Joe’s Jeans Inc. (the “Company”) (NASDAQ: JOEZ) today announced
financial results for the third quarter ended August 31, 2014.
Highlights were:
- Third quarter net sales increased 79%
to $52.7 million;
- Wholesale net sales increased 98%;
- Retail store net sales increased 13%;
and
- Operating income was $3.8 million
compared to an operating loss of $295,000 in the prior year
period.
For the third quarter ended August 31, 2014, overall net sales
were $52.7 million compared to $29.4 million in the prior year
comparative period, or a 79% increase. We completed our acquisition
of Hudson Clothing Holdings, Inc. (“Hudson”) on September 30, 2013
and our results for the third quarter of fiscal 2014 reflect the
operation of Hudson as one of our wholly-owned subsidiaries.
Our overall gross profit for the quarter increased to $24.5
million from $12.9 million in the prior year comparative period, or
a 90% increase. Our overall gross margin in the third quarter of
fiscal 2014 was 46% compared to 44% in the third quarter of fiscal
2013. Operating expense in the third quarter of fiscal 2014 was
$20.7 million compared to $13.1 million a year ago. Our operating
income was $3.8 million compared to an operating loss of $295,000
in the prior year comparative period. We had net income of $276,000
compared to a net loss of $287,000 in the prior year period. As a
result, our fully diluted earnings per share was comparable at
$0.00 for the third quarter of fiscal 2014 and 2013.
Marc Crossman, President and Chief Executive Officer, commented,
“We are pleased with our results for the third quarter. On a
historical combined basis, we increased revenue, expanded gross
margins, and grew operating income.” Crossman continued, “Both our
Joe’s® and Hudson® brands experienced the same top line trends this
quarter. More importantly, our brands are well positioned with
non-denim offerings as we move into the fourth quarter. For
example, our Joe’s® brand has created a fashion forward fitness
collection that launched just this month that will be available not
only with our existing retail partners, but also in several new and
significant fitness apparel retailers.”
Wholesale
Net sales for our wholesale segment in the third quarter of
fiscal 2014 increased 98% to $45.5 million compared to $23.1
million in the year ago period. Wholesale net sales for the third
quarter of fiscal 2014 included $22.1 million in wholesale net
sales from Hudson®. Gross margin percentages for our wholesale
segment were 43% for the third quarter of fiscal 2014 compared to
37% in the prior year comparable quarter. For the third quarter,
wholesale operating expense increased to $6.4 million compared to
$3.5 million in the year ago period. Our wholesale operating income
increased to $13.4 million in the third quarter of fiscal 2014
compared to $5.2 million in the prior year comparative period.
Retail
Net sales from our retail segment in the third quarter increased
13% to $7.1 million compared to $6.3 million in the prior year
comparative period. The growth in retail sales was driven by
revenue contribution of $585,000 from Hudson’s® e-shop as well as
growing our store base by one store in the comparative period. In
addition, our same store sales, which includes Joe’s® stores open
at least 12 months and our Joe’s® e-shop, decreased 2% during the
quarter. Gross margin percentages for our retail segment decreased
to 65% from 67% in the year ago period and were impacted by
increased promotional activity at our retail outlet stores as our
competitors were more promotional. Retail operating expense
increased as a result of additional expenses associated with
expanding our store base compared to the prior year period and the
addition of the operation of Hudson’s® e-shop. Overall, for the
third quarter, we had an operating loss of $1.0 million compared to
a loss of $524,000 in the year ago period for our retail
segment.
Corporate and Other
For the third quarter of fiscal 2014, our corporate and other
expenses were $8.6 million compared to $4.9 million in the third
quarter a year ago. Corporate and other expenses increased due to
$4.7 million of expenses associated with Hudson’s corporate
operations for the third quarter of fiscal 2014.
The Company will host a conference call on Thursday, October 9,
2014 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 third quarter ended
August 31, 2014.
To access the live call, please dial 1(800) 264-7882 or 1(847)
413-3708. The conference ID number and participant passcode is
38176967 and is titled the “Q3 2014 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 7:00 p.m. Eastern Time on October 9, 2014 until 11:59 p.m.
Eastern Time on October 16, 2014 by dialing 1(888) 843-7419 or
1(630) 652-3042 and using the conference passcode 38176967#. 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 NET INCOME (LOSS) AND COMPREHENSIVE
INCOME (LOSS) (in thousands, except per share data)
Three months ended
August 31, 2014
August 31, 2013 (unaudited) Net sales $
52,668 $ 29,385 Cost of goods sold
28,218
16,540 Gross profit 24,450 12,845
Operating expenses Selling, general and administrative 19,186
12,619 Depreciation and amortization 1,134 521 Retail stores
impairment
332 -
20,652 13,140
Operating income (loss)
3,798 (295 ) Interest expense
3,424
116
Income (loss) before provision for
taxes
374 (411 )
Income tax expense (benefit)
98 (124 )
Net income (loss) and comprehensive income
(loss)
$ 276 $ (287
) Earnings per common share - basic
$ 0.00 $ 0.00
Earnings per common share - diluted
$
0.00 $ 0.00
Weighted average shares outstanding: Basic 68,362
67,413
Diluted 68,880
67,413
The following table sets forth certain segment information for
the three months ended August 31, 2014 and 2013, respectively:
JOE'S JEANS INC. AND SUBSIDIARIES SEGMENT RESULTS
(in thousands) Three
months ended August 31, 2014
August 31, 2013
(unaudited) Net sales: Wholesale $ 45,545 $ 23,060 Retail
7,123 6,325
$ 52,668 $
29,385 Gross profit: Wholesale $ 19,801
$ 8,633 Retail
4,649
4,212 $ 24,450
$ 12,845
Operating income (loss):
Wholesale $ 13,402 $ 5,157 Retail (1,025 ) (524 ) Corporate and
other
(8,579 )
(4,928 ) $
3,798 $ (295
)
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. The Company also acquired
in September 2013 Hudson Clothing Holdings, Inc., a leading global
designer and marketer of women’s and men’s premium branded denim
apparel bearing the Hudson® brand name, and operates it as a wholly
owned subsidiary. Visit: joesjeans.com or facebook.com/joesjeans
and hudsonjeans.com or facebook.com/HudsonJeans.
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: our
ability to successfully integrate the business of Hudson Clothing
Holdings, Inc., or Hudson, and realize cost savings and any other
synergies; the ability to generate significant cost savings in the
third and fourth fiscal quarters of 2014; the ability to increase
our core results; unexpected costs or unexpected liabilities that
may arise from the transaction or the operation of our business;
the inability to retain key personnel; the diversion of
management's time and attention from our ongoing business during
this time period, the impact of the acquisition on our stock price,
the anticipated benefits of the acquisition on our financial
results, business performance and product offerings, the risk that
the credit ratings of the combined company or its subsidiaries may
be different from what the companies expect, continued acceptance
of our product, product demand, competition, capital adequacy,
general economic conditions and the potential inability to raise
additional capital, if required, 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 or
strategies; 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
Company’s brands in the marketplace; 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; the risk that acts or omissions by
the Company’s first party vendors could have a negative impact on
the Company’s reputation; 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 together with all of the Company’s other filings 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.
Joe’s Jeans Inc.Hamish Sandhu323-837-3700 x 304(Investor
Relations)
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