Paper Boy still drags Truett-Hurst sales

Truett-Hurst, Inc. (NASDAQ: THST) reported fiscal third-quarter wholesale revenue would have been 12 percent higher than a year before, but continued challenges in finding a replacement supplier for the Paper Boy paperboard-and-bladder “bottle” limited wholesale growth to 1 percent.

Net sales for the quarter, ended March 31, were up 19 percent to $6.2 million; wholesale, 1 percent to $3.5 million; direct to consumer, 18 percent to $1.2 million; and e-commerce 120 percent to $1.5 million.

“Setting aside the historic Paper Boy items, we are pleased that we are growing our top line and seeing healthy margin expansion,” said Phil Hurst, president and CEO, in a statement.

The company said it is unsure when it will resume Paper Boy production, if at all. In January, a “large national retailer” told Truett-Hurst that Paper Boy on the shelf had “partially oxidized,” and the company in its second quarter wrote off $800,000 in recalled and warehoused inventory.

Overall third-quarter gross margins increased to 39 percent from 34 percent a year before. Wholesale gross margins increased 5.1 points to 30.6 percent; DTC, 2.7 points to 63.9 percent; and Internet sales, 3.2 points to 41.2 percent.