 | $4.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2025-04-01 to 2025-06-30 | −$199.0k | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2025-01-01 to 2025-06-30 | $12.5m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.02 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2025-01-01 to 2025-06-30 | $0.06 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-04-01 to 2025-06-30 | −$0.02 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2025-01-01 to 2025-06-30 | $0.06 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-04-01 to 2025-06-30 | 8,494,546 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2025-01-01 to 2025-06-30 | 8,497,857 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2025-01-01 to 2025-06-30 | −$4.5m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2025-01-01 to 2025-06-30 | $4.7m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2025-01-01 to 2025-06-30 | $12.7m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 6 months, 2025-01-01 to 2025-06-30 | $176.0k | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2025-06-30 | $16.4m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-06-30 | $54.5m | us-gaap:AssetsCurrent |
| Total assets | at 2025-06-30 | $76.5m | us-gaap:Assets |
| Current liabilities | at 2025-06-30 | $11.1m | us-gaap:LiabilitiesCurrent |
| Shareholders' equity | at 2025-06-30 | $57.2m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 12,925 characters.

### The Business and Strategy

Tandy Leather Factory, Inc. is one of the world’s largest specialty retailers of leather and leathercraft-related items. Founded in 1919 in Fort Worth, Texas, and organized in 2005 as a Delaware corporation, the Company introduced leathercrafting to millions of American and later Canadian and other international customers and has built a track record as the trusted source of quality leather, tools, hardware, supplies, kits and teaching materials for leatherworkers everywhere. Today, our mission remains to build on our legacy of inspiring the timeless art and trade of leatherworking.

What differentiates Tandy from the competition is our high brand awareness and strong brand equity and loyalty, our network of retail stores that provides convenience, a high-touch customer service experience, and a hub for the local leathercrafting community, and our 100-year heritage. We believe that this combination of qualities is unique to Tandy and gives the brand competitive advantages that are difficult for others to replicate.

We sell our products primarily through company-owned stores and through orders generated from our global websites, and through direct account representatives in our commercial division. We also manufacture leather lace, cut leather pieces and most of the do-it-yourself kits that are sold in our stores and on our websites. We also offer production services to our business customers such as cutting (“clicking”), splitting, and some assembly. We maintain our principal offices at 1900 Southeast Loop 820, Fort Worth, Texas 76140.

Currently, the Company operates a total of 101 retail stores. There are 91 stores in the United States (“U.S,”), nine stores in Canada and one store in Spain.

Tandy Leather has been introducing people to leatherworking for over 100 years. Our stores have been and continue to be our competitive advantage: where our customers learn the craft in classes, open table , and from the expertise of our store staff, where they can touch, feel and test the product, and where they can connect and commune with others passionate about leather. Our websites provide inspiration, detailed product descriptions and specifications, educational information and videos, and a convenient place to also purchase products – especially for those who are far from our retail stores, including a growing international customer base. For many of our retail and web customers, leatherworking evolves from a passion to a trade. Our Commercial Division is tailored to the needs of those customers who build businesses around leather. With dedicated direct account representatives, a direct-from-our-warehouse shipping model, bulk and volume-based competitive pricing, customized product development, and production and pre-production services, we are building long-term, strategic relationships with our largest customers.

We continue to focus on improving our financial sustainability and profitability. In the short-term, we are managing operating expenses and gross margin to deliver free operating cash and operating income even in the face of possible continued economic headwinds. We will also continue to selectively invest in profitable sales growth where it makes sense, but rebuilding a durable, profitable business model is the highest priority.

On January 22, 2025, the Company finalized the sale of its corporate headquarters and distribution facilities in Fort Worth, Texas for a gross sale of $26.5 million before deduction of commission and relevant closing fees as referenced in the Company’s 8-K filed on January 22, 2025. The net proceeds of the sale is recorded in ‘Other, net’ in our consolidated statements of operations and comprehensive income On January 28, 2025, the Company also signed a 10-year lease for new corporate headquarters and distribution facilities in Benbrook, Texas and the Company has the ability to renew the lease for an additional 10 years at market rate.

The Company hired Johan Hedberg as its new Chief Executive Officer as of January 6, 2025. Prior to the hiring of Mr. Hedberg, Janet Carr resigned as Chief Executive Officer, effective January 3, 2025; she remained employed by the Company to assist with transition until March 31, 2025.

### Results of Operations

### Three Months Ended June 30, 2025 and 2024

The following table presents selected financial data:

*(in thousands)*

|  | Three Months Ended June 30, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Sales | $17,773 | $17,286 | $487 | 2.8% |
| Gross profit | 10,573 | 10,018 | 555 | 5.5% |
| Gross margin percentage | 59.5% | 58.0% |  | 1.5% |
| Operating expenses | 10,507 | 9,955 | 552 | 5.5% |
| Income (loss) from operations | $66 | $63 | $3 | 4.8% |

### Net Sales

Consolidated net sales for the quarter ended June 30, 2025 increased by $0.5 million, or 2.8%, compared to the same period in the prior year period. We believe the increase in sales was primarily due to increased successful sale campaigns the Company executed in the quarter.

### Gross Profit

Gross profit for the quarter increased by $0.6 million, or 5.5%, compared to the same period in 2024. Gross margin percentage for the quarter ended June 30, 2025 was 150 basis points better than last year primarily driven by inventoriable costs adjustments and pricing changes implemented to balance tariffs.

### Operating expenses

Operating expenses for the quarter increased by $0.6 million or 5.5% compared to the corresponding prior year period, primarily as a result of an increase in total occupancy of $0.4 million mainly to cover rent expense for our corporate offices that were previously owned, increase in salary of $0.3 million driven by hiring to filled some of key management vacancies including VP of Stores, and additional related costs due to relocation of our corporate offices.; partially offset by a decrease in contract labor of $0.1 million.

### Income Taxes

Our effective income tax rate for the three months ended June 30, 2025 and June 30, 2024 was (10.8%) and 32.7% respectively and are primarily due to the recognition of tax benefits on the sales of our corporate property, partially offset by forecasted income taxes loss projected due to our 2025 operation and certain foreign and state jurisdictions obligation in which we operate. Our effective tax rate differs from the federal statutory rate primarily due to U.S. state income tax expense, expenses that are non-deductible for tax purposes, and the estimates in our valuation allowance associated with our deferred tax assets.

### Six Months Ended June 30, 2025 and 2024

The following table presents selected financial data:

*(in thousands)*

|  | Six Months Ended June 30, 2025 | 2024 | $ Change | % Change |
| --- | ---: | ---: | ---: | ---: |
| Sales | $36,809 | $36,561 | $248 | 0.7% |
| Gross profit | 21,291 | 20,938 | 353 | 1.7% |
| Gross margin percentage | 57.8% | 57.3% |  | 0.5% |
| Operating expenses | 20,963 | 20,226 | 737 | 3.6% |
| Income from operations | $328 | $712 | $(384) | (53.9)% |

### Net Sales

Consolidated net sales for the six months ended June 30, 2025 increased $0.2 million, or 0.7%, compared to the corresponding prior year period. We believe the increase in sales was due to the increased sale campaigns that were ramped up in the second quarter offset by some uncertainty related to global political, economic and other uncontrollable factors.

Our store footprint consisted of 101 and 103 stores at June 30, 2025 and June 30, 2024, respectively.

### Gross Profit

Gross profit increased by $0.4 million, or 1.7%, compared to the same period in 2024, and our gross margin percentage for the six months ended June 30, 2025, increased year over year by 50 basis points.

### Operating expenses

Operating expenses increased $0.7 million or 3.6% compared to the corresponding prior year period, primarily as a result of an increase in occupancy costs by $0.5 million excluding adjustments for accrued property taxes, an increase in salaries of $0.4 million; partially offset by a decrease in depreciation of $0.2 million due to the sales of our corporate offices.

### Income Taxes

Our effective income tax rate for the six months ended June 30, 2025 and June 30, 2024 was 25.2% and 27.0% respectively and are primarily due to the recognition of tax benefits on the sales of our corporate property, partially offset by forecasted income taxes loss projected due to our 2025 operation and certain foreign and state jurisdictions obligation in which we operate. Our effective tax rate differs from the federal statutory rate primarily due to U.S. state income tax expense, expenses that are nondeductible for tax purposes, and the change in our valuation allowance associated with our deferred tax assets.

### Capital Resources, Liquidity and Financial Condition

We require cash principally for day-to-day operations, to purchase inventory and to finance capital investments. We expect to fund our operating and liquidity needs primarily from a combination of current cash balances and cash generated from operating activities. Any excess cash will be invested as determined by our Board of Directors in accordance with its approved investment policy. Our cash balances as of June 30, 2025 totaled $16.4 million.

On October 30, 2024, the Company renewed the promissory note under its credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. through October 31, 2025. Under the Credit Agreement, the bank will provide the Company a credit facility of up to $5,000,000 on standard terms and conditions, including affirmative and negative covenants set forth in the Credit Agreement. As security for the credit facility, the Company has pledged as collateral certain of its assets, including the Company’s cash in deposit accounts, inventory and equipment. The interest rate is based on CME term SOFR + 210 basis points and the maturity is 1 year. As of the date of this filing, no funds had been borrowed under this facility.

### Share Repurchase Program and Share Repurchase

On August 7, 2022, the Board of Directors approved a new program to repurchase up to $5.0 million of the Company’s common stock between that date and August 31, 2024. As of August 31, 2024, the Company had purchased less than $10,000 of shares under this plan.

On September 17, 2024, the Board of Directors approved the renewal of the stock plan and the Company shall be authorized to repurchase up to $5 million (at then-current market value) of the Company’s common stock in open-market transactions at prevailing market prices upon periodic instructions from the Board or an authorized sub-committee of the Board until September 30, 2026. As of June 30, 2025, $5.0 million remained available for repurchase under this new program.

### Cash Flows

*(amounts in thousands)*

|  | 2025 | 2024 |
| --- | ---: | ---: |
| Net cash (used in) provided by operating activities | $(4,501) | $572 |
| Net cash provided by (used in) investing activities | 20,240 | (1,428) |
| Net cash (used in) from financing activities | (12,921) | (1) |
| Effect of exchange rate changes on cash and cash equivalents | 330 | 229 |
| **Net increase (decrease) in cash and cash equivalents** | **$3,148** | **$(628)** |

22

For the six months ended June 30, 2025, cash used in operations was $4.5 million driven by a net income from operations of $0.3 million , offset by a reduction in lease liability payment of $2.4 million, an increase in trade accounts payables of $1.0 million, an increase in accrued liabilities of $0.9 million, an increase in inventory of $0.3 million, and an increase in other assets of $0.2 million. Cash provided by investing activities was $20.2 million, which included net proceeds from sale of our corporate headquarters of $24.9 million offset by the purchase of assets for our new corporate facility of $4.7 million. We paid dividends in the amount of $12.8 million. The above activities, in addition to the effect of exchange rate changes, resulted in a net increase in cash of $3.1 million.

For the six months ended June 30, 2024, cash from operations generated $0.6 million driven by a net income of $0.6 million, non-cash expense of $2.8 million, including depreciation, amortization, and stock-based compensation, a net reduction in inventory of $0.8 million partially offset by a reduction in lease liability payments of $1.8 million, decrease in accrued expense and other liabilities of $0.7 million, an increase in prepaid expense of $0.4 million, and an increase in accounts receivable of $0.1 million. We invested $1.4 million in capital expenditure primarily related to replacing a new roof at our corporate headquarters and other new capital investments due to new store openings and store relocations. The activities above, in addition to the effect of exchange rate changes, resulted in a net decrease in cash of $0.6 million.

## Controls and procedures

As filed, 1,915 characters.

### Evaluation of Disclosure Controls and Procedures

Our management team, under the supervision and with the participation of our Chief Executive Officer (who serves as our principal executive officer and principal financial officer) , evaluated the effectiveness of the design and operation of our disclosure controls and procedures as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of the last day of the fiscal period covered by this report, June 30, 2025. The term disclosure controls and procedures means our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, is accumulated and communicated to management, including our principal executive and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on this evaluation, our management, with the participation of our Chief Executive Officer, concluded that, as of June 30, 2025, our disclosure controls and procedures were effective at a reasonable assurance level.

### Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting during the fiscal quarter ended June 30, 2025 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 2,362 characters.

Our Risk Factors are discussed fully in Part I Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and incorporated herein by reference. In addition, we have identified the following additional risk factors:

***Recent Changes to U.S. Tariff Rates.*** The manufacturing of our products is primarily outsourced to third parties across multiple countries, most notably China and Brazil. We continue to focus on opportunities to mitigate negative impacts and increase efficiencies and scale within our supply chain. However, significant increases in tariff rates, particularly for products imported mainly from China and Brazil, would substantially increase our cost for those products. These increases may likely force the Company to increase our prices to customers for those products to maintain profitability, which could in turn lead to a decrease in our sales. Even if we are able to avoid raising the prices of our own products, the macro-economic inflationary impact from tariffs of substantially higher prices on other products sold in this country could also harm our sales by reducing our customers’ ability to make discretionary purchases of items such as our products. The global tariff environment is changing rapidly, and we cannot be assured that we will not be materially negatively impacted by these changes. We may also be exposed to retaliatory tariffs implications for our intercompany sales to Canadian stores if implemented.

***Increased Expenses from Renting Headquarters Facilities and Flagship Store.*** Until January 2025, the Company owned the buildings housing its principal offices, distribution center and flagship retail store in Fort Worth, Texas. Since closing the sale of those buildings in January 2025, the Company has leased its current spaces, and we plan to relocate our facilities to new rented spaces during the second half of 2025. Excluding buildout, furniture, equipment and other costs associated with the move itself, the Company expects to pay initial combined rent for new headquarters and flagship store facilities in excess of $1.5 million per year (increasing annually beginning in 2026). If the Company is unable to generate additional sales and profits to offset these added expenses, this could have a material adverse effect on the Company and its operations.

Filed Aug 12, 2025.
Source: SEC EDGAR, the filing index for accession 0001140361-25-030265. Last ingested by Listed: Oct 24, 2026, 15:00 ET. No prices; not investment advice.