Hartmarx Women's Apparel registers lower earnings in Q2
Hartmarx Corporation reported operating results for its second quarter and six months ended May 31, 2008. Second quarter revenues were $131.5 million compared to $155.9 million in 2007.
The net loss was $1.5 million or $.04 per diluted sshare in the current period compared to net earnings of $5.4 million or $.15 per diluted share last year.
For the six months, revenues were $250.5 million compared to $276.0 million in 2007. The net loss was $5.0 million, or $.14 per diluted share in the current year compared to net earnings of $2.0 million or $.05 per diluted share in 2007.
Homi B. Patel, chairman and chief executive officer of Hartmarx, commented, "The overall economic and retail environment remains very difficult and contributed to results falling far below our expectations.
Consumer confidence has been unfavorable for a number of months and any discretionary spending, including the income tax rebate checks, in all likelihood is going toward higher food and gas costs rather than for discretionary apparel purchases.
In addition to the current macro-economic conditions, our first half results continued to be adversely impacted by the residual effect on sales and earnings from reducing our moderate tailored clothing product offerings, including the previously announced decision not to renew the Tommy Hilfiger and Perry Ellis licenses upon their expiration at the end of 2008.
In this difficult environment, we are focusing on controlling our expenses, reducing our inventories and maximizing our cash flows.
We are managing our business conservatively and reducing headcount, which reflected approximately $1 million of second quarter severance charges.
While the actions taken to curtail our moderate tailored clothing lines has had a significant negative near-term impact on reported revenues and earnings, we strongly believe these actions will have a positive impact on longer-term profitability.
We continue to focus on a disciplined execution of our longer-term strategies fully confident that when the economy does turn around our strong brands and emphasis on upscale products will result in significant earnings improvement.
Assuming that there is no further deterioration in the economy, in the second half of the fiscal year we expect to be profitable with favorable earnings comparisons to the prior year.
Accordingly, we are currently estimating full- year consolidated revenues in the range of $530 million to $550 million. Full- year diluted earnings per share is currently anticipated within a range of a breakeven to a small profit."
"At May 31, inventories of $149.9 million declined $9.2 million or 6% from the year earlier levels excluding the inventories associated with the August 2007 Monarchy acquisition.
The trailing year total debt increase of $34.2 million to $147.2 million at May 31 this year reflected $47.6 million of outflows attributable to acquisitions, capital expenditures and share repurchases.
To date, we have repurchased approximately 1.1 million shares pursuant to our 3 million share authorization," Mr. Patel concluded.
The second quarter revenue decline was principally attributable to the Men's Apparel Group segment, from reductions in the tailored product categories. This segment also included the Monarchy product lines which contributed $3.9 million to the current year second quarter revenues and $7.5 million for the six months.