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TANDY LEATHER FACTORY INC

TANDY LEATHER FACTORY INCTLFEarnings & Financial Report

Nasdaq · Consumer Discretionary · Leather & Leather Products

Tandy Leather Factory, Inc. is an American specialty retailer and wholesale distributor of leather and leatherwork related products. It operates more than 100 stores worldwide. Originally part of the Tandy Corporation, Tandy Leather has gone through a series of acquisitions and mergers, eventually being sold to The Leather Factory in 2000. The Tandy Leather flagship store next to their corporate headquarters in Fort Worth, Texas also houses the Al and Ann Stohlman Leathercraft Museum.

What changed in TANDY LEATHER FACTORY INC's 10-K — 2023 vs 2024

Top changes in TANDY LEATHER FACTORY INC's 2024 10-K

105 paragraphs added · 107 removed · 77 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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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 plus heritage.
What differentiates Tandy from the competition is our high brand equity, 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 plus heritage.
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, volume-based competitive pricing, customized product development, assembly and pre-assembly services, we are building long-term, strategic relationships with our largest customers.
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, volume-based competitive pricing, customized product development, and assembly and pre-assembly services, we are building long-term, strategic relationships with our largest customers.
To be served through our commercial division, customers generally need to spend more than $20,000. 4 Table of Contents Merchandise We carry a wide assortment of products organized into a number of categories including leather, hand tools, hardware, kits, liquids, machines, and other supplies.
To be served through our commercial division, customers generally need to spend more than $20,000 annually. 4 Table of Contents Merchandise We carry a wide assortment of products organized into a number of categories including leather, hand tools, hardware, kits, liquids, machines, and other supplies.
We are not a party to any collective bargaining agreements. Overall, we believe that relations with employees are good. Intellectual Property The Company owns all the material trademark rights used in connection with the production, marketing, distribution and sale of all Tandy-branded products.
We are not a party to any collective bargaining agreements. Overall, we believe that our relations with employees are good. Intellectual Property The Company owns all the material trademark rights used in connection with the production, marketing, distribution and sale of all Tandy-branded products.
Virtually all of these competitors carry a more limited line of leathercraft products compared to Tandy. We are competitive on convenience, price, availability of merchandise, customer service, depth of our product line, and delivery time.
All of these competitors carry a more limited line of leathercraft products compared to Tandy. We are competitive on convenience, price, availability of merchandise, customer service, depth of our product line, and delivery time.
We also offer open workbenches where customers can work on projects together with the leathercrafting community, and test new tools and techniques. Most of our stores range in size from 1,300 square feet to 9,000 square feet, with the average at approximately 3,500 square feet. Our Fort Worth flagship store is approximately 22,000 square feet.
We also offer numerous classes and open workbenches where customers can work on projects together with the leathercrafting community, and test new tools and techniques. Most of our stores range in size from 1,300 square feet to 9,000 square feet, with the average at approximately 3,500 square feet. Our Fort Worth flagship store is approximately 22,000 square feet.
Canada web orders are fulfilled out of our 10 Canada stores, and European web orders are fulfilled out of our Spain store. We have a global customer service team that handles web order inquiries and phone orders.
Canada web orders are fulfilled out of our 9 Canada stores, and European web orders are fulfilled out of our Spain store. We have a global customer service team that handles web order inquiries and phone orders.
The Company’s common shares currently trade on the Nasdaq Capital Market Group under the symbol “TLF.” 3 Table of Contents Retail Fleet The Company currently operates a total of 102 retail stores. There are 91 stores in the United States (“U.S.”), 10 stores in Canada and one store in Spain.
The Company’s common shares currently trade on the Nasdaq Capital Market Group under the symbol “TLF.” 3 Table of Contents Retail Fleet The Company currently operates a total of 101 retail stores. There are 91 stores in the United States (“U.S.”), 9 stores in Canada and one store in Spain.
Information about our Executive Officers The following table sets forth information concerning our executive officers as of December 31, 2023: Name Age Executive Since Position Janet Carr 62 2018 Chief Executive Officer Janet Carr has served as our Chief Executive Officer and as a member of our Board of Directors since October 2018. Prior to her current role, Ms.
Information about our Executive Officers The following table sets forth information concerning our executive officers as of December 31, 2024: Name Age Executive Since Position Janet Carr 63 2018 Chief Executive Officer Janet Carr has served as our Chief Executive Officer and as a member of our Board of Directors since October 2018. Prior to her current role, Ms.
Compliance with Environmental Laws Our compliance with federal, state and local environmental protection laws has not had, and is not expected to have, a material effect on our capital expenditures, earnings, or competitive position. Employees As of December 31, 2023, we employed 515 people, 389 of whom were employed on a full-time basis.
Compliance with Environmental Laws Our compliance with federal, state and local environmental protection laws has not had, and is not expected to have, a material effect on our capital expenditures, earnings, or competitive position. Employees As of December 31, 2024, we employed 542 people, 414 of whom were employed on a full-time basis.
Suppliers We purchase merchandise and raw materials from nearly 150 suppliers from the United States and approximately 20 foreign countries. In general, our 10 largest suppliers account for approximately 55% of our inventory purchases, and we had one supplier in 2023 who represented more than 10% of our purchases.
Suppliers We purchase merchandise and raw materials from nearly 150 suppliers from the United States and approximately 20 foreign countries. In general, our 10 largest suppliers account for approximately 55% of our inventory purchases, and we had one supplier in 2024 who represented about 12% of our purchases.
COVID-19 and Economic Conditions At the time of filing this Form 10-K, the American and world economies have largely recovered from effects of the COVID-19 pandemic but continue to be affected by a combination of factors arising from the continuing war in Ukraine, the more recent and worsening crisis in the Israel and the Middle East, and continued tensions between the U.S. and China.
At the time of filing this Form 10-K, the American and world economies continue to be affected by a combination of factors arising from the continuing war in Ukraine, the more recent and worsening crisis in Israel and the Middle East, and continued tensions between the U.S. and China.
Going forward, our strategy is to continue to manage our cost base and use of cash and focus on strengthening our sales by leveraging our competitive advantage of our retail stores. Improving our employee product knowledge, customer service level and community engagement as well as expanding workshop space in stores with machines are the highest priorities.
Going forward, our strategy is to continue to: • manage our cost base and use of cash and focus on strengthening our sales by leveraging our competitive advantage of our retail stores. • improving our employee product knowledge, customer service level, and in-store and virtual classes and community engagement as well as expanding workshop space in stores with machines are the highest priorities. • give customers good reasons to visit stores, and an excellent return on their time investment when they do.
Tandy polices its trademarks and trade dress and where appropriate pursues infringers.
Tandy monitors its trademarks and trade names and where appropriate pursues infringers.
The most acute supply chain shocks resulting from the pandemic have mostly moderated, with increases in lead times, product costs and ocean freight costs flattening and even declining in some areas. However, trucking costs and reliability remain volatile and tight labor markets and rising wages continue to pressure costs across all areas.
While pandemic-related supply chain shocks have been resolved, freight costs and reliability remain volatile and tight labor markets and rising wages continue to pressure costs across all areas.
All Tandy locations, other than our corporate headquarters (which includes our flagship store, corporate offices, distribution center, and production facility) are leased. Business Strategy Tandy Leather has been introducing people to leatherworking for over 100 years.
Business Strategy Tandy Leather has been introducing people to leatherworking for over 100 years.
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With COVID-19 and restatement related impacts behind us, and with initiatives to improve our brand proposition and to build the foundation for a modern and efficient retail business taking hold, we believe we have made significant progress toward building a durable, profitable business model.
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As of December 31, 2024, all Tandy locations, other than our corporate headquarters facilities (which includes our flagship store, corporate offices, distribution center, and production facility) were leased. Since January 22, 2025, when the Company completed the sale of its corporate headquarters facilities in Fort Worth, Texas, all Tandy locations are leased.
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Our cost of sales and operating expenses have stabilized, and we believe we have the structure, and the operating nimbleness, that can deliver operating profit and free cash flow even in the face of economic headwinds.
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Economic Conditions Over the past 3 years, as post-covid inflation had significant impact on food and housing costs, our customers have pulled back on discretionary spending.
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We need to continue to give customers good reasons to visit stores, and an excellent return on their time investment when they do.
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Furthermore, it is not clear how a new U.S. administration will affect inflation, employment, cost of goods through tariffs, tax policy and other external factors that may have an impact on our employees, our customers or the financial performance of Tandy.
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While inflation appears to be cooling, food, housing and transportation prices remain significantly higher than prior to the pandemic – that is not likely to change in the near term and could be further impacted by the global environment.
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(formerly Coach, Inc.), Gap Inc. and Safeway. Ms. Carr resigned as Chief Executive Officer and was replaced on January 6, 2025, by Johan Hedberg. See note on “Subsequent Events” below. 7 Table of Contents
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The weakening labor market may relieve pressure on our ability to hire qualified employees, but recent wage gains are not likely to be reversed. Higher unemployment together with continued high interest rates may further dampen consumer demand and affect the Company’s future financial performance.
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(formerly Coach, Inc.), Gap Inc. and Safeway. 7 Table of Contents

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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As a Company engaged in sourcing on a global scale, we are subject to the risks inherent in such activities, including, but not limited to: • unavailability of, or significant fluctuations in the cost of, raw materials; • disruptions or delays in shipments; • loss or impairment of key assembly or distribution sites, which also could result in a former manufacturer beginning to produce similar products that compete with ours; • inability to engage new independent manufacturers that meet the Company’s cost-effective sourcing model; • product quality issues; • compliance by us and our independent manufacturers and suppliers with labor laws and other foreign governmental regulations; • imposition of additional duties, taxes, and other charges on imports or exports; • embargoes against products originating in countries from which we source; • increases in the cost of labor, fuel (including volatility in the price of oil), travel and transportation; • compliance by our independent manufacturers and suppliers with our Code of Business Conduct and Ethics and our Animal Welfare Policy; • political unrest; • unforeseen public health crises, such as pandemic (e.g., the COVID-19 pandemic) and epidemic diseases; • natural disasters or other extreme weather events, whether as a result of climate change or otherwise; and • acts of war or terrorism and other external factors over which we have no control.
As a Company engaged in sourcing on a global scale, we are subject to the risks inherent in such activities, including, but not limited to: • unavailability of, or significant fluctuations in the cost of, raw materials; • disruptions or delays in shipments; and volatility of pricing in shipment costs. • loss or impairment of key assembly or distribution sites, which also could result in a former manufacturer beginning to produce similar products that compete with ours; • inability to engage new independent manufacturers that meet the Company’s cost-effective sourcing model; • product quality issues; • compliance by us and our independent manufacturers and suppliers with labor laws and other foreign governmental regulations; • imposition of additional duties, taxes, new tariffs, and other charges on imports or exports; • embargoes against products originating in countries from which we source; • increases in the cost of labor, fuel (including volatility in the price of oil), travel and transportation; • compliance by our independent manufacturers and suppliers with our Code of Business Conduct and Ethics and our Animal Welfare Policy; • political unrest; • unforeseen public health crises, such as pandemic (e.g., the COVID-19 pandemic) and epidemic diseases; • natural disasters or other extreme weather events, whether as a result of climate change or otherwise; and • acts of war or terrorism and other external factors over which we have no control.
In addition, our vendors receive and maintain certain personal, financial, and other information about our employees and customers. The use and transmission of this information is regulated by evolving and increasingly demanding laws and regulations across various jurisdictions.
We receive and maintain certain personal, financial, and other information about our customers, employees, and vendors. In addition, our vendors receive and maintain certain personal, financial, and other information about our employees and customers. The use and transmission of this information is regulated by evolving and increasingly demanding laws and regulations across various jurisdictions.
If we determine that it is no longer economical to operate a retail store subject to a lease and decide to close it, as we have done in the past and will do in the future, we would generally remain obligated under the applicable lease for, among other things, payment of the base rent, common charges, and other net payments for the balance of the lease term.
If we determine that it is no longer economical to operate a retail store or other facility subject to a lease and decide to close it, as we have done in the past and will do in the future, we would generally remain obligated under the applicable lease for, among other things, payment of the base rent, common charges, and other net payments for the balance of the lease term.
The growth of internet retailers has also significantly reduced traffic to many shopping centers and physical stores, which, if not countered by an increase in our own online retailing, could have a material adverse effect on our in-store or overall sales. 9 Table of Contents Declines in foot traffic in our retail store locations could negatively impact our sales and profits.
The growth of internet retailers has also significantly reduced traffic to many shopping centers and physical stores, which, if not countered by an increase in our own online retailing, could have a material adverse effect on our in-store or overall sales. Declines in foot traffic in our retail store locations could negatively impact our sales and profits.
If our digital commerce platforms do not meet customers’ expectations in terms of security, speed, attractiveness or ease of use, customers may be less inclined to return to such digital commerce platforms, which could negatively impact our business. 12 Table of Contents Risks Related to the Macroeconomic Environment Our business may be negatively impacted by general economic conditions in the United States and abroad.
If our digital commerce platforms do not meet customers’ expectations in terms of security, speed, attractiveness or ease of use, customers may be less inclined to return to such digital commerce platforms, which could negatively impact our business. Risks Related to the Macroeconomic Environment Our business may be negatively impacted by general economic conditions in the United States and abroad.
Further, we could incur substantial costs in legal actions relating to our use of intellectual property or the use of our intellectual property by others. Even if we are successful in these actions, the costs we incur could have a material adverse effect on us.
Further, we could incur substantial costs in legal actions relating to our use of intellectual property or the use of our intellectual property by others. Even if we are successful in these actions, the costs we incur could have a material adverse effect on us. 14 Table of Contents
Likewise, our obligation to continue making lease payments in respect of leases for closed retail spaces could have a material adverse effect on our business, financial condition and results of operations. We may be unable to sustain our financial performance or our past growth, which could have a material adverse effect on our future operating results.
Likewise, our obligation to continue making lease payments in respect of leases for closed retail or other spaces could have a material adverse effect on our business, financial condition and results of operations. 9 Table of Contents We may be unable to sustain our financial performance or our past growth, which could have a material adverse effect on our future operating results.
In addition, adverse weather conditions, economic or political instability and consumer confidence volatility could have material adverse impacts on our sales and operating results. Our success depends, in part, on attracting, developing and retaining qualified employees, including key personnel.
In addition, adverse weather conditions, economic or political instability and consumer confidence volatility could have material adverse impacts on overall customer demand, which may impact our sales and operating results. 10 Table of Contents Our success depends, in part, on attracting, developing and retaining qualified employees, including key personnel.
Pressure on discretionary income brought on by economic downturns and slow recoveries, including housing market declines, rising energy prices and weak labor markets, may cause consumers to reduce the amount they spend on discretionary items.
Our stores offer leather and leathercraft-related items, which are viewed as discretionary items. Pressure on discretionary income brought on by economic downturns and slow recoveries, including housing market declines, rising energy prices and weak labor markets, may cause consumers to reduce the amount they spend on discretionary items.
The theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, or interference with our information technology systems or the technology systems of third parties on which we rely, could result in business disruption, negative publicity, brand damage, violation of privacy laws, loss of customers, potential liability and competitive disadvantage.
The theft, destruction, loss, misappropriation, or release of sensitive and/or confidential information or intellectual property, or interference with our information technology systems or the technology systems of third parties on which we rely, could result in business disruption, negative publicity, brand damage, violation of privacy laws, loss of customers, potential liability and competitive disadvantage. 12 Table of Contents Unreliable or inefficient information technology or the failure to successfully implement or invest in technology initiatives in the future could adversely impact operating results.
In addition, the State of California enacted the California Consumer Privacy Act (the “CCPA”), which became effective January 2020 and requires companies that process information on California residents to, among other things, provide new disclosures and options to consumers about data collection, use and sharing practices. 11 Table of Contents Moreover, each of the GDPR and the CCPA confer a private right-of-action on certain individuals and associations.
In addition, the State of California enacted the California Consumer Privacy Act (the “CCPA”), which became effective January 2020 and requires companies that process information on California residents to, among other things, provide new disclosures and options to consumers about data collection, use and sharing practices.
We compete with smaller retailers focused on leather and leather crafting, some of whom have been able to offer competitive products at lower prices than ours.
While we remain competitive in the areas of quality, price, breadth of selection, customer service, and convenience, we compete with smaller and larger retailers focused on leather and leather crafting, some of whom have been able to offer competitive products at lower prices than ours.
The retail industry is competitive, which could result in the reduction of our prices and loss of our market share. We must remain competitive in the areas of quality, price, breadth of selection, customer service, and convenience.
The retail industry is competitive, which could result in the reduction of our prices and loss of our market share.
These include the realignment of the Company’s retail division management structure, the closing of underperforming stores, the formation of a new division focused on serving commercial customers, pricing and marketing initiatives, systems improvements, and other changes.
These include the closing or relocation of underperforming stores and opening of new store concepts, the further development of our new division focused on serving commercial customers, pricing and marketing initiatives, systems improvements, and other changes.
This revenue, when translated into U.S. dollars for consolidated reporting purposes, could be materially affected by fluctuations in the U.S. dollar, negatively impacting our results of operations and our ability to generate revenue growth.
This revenue, when translated into U.S. dollars for consolidated reporting purposes, could be materially affected by fluctuations in the U.S. dollar, negatively impacting our results of operations and our ability to generate revenue growth. 13 Table of Contents We face risks related to the effect of economic uncertainty. ​During events of economic downturn and slow recovery, our growth prospects, results of operations, cash flows and financial condition could be adversely impacted.
While we are better prepared to handle a future pandemic, it could impact our ability to keep our stores open, to obtain merchandise or payment terms from our vendors, to transport merchandise to and from our warehouse, to operate our warehouse, factory and other facilities that require on-site activities, and thus materially adversely affect our revenues, earnings, liquidity and cash flows. 13 Table of Contents Risks Related to Legal, Regulatory and Compliance If the United States maintains current tariffs on products manufactured in China, or if additional tariffs or trade restrictions are implemented by other countries or by the U.S., the cost of our products manufactured in China or other countries and imported into the U.S. or other countries could increase.
While we are better prepared to handle a future pandemic, it could impact our ability to keep our stores open, to obtain merchandise or payment terms from our vendors, to transport merchandise to and from our warehouse, to operate our warehouse, factory and other facilities that require on-site activities, and thus materially adversely affect our revenues, earnings, liquidity and cash flows.
The cost of these items may fluctuate substantially, depending on a variety of factors, including demand, supply conditions, transportation and fuel costs, government regulation, economic climates, war or other political considerations, and other unpredictable factors. Leather prices worldwide have been relatively stable for the past several years although the outlook for future prices is uncertain.
The cost of these items may fluctuate substantially, depending on a variety of factors, including demand, supply conditions, transportation and fuel costs, government regulation including potential trade barriers such as tariffs, economic climates, war or other political considerations, and other unpredictable factors.
We lease the majority of our retail store locations under long-term, non-cancelable leases, which have initial or renewed terms typically ranging from three years to ten years and may include lease renewal options. We believe that most of the lease agreements we will enter into in the future will likely be long-term and non-cancelable.
If we close a leased retail space, we might remain obligated under the applicable lease. We lease our retail store locations under long-term, non-cancelable leases, which have initial or renewed terms typically ranging from three years to ten years and may include lease renewal options.
Disruptions in the operation of our Fort Worth distribution center or assembly facility due to disease, including COVID-19, natural disaster, fire, or other crises, could have an adverse effect on our ability to supply our retail stores, fulfill web orders and/or manufacture product, resulting in possible decreases in sales and margin. 10 Table of Contents We are dependent on a limited number of distribution and sourcing centers, primarily the center located at our Fort Worth, Texas headquarters.
Disruptions in the operation of our Fort Worth distribution center or assembly facility could have an adverse effect on our ability to supply our retail stores, fulfill web orders and/or manufacture product, resulting in possible decreases in sales and margin.
Risks Related to Technology, Data Security and Privacy Failure to protect the integrity and security of personal information of our customers and employees could result in substantial costs, expose us to litigation and damage our reputation. We receive and maintain certain personal, financial, and other information about our customers, employees, and vendors.
We cannot guarantee that we will be able to secure all of the additional cash or working capital we might require to continue our operations. 11 Table of Contents Risks Related to Technology, Data Security and Privacy Failure to protect the integrity and security of personal information of our customers and employees could result in substantial costs, expose us to litigation and damage our reputation.
The occurrence of any of these events could adversely affect our business and our results of operations. We are subject to risks associated with leasing retail space under long-term and non-cancelable leases. We may be unable to renew leases on acceptable terms. If we close a leased retail space, we might remain obligated under the applicable lease.
These issues could have a material adverse effect on the Company’s business and operations in 2025 or beyond. We are subject to risks associated with leasing retail, distribution and office space under long-term and non-cancelable leases. We may be unable to renew leases on acceptable terms.
Specifically, at the time of filing this Form 10-K, the American and world economies have been acutely affected by a combination of factors resulting from both the COVID-19 pandemic and the war resulting from the invasion of Ukraine by Russian military forces.
Specifically, at the time of filing this Form 10-K, the American and world economies have been acutely affected by a combination of factors resulting from post-pandemic inflation and weak economic growth, multiple major military conflicts, and tensions with key U.S. trade partners caused by the uncertainty of a new administration.
We may also seek capital through the private issuance of debt or equity securities. We cannot guarantee that we will be able to secure all of the additional cash or working capital we might require to continue our operations.
We may also seek capital through the private issuance of debt or equity securities.
In 2020, we experienced declines in sales and operating income primarily resulting from the COVID-19 pandemic. In 2023, we also experienced declines primarily resulting the longer-term economic effects of COVID-19 (higher food, housing and transportation costs, higher interest rates, lower government subsidies) and the added economic impact of the war in Ukraine and now the Middle East.
In 2020, we experienced declines in sales and operating income primarily resulting from the COVID-19 pandemic.
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Unreliable or inefficient information technology or the failure to successfully implement or invest in technology initiatives in the future could adversely impact operating results.
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Leather prices worldwide have been relatively stable for the past several years although the outlook for future prices is uncertain.
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The current impacts of these events include (but are not limited to) levels of inflation that are the highest in the U.S. in more than 40 years, fuel prices at or near record highs, an extremely tight labor market with rising wages and competition to attract qualified workers, rising real estate prices and increases in interest rates.
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The occurrence of any of these events could adversely affect our business and our results of operations. Relocation of the Company’s headquarters and main distribution facility in 2025 might cause significant disruption to the Company’s business and operations.
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We face risks related to the effect of economic uncertainty. ​During events of economic downturn and slow recovery, our growth prospects, results of operations, cash flows and financial condition could be adversely impacted. Our stores offer leather and leathercraft-related items, which are viewed as discretionary items.
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In January 2025, the Company completed the sale of its headquarters facilities, including its main distribution facility and flagship store, in Fort Worth, Texas. The Company plans to relocate these operations to new spaces beginning around the third quarter of 2025.
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These relocation activities will inevitably cause disruption to the Company’s business and operations, including (but not limited to) requiring the Company set up temporary fulfillment centers for web orders while the move is in progress and establishing new facilities and procedures for distribution of products to stores and all customers during and after this period.
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The Company is actively working to plan for and manage these transitions, but we cannot assure you that these processes will be completed as planned, that they will not cost significantly more than expected, or that we will not encounter unforeseen problems or challenges.
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In addition, we have signed a lease for the Company’s future principal offices and distribution center (including some factory production) that will run through September 2035. We believe that most of the lease agreements we will enter into in the future will be long-term and non-cancelable.
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In 2024, we also experienced declines, which management believes were primarily resulting from macroeconomic factors, including inflation (particularly higher food, fuel, housing and transportation costs), higher interest rates and lower government subsidies, all of which impacted the specialty retail industry and impacts our customers’ ability to make discretionary purchases such as our products.
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We are dependent on a limited number of distribution and sourcing centers, primarily the center located at our Fort Worth, Texas headquarters, which will be relocated during 2025 as referenced above and in Note 11 of this document.
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We anticipate, and are planning for, a period of disruption in 2025 while we move our distribution facilities to their new location near Fort Worth, but we cannot be sure that this disruption will not exceed our forecast or interfere with our ability to allocate or distribute products as needed.
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Moreover, each of the GDPR and the CCPA confer a private right-of-action on certain individuals and associations.
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The impacts of these events over the last year include (but are not limited to) continued high food and housing costs as a result of multiple years of high inflation, continued higher wages as a result of multiple years high employment and the associated wage growth, rising real estate prices and continued high interest rates.
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Risks Related to Legal, Regulatory and Compliance If the United States maintains current tariffs on products manufactured in China, or if additional tariffs or trade restrictions are implemented by other countries or by the U.S., the cost of our products manufactured in China or other countries and imported into the U.S. or other countries could increase.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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The Company’s information security program is managed by its Vice President, Operations and Technology, whose team is responsible for leading Company-wide cybersecurity strategy, policy, standards, architecture, and processes. We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF and AI Risk Management Framework).
The Company’s information security program is managed by its Vice President, Technology, whose team is responsible for leading Company-wide cybersecurity strategy, policy, standards, architecture, and processes. We design and assess our program based on the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF and AI Risk Management Framework).
Management provides a full briefing on various cybersecurity risk matters including risk assessments, mitigation strategies, areas of emerging risk and other areas of importance at least annually. In the event of a cybersecurity incident determined to be significant, management will notify the Board.
Management provides a full briefing on various cybersecurity risk matters including risk assessments, mitigation strategies, areas of emerging risk and other areas of importance at least annually if material. In the event of a cybersecurity incident determined to be significant, management will notify the Board.
We face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See “Risk Factors”. Cybersecurity Governance The Company’s Board of Directors oversees management’s cybersecurity strategy.
We face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See “Risk Factors”. 15 Table of Contents Cybersecurity Governance The Company’s Board of Directors oversees management’s cybersecurity strategy.
Information about cybersecurity risks and our risk management processes is collected, analyzed and considered as part of our overall enterprise risk management program. 14 Table of Contents Key components of our cybersecurity risk management program The Company’s cybersecurity program includes: • Advanced security infrastructure with state-of-the-art firewalls and intrusion detection systems. • Regular cybersecurity training for employees. • Strict data access controls and authentication protocols. • Continuous monitoring of our networks and systems for signs of unauthorized activity. • Partnerships with leading cybersecurity software and hardware providers for real-time systems monitoring and threat intelligence.
Key components of our cybersecurity risk management program The Company’s cybersecurity program includes: • Advanced security infrastructure with state-of-the-art firewalls and intrusion detection systems. • Regular cybersecurity training for employees. • Strict data access controls and authentication protocols. • Continuous monitoring of our networks and systems for signs of unauthorized activity. • Partnerships with leading cybersecurity software and hardware providers for real-time systems monitoring and threat intelligence.
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Information about cybersecurity risks and our risk management processes is collected, analyzed and considered as part of our overall enterprise risk management program.

Item 2. Properties

Properties — owned and leased real estate

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Locations: Alabama 1 Missouri 3 Alaska 1 Montana 1 Arizona 3 Nebraska 1 Arkansas 1 Nevada 2 California 7 New Jersey 1 Colorado 4 New Mexico 2 Connecticut 1 New York 2 Florida 4 North Carolina 2 Georgia 2 Ohio 3 Idaho 1 Oklahoma 2 Illinois 1 Oregon 2 Indiana 1 Pennsylvania 3 Iowa 1 South Dakota 1 Kansas 1 Tennessee 3 Kentucky 1 Texas 16 Louisiana 2 Utah 4 Maryland 1 Washington 3 Massachusetts 1 Wisconsin 1 Michigan 2 Wyoming 1 Minnesota 2 Canadian Locations: Alberta 3 Ontario 3 British Columbia 1 Saskatchewan 1 Manitoba 1 Nova Scotia 1 International Locations: Spain 1 The broader economic impact of the pandemic and the war in Ukraine and the Middle East have put pressure on store profitability with dampened demand, higher wages and staffing challenges, rising retail rents, and increases in other retail store operating costs.
Locations: Alabama 1 Missouri 3 Alaska 1 Montana 1 Arizona 3 Nebraska 1 Arkansas 1 Nevada 2 California 7 New Jersey 1 Colorado 4 New Mexico 2 Connecticut 1 New York 2 Florida 4 North Carolina 2 Georgia 2 Ohio 3 Idaho 1 Oklahoma 2 Illinois 1 Oregon 2 Indiana 1 Pennsylvania 2 Iowa 1 South Dakota 1 Kansas 1 Tennessee 3 Kentucky 1 Texas 18 Louisiana 2 Utah 4 Maryland 1 Washington 3 Massachusetts 1 Wisconsin 1 Michigan 2 Wyoming 1 Minnesota 2 Virginia 1 Canadian Locations: Alberta 3 Ontario 2 British Columbia 1 Saskatchewan 1 Manitoba 1 Nova Scotia 1 International Locations: Spain 1 The broader economic impact of the pandemic and the war in Ukraine and the Middle East have put pressure on store profitability with dampened demand, higher wages and staffing challenges, rising retail rents, and increases in other retail store operating costs.
ITEM 2. PROPERTIES We lease our store locations, with the exception of our flagship store located in Fort Worth, Texas. The majority of our stores have initial lease terms of at least five years. The leases are generally renewable, with increases in lease rental rates in some cases. We believe that all of our properties are adequately covered by insurance.
ITEM 2. PROPERTIES We lease our store locations, with the exception of our flagship store located in Fort Worth, Texas which we still owned as of December 31, 2024. The majority of our stores have initial lease terms of at least five years. The leases are generally renewable, with increases in lease rental rates in some cases.
We own the 22,000 square foot building that houses our flagship store. Further, we own our corporate headquarters, which includes our central distribution center and production facility, sales, marketing, administrative, and executive offices.
We believe that all of our properties are adequately covered by insurance. As of December 31, 2024, we owned the 22,000 square foot building that houses our flagship store. Further, we owned our corporate headquarters, which includes our central distribution center and production facility, sales, marketing, administrative, and executive offices.
The facility consists of 191,000 square feet located on approximately 30 acres. 15 Table of Contents The following table summarizes the locations of our leased premises as of the date of this filing: U. S.
The following table summarizes the locations of our leased premises as of the date of this filing: U. S.
Removed
In 2022, we closed four store locations that met a number of the criteria for closure, three of which were at the end of the lease, and one of which we paid a negotiated early lease termination. We also opened one new location at Fort Liberty, NC.
Added
The facility consists of 191,000 square feet located on approximately 30 acres. In January 2025, the Company completed the sale of its flagship store and corporate headquarters buildings, and those spaces have also been leased since that time as referenced in our “Subsequent Events” footnote below.
Removed
In 2023, we closed two locations that met a number of the criteria for closure including the Fort Liberty location, which was not meeting its sales targets, and we opened one new location in Queens NY. 16 Table of Contents

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

0 edited+2 added−4 removed0 unchanged
Removed
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock trades on the Nasdaq Capital Market under the symbol “TLF.” There were approximately 278 stockholders of record on February 29, 2024.
Added
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES 17 ITEM 6. SELECTED FINANCIAL DATA 17 ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 18 ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 25 ITEM 9.
Removed
We did not sell any shares of our equity securities during our fiscal year ended December 31, 2023 that were not registered under the Securities Act. Our Board of Directors did not authorize any dividends during the fiscal years ended December 31, 2023 or 2022.
Added
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 52 ITEM 9A. CONTROLS AND PROCEDURES 52
Removed
Our Board of Directors may consider future cash dividends after giving consideration to our profitability, cash flow, capital requirements, current and forecasted liquidity, as well as financial and other business conditions existing at the time. This policy is subject to change based on future industry and market conditions, as well as other factors.
Removed
We did not repurchase any shares of our common stocks during the fourth quarter of fiscal year 2023.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

29 edited+8 added−15 removed46 unchanged
We evaluate a number of factors when determining whether to close existing stores, including the 4-wall cash flow trend and longer-term projection for the store, the long-term sales trend, ongoing cost of store operations, date of lease expiration, quality of the store and location, and the size and potential of the trade area including proximity to other existing stores, among other variables.
We evaluate a number of factors when determining whether to close existing stores, including the 4-wall cash flow trend and longer-term projections for the store, the long-term sales trend, ongoing cost of store operations, date of lease expiration, quality of the store and location, and the size and potential of the trade area including proximity to other existing stores, among other variables.
At the store level, inventory is physically counted each quarter. Inventory is then adjusted in our accounting system to reflect actual count results. Leases. We lease certain real estate for our retail store locations and warehouse equipment for our Texas distribution center, both under long-term lease agreements.
At the store level, inventory is physically counted each quarter. Inventory is then adjusted in our accounting system to reflect actual count results. Leases. We lease certain real estate for our retail store locations and periodically lease warehouse equipment for our Texas distribution center, both usually under long-term lease agreements.
We may be subject to periodic audits by the Internal Revenue Service and other taxing authorities. These audits may challenge certain of our tax positions, such as the timing and amount of deductions and allocation of taxable income to the various jurisdictions. 26 Table of Contents
We may be subject to periodic audits by the Internal Revenue Service and other taxing authorities. These audits may challenge certain of our tax positions, such as the timing and amount of deductions and allocation of taxable income to the various jurisdictions. 24 Table of Contents
This evaluation requires management to make judgements relating to future cash flows, growth rates and economic and market conditions. The fair value of an asset group is estimated using a discounted cash flow valuation method. Stock-based Compensation. The Company’s stock-based compensation relates primarily to restricted stock unit (“RSU”) awards.
This evaluation requires management to make judgements relating to future cash flows, growth rates and economic and market conditions. The fair value of an asset group is estimated using a discounted cash flow valuation method. 23 Table of Contents Stock-based Compensation. The Company’s stock-based compensation relates primarily to restricted stock unit (“RSU”) awards.
We believe that cash flow from operations and our existing cash reserves will be adequate to fund our operations through 2024, considering the current effects of the inflationary pressure on our business and cash flow and our current business performance.
We believe that cash flow from operations and our existing cash reserves will be adequate to fund our operations through 2025, considering the current effects of the inflationary pressure on our business and cash flow and our current business performance.
The remaining asset balance in our finance lease is only residual value and only an insignificant interest expense of less than $100 dollars was incurred and is recorded on the consolidated statements of operations and comprehensive income. 24 Table of Contents None of our lease agreements contain material residual value guarantees or material restrictive covenants.
The remaining asset balance in our finance lease is only residual value and only an insignificant interest expense of less than $100 dollars was incurred and is recorded on the consolidated statements of operations and comprehensive income. None of our lease agreements contain material residual value guarantees or material restrictive covenants.
Currently, the Company operates a total of 102 retail stores. There are 91 stores in the United States (“U.S,”), 10 stores in Canada and one store in Spain. Tandy Leather has been introducing people to leatherworking for over 100 years.
Currently, the Company operates a total of 101 retail stores. There are 91 stores in the United States (“U.S,”), 9 stores in Canada and one store in Spain. Tandy Leather has been introducing people to leatherworking for over 100 years.
As merchandise is returned, the company records the sales return against the sales return allowance. 23 Table of Contents We record a gift card liability for the unfulfilled performance obligation on the date we issue a gift card to a customer. We record revenue and reduce the gift card liability as the customer redeems the gift card.
As merchandise is returned, the company records the sales return against the sales return allowance. We record a gift card liability for the unfulfilled performance obligation on the date we issue a gift card to a customer. We record revenue and reduce the gift card liability as the customer redeems the gift card.
Our store footprint consisted of 102 stores at December 31, 2023 and 103 stores at December 31, 2022. Since January 1, 2023, we closed two stores and opened one store.
Our store footprint consisted of 101 stores at December 31, 2024 and 102 stores at December 31, 2023. Since January 1, 2024, we closed two stores and opened one store.
Cash Flows (amounts in thousands) 2023 2022 Net cash provided by operating activities $ 4,537 $ 1,154 Net cash used in investing activities (576 ) (625 ) Net cash used in financing activities (26 ) (2,171 ) Effect of exchange rate changes on cash and cash equivalents 249 (538 ) Net increase (decrease) in cash and cash equivalents $ 4,184 $ (2,180 ) For 2023, we generated $4.5 million of cash from operations driven by net income of $3.8 million, the add-back of non-cash expenses of $4.5 million, including depreciation, amortization, loss on disposal of fixed assets, stock based compensation, and deferred taxes, an increase in accrued expenses and other liabilities of $0.5 million, a decrease in inventory of $0.2 million and a decrease in accounts receivable of $0.1 million; offset by a decrease in operating lease liabilities payments of $3.6 million, a decrease in accounts payable of $0.8 million, and an increase in prepaid expenses of $0.2 million.
Cash Flows (amounts in thousands) 2024 2023 Net cash provided by operating activities $ 4,548 $ 4,537 Net cash used in investing activities (2,983 ) (576 ) Net cash used in financing activities (1 ) (26 ) Effect of exchange rate changes on cash and cash equivalents (452 ) 249 Net increase in cash and cash equivalents $ 1,112 $ 4,184 For 2024, we generated $4.6 million of cash from operations driven by net income of $0.8 million, the add-back of non-cash expenses of $5.4 million, including depreciation, amortization, loss on disposal of fixed assets, stock based compensation, and deferred taxes, a decrease in inventory of $2.0 million, and an increase in accrued expense of $0.3 million; offset by a decrease in operating lease liabilities payments of $3.5 million and an increase in prepaid expense of $0.4 million.
As of December 31, 2023, we have no sublease agreements and no lease agreements in which we are named as a lessor. We do not have any contingent rental payment agreements.
As of December 31, 2024, we have no sublease agreements and no lease agreements in which we are named as a lessor. We do not have any contingent rental payment agreements. Impairment of Long-Lived Assets .
The compensation expense ultimately recognized, if any, related to performance-based awards will equal the grant date fair value based on the number of shares for which the performance condition has been satisfied. We issue shares from authorized shares upon the lapsing of vesting restrictions on RSUs.
The compensation expense ultimately recognized, if any, related to performance-based awards will equal the grant date fair value based on the number of shares for which the performance condition has been satisfied. We issue shares from authorized shares upon the lapsing of vesting restrictions on RSUs. We do not use cash to settle equity instruments issued under stock-based compensation awards.
Share Repurchase Program On August 8, 2022, the Board of Directors approved a new program to repurchase up to $5.0 million of the Company’s common stock on the open market on or prior to August 31, 2024. As of December 31, 2022 and December 31, 2023, $5.0 million remained available for repurchase under this new program.
Share Repurchase Program On August 8, 2022, the Board of Directors approved a new program to repurchase up to $5.0 million of the Company’s common stock on the open market on or prior to August 31, 2024.
We use similar factors to determine whether to open new stores. Gross Profit Gross profit decreased by $1.3 million, or 2.9%, from 2022 to 2023.
We use similar factors to determine whether to open new stores. Gross Profit Gross profit decreased by $3.4 million, or 7.4%, from 2023 to 2024.
We regularly review all inventory items to determine if there are (i) damaged goods (e.g., for leather, excessive scars or damage from ultra-violet (“UV”) light), (ii) items that need to be removed from our product line (e.g., slow-moving items, inability of a supplier to provide items of acceptable quality or quantity, and to maintain freshness in the product line) and (iii) pricing actions that need to be taken to adequately value our inventory at the lower of FIFO cost or net realizable value.
We regularly review all inventory items to determine if there are (i) damaged goods (e.g., for leather, excessive scars or damage from ultra-violet (“UV”) light), (ii) items that need to be removed from our product line (e.g., slow-moving items, inability of a supplier to provide items of acceptable quality or quantity, and to maintain freshness in the product line) and (iii) pricing actions that need to be taken to adequately value our inventory at the lower of FIFO cost or net realizable value. 22 Table of Contents Since the determination of net realizable value of inventory involves both estimation and judgement with regard to market values and reasonable costs to sell, differences in these estimates could result in ultimate valuations that differ from the recorded asset.
Any resulting deferred tax assets are evaluated for recoverability based on estimated future taxable income. To the extent it is more-likely-than-not that all or a portion of a deferred tax asset will not be realized, a valuation allowance is recorded.
To the extent it is more-likely-than-not that all or a portion of a deferred tax asset will not be realized, a valuation allowance is recorded.
Results of Operations The following table presents selected financial data: (in thousands) 2023 2022 $ Change % Change Sales $ 76,229 $ 80,335 $ (4,106 ) (5.1 )% Gross profit 45,163 46,497 (1,334 ) (2.9 )% Gross margin percentage 59.2 % 57.9 % - 1.3 % Operating expenses 40,753 45,109 (4,356 ) (9.7 )% Income from operations $ 4,410 $ 1,388 $ 3,022 217.7 % Net Sales Consolidated net sales decreased by $4.1 million, or 5.1%, from 2022 to 2023.
Results of Operations The following table presents selected financial data: (in thousands) 2024 2023 $ Change % Change Sales $ 74,391 $ 76,229 $ (1,838 ) (2.4 )% Gross profit 41,804 45,163 (3,359 ) (7.4 )% Gross margin percentage 56.2 % 59.2 % - (3.0 )% Operating expenses 41,176 40,753 423 1.0 % Income from operations $ 628 $ 4,410 $ (3,782 ) (85.8 )% Net Sales Consolidated net sales decreased by $1.8 million, or 2.4%, from 2023 to 2024.
We do not use cash to settle equity instruments issued under stock-based compensation awards. 25 Table of Contents Income Taxes. Income taxes are estimated for each jurisdiction in which we operate. This involves assessing current tax exposure together with temporary differences resulting from differing treatment of items for tax and financial statement accounting purposes.
Income Taxes. Income taxes are estimated for each jurisdiction in which we operate. This involves assessing current tax exposure together with temporary differences resulting from differing treatment of items for tax and financial statement accounting purposes. Any resulting deferred tax assets are evaluated for recoverability based on estimated future taxable income.
For the year ended December 31, 2023, we recognized other income of $0.1 million. During the year ended December 31, 2022, we recognized other income of less than $0.1 million related to interest earned on our short term investment.
Other Income Other income consists primarily of interest income and foreign currency gain. For the year ended December 31, 2024 and 2023, we recognized other income of $0.5 million of which $0.3 million was related to interest earned on our short term investment and $0.3 million in foreign currency exchange gain offset by $0.1 million in foreign tax penalties.
Provision for Income Taxes Our effective tax rate was 17.1% and 12.9% for the years ended December 31, 2023 and 2022, respectively. 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 release of valuation allowance associated with our deferred tax assets.
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 release of valuation allowance associated with our deferred tax assets in 2023. Capital Resources, Liquidity and Financial Condition We require cash principally for day-to-day operations, to purchase inventory and to finance capital investments.
We invested $0.6 million in capital expenditures for the purchase of store fixtures and systems implementations.
We invested $0.6 million in capital expenditures for the purchase of store fixtures and systems implementations. The activities above, in addition to the effect of exchange rate changes, resulted in a net increase in cash of $4.2 million.
The activities above, in addition to the effect of exchange rate changes, resulted in a net increase in cash of $4.2 million. 22 Table of Contents For 2022, we generated $1.1 million of cash from operations driven by net income of $1.2 million, the add-back of non-cash expenses of $5.5 million, including depreciation, amortization, and stock-based compensation, a decrease in income taxes, net of $0.9 million due to collecting $1.4 million of refunds from NOL carryback claims that partially offset current year installment payments and recording the current year income tax provision, and a decrease in accounts receivable of $0.2 million among other changes, offset by the increase of inventory of $0.3 million (including currency effects), a decrease in accounts payable and accrued expenses of $3.3 million and a decrease in operating lease liabilities of $3.4 million.
For 2023, we generated $4.5 million of cash from operations driven by net income of $3.8 million, the add-back of non-cash expenses of $4.5 million, including depreciation, amortization, loss on disposal of fixed assets, stock based compensation, and deferred taxes, an increase in accrued expenses and other liabilities of $0.5 million, a decrease in inventory of $0.2 million and a decrease in accounts receivable of $0.1 million; offset by a decrease in operating lease liabilities payments of $3.6 million, a decrease in accounts payable of $0.8 million, and an increase in prepaid expenses of $0.2 million.
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.
On January 3, 2023, the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A. 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.
In addition, we anticipate that this cash flow and our current cash reserves will enable us to meet our contractual obligations and commercial commitments throughout 2024. There can be no assurance, however, that the current global economic conditions would not result in further restrictions on our business operations in a manner that would more materially impact our cash flow.
There can be no assurance, however, that the current global economic conditions would not result in further restrictions on our business operations in a manner that would more materially impact our cash flow. 21 Table of Contents Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements during 2024 or 2023, and we do not currently have any such arrangements.
We need to continue to give customers good reasons to visit stores, and an excellent return on their time investment when they do.
Improving our employee product knowledge, customer service level, in-store and virtual classes and community engagement as well as expanding workshop space in stores with machines are the highest priorities. We need to continue to give customers good reasons to visit stores, and an excellent return on their time investment when they do.
Any excess cash will be invested as determined by our Board of Directors in accordance with its approved investment policy. Our cash balance as of December 31, 2023 totaled $12.2 million. On January 3, 2023, the Company entered into a credit agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A.
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 balance as of December 31, 2024 totaled $13.3 million.
Our gross margin percentage for the year ended December 31, 2023 increased to 59.2% versus 57.9% in the same period in 2022, due to reduction in freight and warehouse overhead, relatively stronger full-priced selling throughout the year and product and customer mix shifts. 20 Table of Contents Operating Expenses (in thousands) 2023 2022 Operating expenses $ 40,753 $ 45,109 Non-routine items related to restatement - (246 ) Adjusted operating expenses $ 40,753 $ 44,863 Operating expenses % of sales 53.5 % 56.2 % Adjusted operating expenses % of sales 53.5 % 55.8 % Operating expenses declined by $4.3 million in 2023 as compared to the prior year.
Our gross margin percentage for the year ended December 31, 2024 decreased to 56.2% versus 59.2% in the same period in 2023, due to higher freight and warehouse overhead throughout the year, and increased promotional activity to compensate for weak consumer discretionary spending. 19 Table of Contents Operating Expenses Operating expenses increased by $0.4 million in 2024 as compared to the prior year.
With dedicated direct account representatives, a direct-from-our-warehouse shipping model, volume-based competitive pricing, customized product development, and production and pre-production services, we are building long-term, strategic relationships with our largest customers. 19 Table of Contents With COVID-19 and restatement related impacts behind us, and with initiatives to improve our brand proposition and to build the foundation for a modern and efficient retail business taking hold, we believe we have made significant progress toward building a durable, profitable business model.
With dedicated direct account representatives, a direct-from-our-warehouse shipping model, volume-based competitive pricing, customized product development, and production and pre-production services, we are building long-term, strategic relationships with our largest customers. 18 Table of Contents Going forward, our strategy is to continue to manage our cost base and use of cash and focus on strengthening our sales by leveraging our competitive advantage of our retail stores.
The activities above, in addition to the effect of exchange rate changes, resulted in a net decrease in cash of $2.2 million.
We invested $2.9 million in capital expenditures for store build-out and fixtures for new and relocated stores, a new roof for our Fort Worth headquarters building of $1 million, and expenditures related to our ERP and e-commerce systems. The activities above, in addition to the effect of exchange rate changes, resulted in a net increase in cash of $1.1 million.
Removed
Our cost of sales and operating expenses have stabilized, and we believe we have the structure, and the operating nimbleness, that can deliver operating profit and free cash flow even in the face of economic headwinds.
Added
We believe the decrease in sales was due to ongoing weak consumer demand compared to a year ago, resulting from continued weakness in consumer discretionary spending related to sustained increases in key non-discretionary items like food and housing, exacerbated by temporary store closures and moves.
Removed
Going forward, our strategy is to continue to manage our cost base and use of cash and focus on strengthening our sales by leveraging our competitive advantage of our retail stores. Improving our employee product knowledge, customer service level and community engagement as well as expanding workshop space in stores with machines are the highest priorities.
Added
The primary drivers of the increase were higher employment costs of approximately $1.4 million for full time employees across the Company, and an increase in occupancy and utilities of $0.4 million due to the renewal of our store leases; offset by reduction in accrued bonus of $0.9 million, the expiration and forfeiture of RSUs of $0.2 million, a reduction in credit card fees of $0.2 million, a reduction in office supplies of $0.1 million, and a reduction in repair and maintenance of $0.1 million.
Removed
About $1.3 million of the decline came from stores that were open in 2022 but closed in 2023. We believe the rest of the decrease in sales was due to continued weaker consumer demand as a result of inflation and ongoing uncertainty related to global political, economic and public health concerns.
Added
Provision for Income Taxes Our effective tax rate was 24.2% and 17.1% for the years ended December 31, 2024 and 2023, respectively.
Removed
The primary drivers of the decrease were reduced contract labor of approximately $1.2 million, primarily in accounting and warehouse, as we hired permanent, full-time staff and retail employment costs of $1.5 million resulting from retail labor initiatives.
Added
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.
Removed
Other savings initiatives included reduced insurance and other taxes of $0.6 million, reduced outside services of $0.4 million, and lower occupancy, supplies and other expenses combined for another $1.0 million in savings, partially offset by increased bonus compensation of $0.5 million. Other Income Other income consists primarily of interest income and foreign currency gain.
Added
As of the date of this filing, no funds had been borrowed under this facility, and we are in compliance with all covenants. In the fourth quarter of 2024, the Company renewed the promissory note under its Credit Agreement with JPMorgan Chase Bank, N.A. through October 31, 2025 under the same terms as above.
Removed
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.
Added
As of December 31, 2024, the Company had purchased less than $10,000 of shares under this plan. 20 Table of Contents 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.
Removed
As of the date of this filing, no funds had been borrowed under this facility. 21 Table of Contents Spain Loan During the second quarter of 2020, the Company borrowed $0.4 million from Banco Santander S.A. under the Institute of Official Credit Guarantee for Small and Medium-sized Enterprises in order to facilitate the continuation of employment and to attenuate the economic effects of the COVID-19 virus.
Added
As of December 31, 2024, $5.0 million remained available for repurchase under this new program.
Removed
This loan was provided for by the Spanish government as part of a COVID-19 relief program. During the second quarter of 2022, we repaid this loan in full.
Added
In addition, we anticipate that this cash flow and our current cash reserves will enable us to meet our contractual obligations and commercial commitments throughout 2025.
Removed
On April 11, 2022, we entered into an agreement with two institutional shareholders of the Company, to repurchase 359,500 shares of our common stock, par value $0.0024 in a private transaction. The purchase price was $5.00 per share for a total of $1.8 million.
Removed
The closing of the repurchases took place on April 22, 2022, and these shares were subsequently cancelled. Prior to the repurchase, the shares represented approximately 4.2% of our outstanding common stock.
Removed
The direct share repurchases described above were separately authorized by our Board of Directors and did not reduce the remaining amount authorized to be repurchased under the open-market plan that was approved by the Board of Directors at the time. In July 2022, the Company repurchased 600 shares of stock under the open market plan.
Removed
We invested $0.6 million in capital expenditures for the purchase of store fixtures and systems implementations. We used cash in financing activities to repurchase 360,100 shares of Tandy common stock in purchases totaling $1.8 million at an average price of $5.00 per share, and to repay the loan from Spain in the amount of $0.4 million.
Removed
Off-Balance Sheet Arrangements We did not have any off-balance sheet arrangements during 2023 or 2022, and we do not currently have any such arrangements.
Removed
Since the determination of net realizable value of inventory involves both estimation and judgement with regard to market values and reasonable costs to sell, differences in these estimates could result in ultimate valuations that differ from the recorded asset.
Removed
On September 8, 2022, we entered into a concession agreement for our store on the Fort Liberty (formerly Fort Bragg) military base in which the concession payment is based on a sliding scale percentage of sales. At the end of November, 2023, we closed that store. Impairment of Long-Lived Assets .

Other TLF 10-K year-over-year comparisons