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People's Liberation reports record net income in Q3

15 Nov '07

4 min read

People's Liberation Inc designer of premium denim and high-end casual apparel under the brand names People's Liberation and William Rast reported record net income for the third quarter of 2007 of approximately $600,000, or $0.02 per share, compared with net income of $133,000 or $0.00 per share, for the third quarter of 2006.

Net sales for the third quarter of 2007 rose approximately 23% to $6.2 million compared with $5.1 million in the same quarter last year.

The increase in sales primarily reflected continued growth of the William Rast brand. Sequentially, third quarter net sales increased by $1.6 million from $4.6 million in the second quarter of 2007.

Gross profit in the third quarter of 2007 increased to $3.1 million, up 30.9% from gross profit of $2.4 million reported in the same quarter last year. Gross margin for the third quarter of 2007 was approximately 49.4%, up from approximately 46.5% for the third quarter of 2006.

The increase in gross margin was primarily due to continued economies of scale in manufacturing efficiencies. Sequentially, gross margin was also up from 48.7% in the second quarter of 2007.

This increase resulted primarily from increased sales of higher margin William Rast men's and women's denim products and decreased returns, allowances and discounts in the third quarter of 2007.

Operating expenses for the third quarter of 2007 totaled $2.6 million, compared with $2.2 million in the thirdquarter of 2006.

Highlights and Key Events from the quarter and subsequent weeks included:
• The addition of Kenneth Wengrod to the company's board of directors. Mr. Wengrod is Founder and President of FTC Commercial Corp, a global finance commercial service company primarily focused in the apparel industry. Mr. Wengrod is an apparel and finance veteran.
• The resignation of Daniel Guez from his positions as creative director and board member.
• The launch of new spring image and marketing campaigns for both brands that are designed to grow brand awareness and broaden the brands' customer base in the Company's target markets.
• The private placement of an aggregate of 1,060,000 shares of People's Liberation common stock at $0.50 per share with strategic investors including the company's German distributor, Unifa.

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