Joe's Jeans posts 51% surge in Q2 sales
Joe's Jeans Inc. announced financial results for the second quarter ended May 31, 2010. Highlights were:
For the second quarter ended May 31, 2010, overall net sales were $25.9 million compared to $17.2 million from the prior year comparative period, a 51% increase. Marc Crossman, President and Chief Executive Officer, commented, "Once again we are pleased to report sales increases in all of our distribution channels, namely domestic women's, domestic men's, international and retail." Net sales for our wholesale segment increased by 42% compared to the year ago period. The growth in this segment was driven by increases in our core denim business and the addition of sales from non-denim product classifications. Net sales from our retail segment increased 180% compared to the year ago period. The growth in our retail sales was driven by a 26% increase in same store sales and revenue contribution from an additional 9 stores, 7 of which opened during the quarter.
Our overall gross profit for the quarter increased to $11.5 million from $8.7 million from the prior year comparative period, or a 32% increase. Our overall gross margins decreased to 44% compared to 51% in the prior year comparative period. Our gross margin was impacted by the addition of new product categories with lower margins. Marc Crossman commented, "As we continue to grow our new product categories for the Fall of 2010 through the Spring of 2011, we expect to see a meaningful lift in gross margins as we anticipate being able to take advantage of volume thresholds with our factories."
Second quarter overall SG&A was $10.2 million compared to $6.9 million a year ago. The increase over last year is mostly attributable to additional headcount and rent costs associated with the opening of seven new retail stores during the quarter and the additional headcount, samples and facilities and distribution expenses in our wholesale division to support our overall growth and expansion of our other product lines.
In the second quarter, our wholesale operating income was up 4% to $5.8 million compared to $5.6 million in the prior year comparative period and our retail operating income was up 171% to $125,000 compared to a loss of $175,000 in the prior year comparative period. Overall, we generated operating income of $1.2 million. Marc Crossman commented, "With the build-up of our infrastructure to support new product classifications in place, we do not expect to see meaningful increases in our corporate expenses going forward." Crossman continued, "Future sequential expense increases will largely be limited to increases in commission payments that correspond to wholesale sales volume increases and additional retail expenses associated with the opening of additional stores."
Crossman summarized the quarter with the following, "Our second quarter contained several milestones for the Company, including generating a record $25.9 million of sales and openingseven new retail stores with each reaching profitability within 30 days of opening. In addition, we continue to see the positive momentum of sales of the new product lines as we head into our Fall season evidenced by a 23% increase in our wholesale backlog and solid double digit same store sales gains at Company-owned retail stores."
Joe's Jeans Inc