Hartmarx posts third quarter results
Hartmarx Corporation reported operating results for its third quarter and nine months ended August 31, 2008. Third quarter revenues were $124.0 million compared to $135.2 million in 2007.
The net loss was $2.4 million or $.07 per diluted share in the current period compared to net earnings of $.5 million or $.01 per diluted share last year.
For the nine months, revenues were $374.5 million compared to $411.2 million in 2007. The net loss was $7.4 million, or $.21 per diluted share in the current year compared to net earnings of $2.5 million or $.07 per diluted share in 2007.
Homi B. Patel, chairman and chief executive officer of Hartmarx, commented, "Our very disappointing third quarter and year-to-date operating results are reflective of a most challenging economic and retail environment.
Low consumer confidence, declines in discretionary apparel purchases particularly by professional men, volatility in the financial services sector, large retailers' requests to defer advance order shipments and the deteriorating credit worthiness of small specialty store retailers all contributed to a very difficult quarter.
The Company also continues to be adversely impacted by the residual effects of its previously announced strategy to reduce moderate tailored clothing product offerings, resulting in lower sales, increased liquidations of surplus inventories, and losses associated with licensing minimums related to brands which will no longer be marketed in 2009."
Mr. Patel continued, "In this extremely uncertain economy, we are committed to reducing expenses further and improving operational productivity and cash flows, despite its adverse impact on current year revenues and earnings.
During the third quarter we disposed of surplus inventories which lowered our gross margin rate but, along with strict
disciplines on new inventory commitments, resulted in an $18.6 million or 11% reduction in net inventories, exceeding the percentage revenue decline.
We have continued paring down staffing levels in various administrative functions. Fourth quarter results, to be reported in January, will reflect additional severance costs associated with lower staffing levels in general and the closing of a sewing facility in Missouri affecting approximately 150 employees.
We also expect by fiscal year-end to reduce leased office and distribution square footage, actions which collectively would adversely impact fiscal 2008 results, but be beneficial to operating results in 2009 and beyond.
In light of the current environment, we will continue to carefully review the profit contribution prospects of certain other product lines in relation to their required working capital investment.
We are currently estimating full-year revenues in the range of $490 - $500 million, which would result in fourth quarter revenues in the range of $115 - $125 million. This compares to the prior year fourth quarter and full-year revenues of $151.2 million and $562.4 million, respectively.