Men's sales channel of Joe's Jeans experiences growth in Q2
Joe's Jeans Inc. 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.
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.
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.
Joe's Jeans Inc