Joe's Jeans Inc. (the "Company") (NASDAQ: JOEZ) today announced
financial results for the second quarter ended May 31, 2011.
Highlights were:
-- Second quarter net sales declined 5% to $24.7 million;
-- Overall gross margins improved to 47% from 44% in the prior year
comparative period; and
-- Operating income increased 46% to $1.7 million for the second quarter
of fiscal 2011.
For the second quarter ended May 31, 2011, overall net sales
were $24.7 million compared to $25.9 million from the prior year
comparative period, or a 5% decrease. Our overall gross profit was
flat at $11.5 million in both periods. Overall gross margins were
47% compared to 44% in the prior year comparative period and
operating expenses were $9.8 million compared to $10.4 million in
the prior year comparative period. We generated operating income of
$1.7 million compared to $1.2 million in the prior year comparative
period and earnings per share of $0.01 in both periods.
Wholesale
Net sales for our wholesale segment in the second quarter of
fiscal 2011 decreased to $20.2 million compared to $22.9 million in
the second quarter of fiscal 2010. Within our wholesale business,
our men's sales channel experienced growth, while our women's and
international sales channels decreased from the prior year
comparative quarter. Marc Crossman, President and Chief Executive
Officer, commented, "As we said last quarter, we made some
mid-stream changes to our Spring line which allowed us to see some
areas of improvement." Crossman continued, "We continue to believe
our Fall and Holiday 2011 lines, with innovative fabric and fashion
forward details, will resonate well with our customers and bring
about a shift in our women's domestic department store
performance." Gross margins for our wholesale segment were 43%
compared to 42% largely as a result of higher gross margins from
our international business and our collection items. Wholesale
operating expense declined by $950,000 to $2.9 million from $3.8
million. This decline is attributable to reduced sample costs, a
decrease in our distribution expenses and lower commissions. Our
wholesale operating income was slightly down to $5.7 million in the
second quarter of fiscal 2011 compared to $5.8 million in the prior
year comparative period.
Retail
Net sales from our retail segment in the second quarter of
fiscal 2011 increased 52% to $4.5 million compared to $3.0 million
in the prior year comparative period. The growth in retail sales
was driven by revenue contribution from growing our store base from
13 to 20 in the comparative periods. Gross margins for our retail
segment were 65% compared to 64% in the respective comparative
periods. Our overall retail gross margins increased as a result of
less promotional activity at our retail stores. Retail operating
expense increased as a result of additional store payroll and rent
costs associated with operating 20 retail stores compared to 13 in
the prior year period and pre-opening costs associated with opening
two new stores during the quarter. Our retail operating income
improved to $143,000 compared to $125,000 a year ago.
Corporate and Other
For the second quarter of fiscal 2011, our corporate and other
expenses were $4.2 million compared to $4.8 million a year ago.
Corporate and other expenses decreased due to lower payroll
expenses and professional fees and better distribution expense
controls. However, these declines were partially offset by an
increase in print and other advertising fees we incurred to support
and promote awareness of Joe's®.
The Company will host a conference call on Monday, July 11, 2011
at 4:30 p.m. Eastern Time with the Company's Chief Executive
Officer, Marc Crossman, and its Chief Financial Officer, Hamish
Sandhu, to discuss financial results for the second quarter ended
May 31, 2011.
To access the live call, please dial (866) 271-0675 (U.S.) or
(617) 213-8892 (International). The conference ID number and
participant passcode is 19194243 and is entitled the "Q2 2011 Joe's
Jeans Inc. Earnings Conference Call." The information provided on
the teleconference is only accurate at the time of the conference
call, and the Company will take no responsibility for providing
updated information. A telephone replay of the conference call will
be available beginning at 7:30 p.m. Eastern Time on July 11, 2011
until 11:59 p.m. Eastern Time on July 18, 2011 by dialing (888)
286-8010 (U.S.) or (617) 801-6888 (international) and using the
conference passcode 53884828. In addition, the conference call will
be archived for two weeks on the Company's website at
www.joesjeans.com.
JOE'S JEANS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three months ended
-------------------------
May 31, 2011 May 31, 2010
------------ ------------
(unaudited)
Net sales $ 24,701 $ 25,893
Cost of goods sold 13,180 14,392
------------ ------------
Gross profit 11,521 11,501
Operating expenses
Selling, general and administrative 9,545 10,182
Depreciation and amortization 291 168
------------ ------------
9,836 10,350
------------ ------------
Operating income 1,685 1,151
Interest expense 129 125
------------ ------------
Income before provision for taxes 1,556 1,026
Income taxes 805 494
------------ ------------
Net income $ 751 $ 532
============ ============
Earnings per common share - basic $ 0.01 $ 0.01
============ ============
Earnings per common share - diluted $ 0.01 $ 0.01
============ ============
Weighted average shares outstanding
Basic 63,784 62,385
Diluted 64,572 64,543
The following table sets forth certain segment information for
the three months ended May 31, 2011 and 2010, respectively:
JOE'S JEANS INC. AND SUBSIDIARIES
Segment Results
(in thousands)
Three months ended
--------------------------
May 31, 2011 May 31, 2010
------------ ------------
(unaudited)
Net sales:
Wholesale $ 20,187 $ 22,920
Retail 4,514 2,973
------------ ------------
$ 24,701 $ 25,893
------------ ------------
Gross Profit:
Wholesale $ 8,575 $ 9,599
Retail 2,946 1,902
------------ ------------
$ 11,521 $ 11,501
============ ============
Operating income (loss):
Wholesale $ 5,709 $ 5,783
Retail 143 125
Corporate and other (4,167) (4,757)
------------ ------------
$ 1,685 $ 1,151
============ ============
About Joe's Jeans Inc.
Joe's Jeans Inc. designs, produces and sells apparel and
apparel-related products to the retail and premium markets under
the Joe's® brand and related trademarks. More information is
available at the Company website at www.joesjeans.com.
This release contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended. The matters discussed in
this document involved estimates, projections, goals, forecasts,
assumptions, risks and uncertainties that could cause actual
results or outcomes to differ materially from those expressed in
the forward-looking statements. All statements in this news release
that are not purely historical facts are forward-looking
statements, including statements containing the words "intend,"
"believe," "estimate," "project," "expect" or similar expressions.
Any forward-looking statement inherently involves risks and
uncertainties that could cause actual results to differ materially
from the forward-looking statements. Factors that would cause or
contribute to such differences include, but are not limited to: the
risk that the Company will be unsuccessful in gauging fashion
trends and changing customer preferences; the risk that changes in
general economic conditions, consumer confidence, or consumer
spending patterns will have a negative impact on the Company's
financial performance; the highly competitive nature of the
Company's business in the United States and internationally and its
dependence on consumer spending patterns, which are influenced by
numerous other factors; the Company's ability to respond to the
business environment and fashion trends; continued acceptance of
the Joe's® brand in the marketplace; successful implementation of
any growth or strategic plans, including changes and new product
offerings; effective inventory management; the ability to generate
positive cash flow from operations; competitive factors, including
the possibility of major customers sourcing product overseas in
competition with our products; a possible oversupply of denim in
the marketplace; and other risks. The Company discusses certain of
these factors more fully in its additional filings with the SEC,
including its last annual report on Form 10-K filed with the SEC,
and this release should be read in conjunction with that annual
report on Form 10-K, together with all of the Company's other
filings, including current reports on Form 8-K, made with the SEC
through the date of this release. The Company urges you to consider
all of these risks, uncertainties and other factors carefully in
evaluating the forward-looking statements contained in this
release.
Any forward-looking statement is based on information current as
of the date of this document and speaks only as of the date on
which such statement is made, and the Company undertakes no
obligation to update these statements to reflect events or
circumstances after the date on which such statement is made.
Readers are cautioned not to place undue reliance on
forward-looking statements.
Contact: Joe's Jeans Inc. Hamish Sandhu 323-837-3700 x 304
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