Joe's gains solid foothold in two new product classifications
Joe's Jeans Inc. announced financial results for the fourth quarter and year ended November 30, 2009.
• Fourth quarter net sales increased 42% to a record $25.2 million
• Gross margins increased one percentage point to 49%
• Operating income increased 142% to $3.0 million
• Year-end cash and cash equivalents on hand of $13.2 million
For the fourth quarter ended November 30, 2009, overall net sales were $25.2 million compared to $17.8 million, a 42% increase. Marc Crossman, President and Chief Executive Officer, commented, "We are pleased to report that all of our distribution channels, namely, domestic women's, domestic men's, international and retail experienced sales increases." Crossman continued, "The sales gains we made across all channels of distribution were the direct result of a renewed focus on fashion denim, a revamping of our core basic program, and the successful introduction of two new product classifications."
Gross margin during the quarter increased one percentage point to 49% compared to 48% in the year ago quarter. The increase in gross margin was a result of a higher percentage of our net sales coming from retail and licensing during the quarter compared to the fourth quarter a year ago. Fourth quarter SG&A was $9.3 million compared to $7.1 million a year ago. The increase over last year is mostly attributable to additional headcount and rent costs associated with retail stores we opened in the fourth quarter of 2008 and the two stores we opened in 2009. We also recorded additional advertising costs as we invested more in advertising to coincide with the launch of our leggings line, and increased costs associated with facilities and distribution due to our increase in sales volume.
In the fourth quarter, we reversed our valuation allowance for our deferred tax assets. This resulted in an income tax benefit of $16.4 million for fiscal 2009. As a result of this non-cash tax benefit, our fourth quarter net income was $20.5 million compared to $1.1 million during the prior year period. In summary, for the fourth quarter of 2009, we earned $0.33 per share in the fourth quarter of 2009 compared to $0.02 per share for 2008.
Marc Crossman, President and Chief Executive Officer, commented, "The fourth quarter was the perfect end to a successful year during which we were able to grow the top line, improve gross margins, build significant cash balances, add two new licensees, open four retail stores, and most importantly, gain a solid foothold in two new product classifications."
For the year ended November 30, 2009, overall net sales were $80.1 million compared to $69.2 million from the prior year comparative period. Gross margins were 50 percent compared to 47 percent for the year ended November 30, 2008, a three percentage point increase. Selling, general and administrative expense was $30.7 million compared to $26.2 million, ora 17% increase. The increase is primarily attributable to expenses required to support our retail stores and increases in our facilities and distribution costs to support our sales volume increases. In addition, our advertising and tradeshow expenses increased mostly due to entering into more short term leases for billboards and other ad space in NY and LA and our media blitz associated with the launch of our new legging product line.
As noted above, in the fourth quarter, we reversed our valuation allowance which resulted in recording a significant income tax benefit. As a result of the non-cash tax benefit, net income for 2009 was $24.5 million, or $0.40 per share, compared to $4.9 million in 2008, or $0.08 per share.
Joe's Jeans Inc