UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported:)
June 2, 2020


Tandy Leather Factory, Inc.
(Exact Name of Registrant as Specified in Its Charter)

Delaware
(State or Other Jurisdiction of Incorporation

1-12368
 
75-2543540
(Commission File Number)
 
(IRS Employer Identification Number)

1900 Southeast Loop 820, Fort Worth, Texas
 
76140
(Address of Principal Executive Offices)
 
(Zip Code)

(817) 872-3200
(Registrant’s Telephone Number, Including Area Code)

 
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, par value $0.0024
TLF
The Nasdaq Global Market
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
Emerging growth company  ☐
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐



Item 2.02
Results of Operations and Financial Condition

On June 2, 2020, in connection with the Company’s annual meeting of stockholders, the Company held a publicly-announced webcast to discuss selected operating results for fiscal year 2019 and 2020 to date, the impact on the Company of the COVID-19 crisis and plans for the future of the Company’s business following this crisis.  The written Management Presentation from that webcast is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1 furnished herewith, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.   The information furnished pursuant to this Item 2.02, including Exhibit 99.1 furnished herewith, contains “forward- looking statements” within the meaning of the safe harbor provisions of the federal securities laws.  It should be read in conjunction with the introductory note on forward-looking statements contained in the management presentation, the risk factors included in the Company’s periodic reports filed with the Securities and Exchange Commission and the other public announcements that the Company may make, by press release or otherwise, from time to time.

Item 5.07
Submission of Matters to a Vote of Security Holders.

The Company’s annual meeting of stockholders was held on June 2, 2020.  The four proposals considered at the annual meeting were voted on as follows:

Proposal 1:  The election of seven directors for the ensuing year.  The number of votes cast for and withheld for each nominee for director is set forth below.

NOMINEE:
FOR:
WITHHELD:
Vicki Cantrell
5,331,983
218,778
Janet Carr
5,543,695
7,066
Jefferson Gramm
5,513,395
37,366
Sharon M. Leite
5,520,461
30,300
James Pappas
5,550,761
0
Sejal Patel
5,549,595
1,166
William M. Warren
4,642,993
907,768

Proposal 2:  Ratification of the extension of the Tandy Leather Factory, Inc. 2013 Restricted Stock Plan and reservation of additional shares for issuance under the plan.  The number of votes cast for and against this proposal, as well as the number of abstentions with respect to this proposal, are set forth below:

FOR
AGAINST
ABSTAIN
5,517,513
33,248
0


Proposal 3:  Ratification of the appointment of the Company’s independent accounting firm for 2020.  The number of votes cast for and against this proposal, as well as the number of abstentions with respect to this proposal, are set forth below:

FOR
AGAINST
ABSTAIN
5,544,861
5,900
0

Proposal 4:  Advisory vote regarding executive compensation.  The number of votes cast for and against this proposal, as well as the number of abstentions with respect to this proposal, are set forth below:

FOR
AGAINST
ABSTAIN
5,520,461
30,300
0

Item 9.01
Financial Statements and Exhibits.

(d) Exhibits

No.
Exhibit
Management Presentation dated June 2, 2020


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
TANDY LEATHER FACTORY, INC.
   
Date:  June 3, 2020
By: 
/s/ Janet Carr
 

Janet Carr, Chief Executive Officer




Exhibit 99.1

 Annual Meeting of Shareholders  June 2, 2020Management Presentation 
 

 Tandy Strategy Overview  Introduction 
 

 Long-term strategy to drive sales and earnings growthOur assessment revealed strengths and opportunities……Leading to key actions we need to take to grow2019: a year of investment – and restatementWe are now also addressing COVID-19  INTRODUCTION  Today’s presentation will include statements, other than historical results, that constitute forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended.  These statements reflect our expectations or estimates based on the information we have today but are not guarantees or predictions of future performance.  They involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from the statements contained in this presentation.  You are cautioned not to put undue reliance on these forward-looking statements.  The Company assumes no obligation to update or otherwise revise these forward-looking statements, except as required by law. 
 

 TANDY STRATEGY  StrengthsBrand awareness and strong equityOur stores are a key competitive advantage100-year old heritage 
 

 TANDY STRATEGY  OpportunitiesPricing was too high and complicated Consumer perception of inconsistent quality targeted at beginnersCompetitors have been winning with high-value consumer segmentsCustomers outgrow TandyTalent, process, tools, systems to execute strategic initiatives need rebuilding 
 

 Our Core Today  Customer Type  Hobbyist  End Use  Hobbyist-Maker  Etsy  Small/Home Business  Medium Business  Large Business/ National Chain  Traditional Tooled Leather  Bags/SLGs  Costumes  Books  Fetish/BDSM  Furniture  Shoes  Jewelry  Art/Sculpture    Smaller  Bigger  Not Our Expertise  Gun/Knife  Our Expertise  TANDY STRATEGY            Future Opportunity            Future Opportunity 
 

 Strategic ActionsImprove the brand propositionReverse the decline with business customersBuild the talent, process, tools, systemsPosition for long-term growth  TANDY STRATEGY  Started in 2019, these actions require multi-year investment 
 

 Long-term growthOnlineInternationalChains and institutions  TANDY STRATEGY  We have already made significant progress in building our online business  
 

 Strategy & Performance  2019 Summary 
 

 Improve our brand proposition with key consumer segmentsAssess and build the infrastructure and operating modelBuild the team  2019 GOALS: FOUNDATION BUILDING 
 

 2019 INITIATIVES  2019  Jan  Feb  Mar  Apr  May  Jun  Jul  Aug  Sep  Oct  Nov  Dec  Jan  Feb  Mar  Apr  May  Jun  Jul   Aug  Sep  Oct  Nov  Dec    1  Improve Consumer Proposition    3  Build Team    2  Assess and Build Infrastructure  New approach to pricing and promotionNew web platform and experienceImprove product line, flow of newness, quality of leatherNumerous initiatives to improve store experienceMore effective digital and direct mail communicationsLaunch Commercial Division  Create and use budget, basic retail metrics, forecasting model Reorganize field team and create field training programReorganize compensation, incentives, career path, and improve total employee experienceCreate 2-way communication channel with employees (Town Halls, weekly Zone Manager calls, Store Manager meetings, etc.)New integrated systems: GL, POS and WMS and WebDistribution Center efficiencies and optimization  2020 
 

 Changes accounting for $3MM in sales declineClosed 5 stores Stopped selling on Amazon, Ebay and Walmart.comMade Leathercraft Library freeEnded Wholesale Clubs  2019 SALES      Remaining decline attributed to start-up effects of a new team  10% decline from 2018  ($3,043)  ($5,269)  Sales on fiscal calendar  2019 Sales Bridge ($000) 
 

 Inventory not correctly stated at FIFOWarehousing and handling not correctly capitalizedWarehousing and handling incorrectly classified as operating expensesOn track to complete by August 10, 2020  RESTATEMENT 
 

 COVID-19 Response & Outlook  2020 
 

 Demonstrate success of our consumer-facing strategiesSubstantially complete key infrastructure initiativesEvaluate and test growth opportunitiesComplete restatement by August 10, 2020  2020 PLAN 
 

 TIMELINE  Shelter-in-place order in Northern California;Store closures begin  MAR 17  All Tandy stores close to public; 20 stores operating behind the scenes  MAR 22  Fort Worth warehouse ships 532 orders  APR 9  All but 13 stores close fully; 406 employees furloughed; corporate employees work remotely  APR 2  March sale begins28 stores closed  MAR 19  MAY 6  4 Stores begin testing curbside pickup  Fort Worth warehouse ships 1,004 orders  MAY 11  MAY 22  Fort Worth Flagship store reopens  JUN 2  3 more stores open to public 
 

 COVID-19 RESPONSE  Focus on web fulfillmentRetooled to drive online business and fulfill all web orders out of Fort WorthAble to ship over 1,500 direct-to-consumer orders from our warehouse dailyCreated virtual customer service and phone order team 
 

 2020 SALES  Increase in online sales Online orders up 200% from last year  Decline in total sales 1Q – 18% declineApril – 60% declineMay – 40% decline  (17.7%)  (60.1%)  % Total Sales Change  (39.6%)  Sales on retail calendar 
 

 COVID-19 RESPONSE  Focus on conserving capital and protecting liquidity406 employees furloughed or laid off on April 2Reduced SG&A expenses, including salary cutsPaused product purchasesNegotiated abatements, deferrals and longer-term reductions in rent8 stores permanently closed  Do we want to put cost savings on the page? 
 

                   COVID-19 RESPONSE  Closed storesPhoenix AZAustin TXDallas TXPeoria ILRichmond VANyack NYJohnston RISt Leonard QC 
 

 COVID-19 RESPONSE  Operating Expense Impact ($000)  Total cost to exit: $183 in 2020    SG&A savings: $1,586 annually    approx. +$530 annually    Net Cash Impact ($000)  Store Closures Sales Impact ($000)    55% Est. Sales Lost  45% Est. Sales Retained  $3,474  2019 Sales  I’m taking this off the page but leaving in comments? 
 

 WHERE WE ARE NOW  Reopening stores where possiblePrioritize the safety of our employees, customers and community10 stores currently offering curbside pickup (plus 2 more by June 5)Fort Worth Flagship location opened to customers  This is a gradual process, as we monitor and assess business and environment factors for each store  June 2El Paso TXPortland OROklahoma City OK  June 5Columbus OHBillings MTBerlin CT  Pittsburgh PADenver COPhoenix AZ  10 total stores will have reopened to the public by June 5 
 

 OUTLOOK  Protecting long-term valuePositioning to reemerge strongSolid strategy to build on 
 

 QUESTIONS  To ask a question, please message Daniel Ross in the Zoom chat and he will facilitateIf you are calling in on a phone line and would like to ask a question, please email Dan Ross at daniel.ross@tandyleather.com