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Joe's Jeans gross profit up by 16%
11
Feb '11
Joe's Jeans Inc announced financial results for the fourth quarter and year ended November 30, 2010. Highlights were:

o For the full year, net sales increased 23% to $98.2 million;
o Gross profit increased 16% to $46.2 million in fiscal 2010; and
o The Company generated operating income of $6.0 million for fiscal 2010.

For the fiscal year ended November 30, 2010, overall net sales were $98.2 million compared to $80.1 million from the prior year comparative period, or a 23% increase. Our overall gross profit increased to $46.2 million from $39.8 million from the prior year comparative period, or a 16% increase.

Our overall gross margins were 47% and 50%, respectively. Operating expense in fiscal 2010 was $40.2 million compared to $31.2 million a year ago. We generated operating income of $6.0 million compared to $8.5 million in the prior year comparative period and fully diluted earnings per share of $0.04 compared to $0.40 a year ago.

For the fourth quarter ended November 30, 2010, overall net sales were $23.6 million compared to $25.2 million from the prior year comparative period, or a 7% decrease. Our overall gross profit for the quarter decreased to $11.5 million from $12.5 million from the prior year comparative period, or a 7% decrease.

Our overall gross margins were 49% in both comparative periods and operating expense in the fourth quarter of fiscal 2010 was $9.6 million compared to $9.5 million a year ago. We generated operating income of $1.9 million compared to $3.0 million in the prior year comparative period and fully diluted earnings per share of $0.01 compared to $0.33 in same period a year ago.

Wholesale

Net sales for our wholesale segment in the fourth quarter of fiscal 2010 decreased to $19.5 million compared to $23.6 million in the fourth quarter of fiscal 2009. Within our wholesale business, our men's sales channel experienced growth, while women's and international decreased from the comparative quarter.

Marc Crossman, President and Chief Executive Officer, commented, "Given that we were facing tough comparables against last years' successful Jean Legging, we did not have enough newness and innovation of product to drive to the level of sales we had last year."

Crossman continued, "We recognized that we did not capitalize on the trends for the season with the right offering of cords, pontes, and super-stretch fabrics. With this in mind, we have made mid-stride adjustments to our product for Spring and Summer by injecting new silhouettes and innovative fabrics."

Gross margins for our wholesale segment were 46% compared to 48%. Gross margins increased sequentially from 45% to 46% as a result of improving sourcing of our non-denim products and we expect to continue to see improvement in this area in 2011. Wholesale operating expense declined by $857,000 to $2.9 million on a year over year basis.

This decline isattributable to reduced sample costs for our new product classifications, a decrease in our facilities and distribution expenses and lower commissions. Accordingly, despite these cost cutting measures, our wholesale operating income declined to $6.2 million in the fourth quarter of fiscal 2010 compared to $7.7 million in the prior year comparative period.

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