Decline in sales of branded garments at Cygne Designs in Q1

20 Jun '08

2 min read

Cygne Designs Inc announced results of operations for the first quarter ended April 30, 2008.

Net sales for the first quarter of 2008 were $15,282,000, a decrease of $5,581,000 from $20,863,000 net sales for the first quarter of 2007. This decrease in sales is comprised of a $1,616,000 decrease in sales from branded garments, and a decrease of $10,430,000 from the loss of business of two major customers, partially offset by an increase in sales of our private label business of $5,559,000 and an increase in our non-denim products of $906,000.

Gross profit for the first quarter of 2008 was $547,000, a decrease of $3,626,000, or 86.9%, from the gross profit of $4,173,000 for the first quarter of 2007. Gross margins decreased to 3.6% compared to 20% in the prior year period as a result of the product categories sold and the fact that the Company no longer has a guaranteed margin agreement in place with its former supplier.

Additionally, the Company's initial gross margins with its new suppliers were lower overall compared to the prior year period and, due to late deliveries during the period, the Company incurred significant chargebacks and late delivery fees, which negatively impacted gross margins during the period.

The Company recorded a net loss of $3,800,000, or $0.10 loss per share on a basic and diluted share basis, for the quarter ended April 30, 2008 as compared to a net loss of $1,372,000, or $0.05 per share on a basic and diluted share basis, for the prior year period.

The net loss of $3,800,000 for the three months ended April 30, 2008 included expenses of $1,008,000 for a severance expense attributable to the Company's former CEO and $273,000 for non-cash stock compensation issued to the Company's current CEO.

Cygne Designs Inc

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