Gross margins remained steady at Joe's Jeans
Joe's Jeans Inc announced financial results for the first quarter ended February 28, 2011. Highlights were:
• For the first quarter ended February 28, 2011, net sales declined to $21.2 million;
• First quarter retail sales increased 105% to $3.7 million;
• Gross margins remained steady at 49%; and
• The Company generated operating income of $523,000 for the first quarter of fiscal 2011.
For the first quarter ended February 28, 2011, overall net sales were $21.2 million compared to $23.2 million from the prior year comparative period, or a 9% decrease. Our overall gross profit was $10.4 million compared to $11.4 million from the prior year comparative period, or a 9% decrease. Our overall gross margins were 49% and operating expenses were $9.9 million in current and prior year comparative period. We generated operating income of $523,000 compared to $1.4 million in the prior year comparative period.
Net sales for our wholesale segment in the first quarter of fiscal 2011 decreased to $17.5 million compared to $21.4 million in the first quarter of fiscal 2010. Within our wholesale business, our men's sales channel experienced growth, while women's and international decreased from the prior year comparative quarter.
Marc Crossman, President and Chief Executive Officer, commented, "Our first quarter of fiscal 2011 continued to have tough comparables against last year's successful Jean Legging."
Crossman continued, "Due to our decline in women's wholesale sales, we made mid-stream changes to the Spring line and, as a result, our sell-throughs have improved substantially. Our men's business continues to increase as our denim and other product offerings resonate well with our customers."
Gross margins for our wholesale segment were 45.1% compared to 47.6% largely as a result of dilution from higher returns as we rebalanced the inventory on our retailers' floors. Wholesale operating expense declined by $522,000 to $3.5 million on a year over year basis.
This decline is attributable to reduced sample costs, a decrease in our facilities and distribution expenses and lower sales commissions. Accordingly, despite these cost cutting measures, our wholesale operating income declined to $4.4 million in the first quarter of fiscal 2011 compared to $6.2 million in the prior year comparative period.
Net sales from our retail segment in the first quarter of fiscal 2011 increased 105% to $3.7 million compared to $1.8 million in the prior year comparative period. The growth in retail sales was driven by revenue contribution from growing our store base from six to 18 in the comparative periods. Gross margins for our retail segment were 68% compared to 66% in the respective comparative periods.
Our overall retail gross margins increased as a result of less promotional activity this quarter compared to a year ago. Retail operating expense increased as a result of additional store payroll and rent costs associated with operating 18 retail stores compared to six in the prior year period and pre-opening costs associated with new stores. As a result, our retail operating loss was $119,000 compared to $12,000 a year ago.
Corporate and Other
For the first quarter of fiscal 2011, our corporate and other expenses were $3.8 million compared to $4.8 million a year ago. Corporate and other expenses decreased due to advertising expenses in the first quarter of fiscal 2010 that we did not have in the first quarter of fiscal 2011.
Joe's Jeans Inc