Tandy Leather Factory (aka TLF) has built a business turning hides into a cash cow. The company makes, distributes, and sells leather goods and related products, such as leatherworking tools, buckles and belt supplies, leather dyes, saddle and tack hardware, do-it-yourself craft kits, suede lace, and fringe. Its Retail Leathercraft unit, which generates more than 50% of sales, operates about 75 retail leathercraft stores under the Tandy Leather banner that cater to leatherworking hobbyists in the US and Canada. It also sells merchandise online. The company also operates some 30 wholesale stores across in North America. Tandy Leather Factory was founded in 1980 as Midas Leathercraft Tool Co.
TLF's sales increased by 10% in 2010 vs. 2009 with the retail, wholesale, and international businesses all posting gains. Retail sales grew by 15% and outperformed TLF's wholesale arm due to the speedier recovery of the consumer economy relative to small businesses and wholesalers. Profitability also increased, with net income up more than 25% in 2010 vs. the prior year.
The company's wholesale segment -- usually a steady business with modest sales increases -- rebounded after declining in 2009 due to weak consumer spending during the economic downturn. As a result of that loss, TLF exited its custom hat trim business -- Roberts, Cushman & Company -- due to its decreased sales.
TLF has grown over the years by expanding its retail operations and by boosting sales at its existing locations. It operates stores across North America, and its international business comprises one retail/wholesale combination store located in the UK, established in 2008. Facing tough economic times, however, the company has been right-sizing its retail network. In late 2010 TLF closed its Mid-Continent Leather Sales store in Coweta, Oklahoma, after it was unable to turn around declining revenues and shrinking profit margins.
The company's factory in Fort Worth, Texas, primarily is responsible for cutting leather into shapes and patterns using metal dies. The factory produces some 20% of TLF's products; they're distributed to stores under the Tejas, Tandy Leather, and Dr. Jackson's brand names.
Jon Thompson, son of chairman Wray Thompson, was named CEO of the firm in mid-2009. He succeeded the retiring Ron Morgan, who had served as chief executive since 2007. Hedge fund Bandera Partners LLC owns about 24% of TLF's shares, while Bares Capital Management holds about 16%. TLF director Michael Nery, through Nery Capital Partners, owns about 10% of the company's shares. – less