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Tarrant Apparel gross profit increases in Q1
13
May '09
Tarrant Apparel Group, a design and sourcing company for private label and private brand casual apparel, announced financial results for the three months ended March 31, 2009.

The Company reported total net sales of $37.3 million in the first quarter of 2009, a 26.1% decrease compared to total net sales of $50.5 million in the same period of 2008. Private Brands sales were $11.1 million in the first quarter of 2009, compared to $8.3 million in the first quarter of 2008. Private Label sales in the first quarter of 2009 were $26.2 million, as compared to $42.2 million reported in the same period last year.

Gross profit decreased by $2.1 million, or 20.5%, to $8.0 million in the first quarter of 2009 from $10.0 million in the first quarter of 2008. The decrease in gross profit was primarily due to a decrease in total amount of sales. As a percentage of total net sales, gross profit increased from 19.9% in the first quarter of 2008 to 21.4% in the first quarter of 2009. The increase in gross margin in the first quarter of 2009 was due primarily to an increased proportion of sales of Private Brands products that yielded a higher gross margin.

Selling, general and administrative expenses in the first quarter of 2009 were $7.6 million compared to $9.7 million in the first quarter of 2008. The decrease of these expenses in the first quarter of 2009 was due to overhead reduction and cost-cutting efforts. As a percentage of total net sales, selling, general and administrative expenses increased from 19.3% in the first quarter of 2008 to 20.3% in the first quarter of 2009 due to a lower level of sales in the first quarter of 2009. Included in selling, general and administrative expenses in the first quarter of 2008 was a charge of $848,000 resulting from liquidated damages imposed by the U.S. Customs on two of the Company's overseas vendors in April 2008.

Royalty expenses decreased by $72,000, or 21.6%, to $262,000 in the first quarter of 2009 from $334,000 in the first quarter of 2008. The decrease was caused by lowered royalty rates under the amended license agreement with American Rag Cie, LLC reached in December 2008. As a percentage of total net sales, these expenses remained at 0.7% in the first quarter of 2009 and 2008.

Income from operations was $153,000 in the first quarter of 2009 compared to loss from operations of $43,000 in the first quarter of 2008. Income before provision for income taxes and minority interest was $2,000 in the first quarter of 2009 compared to loss before provision for income taxes and minority interest of $139,000 in the first quarter of 2008. The net loss for the 2009 first quarter was $171,000 or a net loss of $(0.01) per basic and diluted share compared to a net loss of $253,000 or $(0.01) per basic and diluted share in the year earlier period.

Tarrant Apparel Group


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