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Joe's Jeans reports record net income during Q2

16
Jul '08
Joe's Jeans Inc announced financial results for the second quarter ended May 31, 2008.

Highlights were:
• Net sales improved 18% to $18.0 million compared to $15.2 million in the second quarter a year ago.
• Sequential gross margin improvement to 47% during the second quarter, a 2 percentage point improvement over 45% in the first quarter of 2008.
• A record quarter of profitability with net income of $2.0 million, or $0.03 per share, compared to $422,000, or $0.01 per share in the second quarter a year ago.
• Announcement of the first full-price Joe's retail store to be located in the Bucktown neighborhood of Chicago.

Marc Crossman, President and Chief Executive Officer, commented, "We are very pleased to be reporting $18.0 million in sales and record net income of $2.0 million during the quarter. These results reflect continued sales growth and gross margin improvement driven by improved performance across all of our business segments, including women's, men's, international and kid's, and from our sourcing capabilities.

Additionally, we announced the signing of our first full-price retail store during the quarter to be located in the Bucktown neighborhood in Chicago with a planned opening in October. We are extremely excited about the progress we made this quarter across all aspects of our business and we look forward to capitalizing on the opportunities we see for continued growth during the remainder of 2008 and into 2009."

For the second quarter ended May 31, 2008, net sales improved to $18.0 million from $15.2 million in the second quarter ended May 26, 2007, an 18% increase. Gross margins during the second quarter of 2008 were 47%. SG&A during the second quarter ended May 31, 2008 was $6.0 million compared to $6.6 million in the second quarter of 2007, a 9% decrease primarily due to a one-time non-cash charge of $1.5 million taken in the second quarter of 2007 in connection with the Company's dissolution of its former international distribution agreement.

Excluding this one-time charge, SG&A during the second quarter of 2008 increased 18% over the second quarter of 2007, primarily due to: higher headcount to support the Company's continued growth and its retail initiatives; increased distribution and shipment costs as a result of higher sales volume over the prior year period; increased sample costs in connection with the development of a full collection; and, an increase in stock-based compensation expense relating to the issuance of restricted common stock and restricted stock units issued during the fourth quarter of 2007 and the first quarter of 2008.

The Company generated net income of $2.0 million, or $0.03 per share, during the second quarter of 2008 compared to net income of $422,000, or $0.01 per share, during the second quarter of 2007.

Joe's Jeans Inc


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