Naples Soap Company Reports Fourth Quarter and Full Year Financial Results for 2022

“These challenges tested our fortitude, and I am extremely proud of how the Company performed in the face of adversity,” Wallin went on to say. “Before the winds died down, we put our extensive contingency plans into place and never lost sight of the importance of our pre-planned fourth quarter holiday initiatives.”

• Despite inflationary pressures, supply chain issues, changes in consumer spending habits and the negative impact of Hurricane Ian, 2022 total sales finished ahead of 2021. Total sales for the year ended December 31, 2022 were approximately $11.1 million compared to approximately $10.9 million for the year ended December 31, 2021, a 2% increase. Total sales for the fourth quarter of 2022 were approximately $3.1 million compared to approximately $3.4 million for the fourth quarter of 2021, a 9% decrease.
• Store sales for the year ended December 31, 2022 were $7.9 million compared to approximately $7.7 million for the year ended December 31, 2021, a 4% increase. Three of the Company’s busiest stores were closed for hurricane repairs during much of the fourth quarter, and tourist traffic in areas impacted by the storm was also down. These factors had a significant impact on the decrease in fourth quarter store sales. Store sales for the fourth quarter of 2022 were approximately $2.0 million compared to approximately $2.4 million for the fourth quarter of 2021, a 16% decrease.
• E-Commerce sales for the year were down slightly over the prior year. For the year ended December 31, 2022, sales were approximately $2.7 million compared to approximately $2.8 million for the year ended December 31, 2021, a 3% decrease. However, E-Commerce sales for the fourth quarter of 2022 were approximately $950 thousand compared to approximately $890 thousand for the fourth quarter of 2021, a 7% increase. Product sales through Amazon.com, continue to grow as an alternative E-Commerce channel. Sales through Amazon were up 47% for 2022 compared to 2021.
• In tandem with the return of consumers shopping in person in stores, the Company’s wholesale sales for the year ended December 31, 2022 were approximately $461 thousand compared to approximately $405 thousand for the year ended December 31, 2021, a 14% increase. Wholesale sales for the fourth quarter of 2022 were approximately $104 thousand compared to approximately $101 thousand for the fourth quarter of 2021, a 3% increase.
• Gross profit for the year ended December 31, 2022 was approximately $8.0 million compared to $8.2 million for the year ended December 31, 2021, a 3% decrease. Gross profit for the fourth quarter of 2022 was approximately $2.2 million compared to approximately $2.5 million for the fourth quarter of 2021, a 14% decrease.
• Operating expenses for the year ended December 31, 2022, increased approximately $1.7 million, or 23%, compared to the year ended December 31, 2021. Operating expenses for the fourth quarter of 2022 increased 9% compared to operating expenses for the fourth quarter of 2021. The increase in operating expenses was primarily driven by the following:
  • The Company incurred hurricane-related expenses at four locations and the ‘former’ warehouse. These expenses included flood remediation, structural repairs, fixture replacements and inventory losses.
  • The Company plans to open three new stores in Florida during the first and second quarters of 2023. Build out expenses for the new stores contributed to the increase in expenses in the fourth quarter of 2022.
  • The Company incurred additional expenses with the March 2022 opening of its retail store in Kissimmee, Florida. These costs were associated with widespread increases in construction expenses, labor and materials.
  • The Company relocated to a new warehouse space with administrative offices in September of 2022 and incurred expenses for both facilities while the new space was under construction. The Company added additional warehouse and administrative personnel in anticipation of the holiday season and expected growth. The new warehouse is expected to bring about improved operational efficiencies.
• Net income for the year ended December 31, 2022 was a loss of approximately $865 thousand compared to net income of $1.3 million for the year ended December 31, 2021. It should be noted that in 2021, the Company received a PPP loan, ERTC refund and insurance proceeds totaling approximately $630 thousand.
• The Company continues to experience an increase in costs for several expense categories and in cost of goods sold due to macroeconomic trends, including 40-year high inflation, rising interest rates and supply chain pressures. These events are impacting consumer confidence and their respective spending patterns as consumers have become increasingly price-sensitive throughout 2022 and into 2023. The Company has several ongoing initiatives to address the current economic environment, which includes reducing expenses, maintaining leaner inventories and increasing margins through different product offerings.

“Although the fourth quarter presented many challenges, we’re continuing to evaluate our business and adapt accordingly,” stated Wallin. “We’ve been proactive with our product selections and inventory management to adjust to the changes in consumer buying habits. We have several distribution channels that continue to grow. And, we’re adding more stores so that our geographic footprint is more diversified. The decisions we’ve made will help strengthen our Company as we look to the future.”