Joe's Jeans Inc announced financial results for the third quarter ended August 31, 2011. Highlights were:
• Third quarter net sales declined 5% to $24.2 million • Overall gross margins were 40%, down from 46% in the prior year comparative period due to an inventory write down; and • Operating loss of $2.6 million for the third quarter of fiscal 2011 due to $2.8 million of non-cash charges.
For the quarter ended August 31, 2011, overall net sales were $24.2 million compared to $25.5 million from the prior year comparative period, or a 5% decrease. Our overall gross profit decreased to $9.7 million compared to $11.8 million, or a 17% decrease, in the prior year comparative period. Overall gross margins were 40% compared to 46% in the prior year comparative period.
Our gross profit and gross margins were negatively impacted by a write down of $1.6 million to the lower of cost or market for certain jean leggings, non-denim pants and aged collection inventory. The write down reduced our gross profit and was the primary contributor in our gross margin reduction. In addition, our operating expenses were negatively impacted by an impairment charge of $1.14 million at two of our retail stores, resulting in operating loss of $2.6 million compared to operating income of $1.5 million in the prior year comparative period.
Wholesale Net sales for our wholesale segment in the third quarter of fiscal 2011 decreased to $19.7 million compared to $21.3 million in the third quarter of fiscal 2010. Within our wholesale business, our men's sales channel experienced growth, while women's and international sales channels decreased. Marc Crossman, President and Chief Executive Officer, commented, "Our Fall 2011 collection, which hit retail stores at the very end of the third quarter, has performed very well.
Our product offering of fashion denim, new, revamped core and novel, unique collection pieces, combined with cross platform advertising, has resulted in sales outpacing stock levels and generated numerous re-orders in our fourth quarter." Crossman continued, "In addition, our men's business continues to grow with a 40% increase and driven not only through expanding our distribution channel, but also by increasing sales dollars in our current department and specialty store channels." Gross margins for our wholesale segment were 34% compared to 44% due to a write down of $1.6 million in the carrying value of certain finished goods inventory to market. Excluding this write down, our gross margins would have been eight percentage points higher. Wholesale operating expense declined to $3.6 million from $3.8 million.
Retail Net sales from our retail segment in the third quarter of fiscal 2011 increased to $4.4 million compared to $4.2 million in the prior year comparative period. The growth in retail sales was driven by revenue contribution from growing our store base from 14 to 21 in thecomparative periods. Gross margins for our retail segment were 67% compared to 55% in the respective comparative periods.
20240830145952.gif)
.jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "UBM China (Shanghai)")
-Ltd..jpg?tr=w-120,h-60,c-at_max,cm-pad_resize,bg-ffffff "Thermore (Far East) Ltd.")
