NEW YORK -- Hurt by a $3.8 million charge to mark down inventory at its Sanmark division, Movie Star Inc. posted a third-quarter loss of $3.4 million.
A year ago, the company earned $402,000, or 3 cents a share.
In the quarter ended March 31, sales declined 29.8 percent, to $20.7 million from $29.5 million. The company attributed the decline to lower sales by its Sanmark division and to the sale of its children's wear business last June. In the nine months, after a gain of $861,000 from accounting changes, Movie Star lost $1.4 million, against a year-ago profit of $2.4 million, or 17 cents a share. Sales dropped 13.2 percent, to $85.7 million from $98.7 million.
In announcing plans for the Sanmark inventory writedown earlier this month, Movie Star said it now will produce inventory for that division only when orders are on hand.
Sanmark, Movie Star's largest division, has mainly sold private label innerwear made against orders for mass merchants and chains, but also produced goods without orders in hand for smaller accounts. The company said this latter segment of the business, which had become smaller and less profitable, has been eliminated so Sanmark can concentrate on its larger and more profitable market.
Once Sanmark's inventory is reduced, it will operate at substantially lower inventory levels, the company said, adding that it plans to sell off the excess inventory by Dec. 31. The company said the restructuring, combined with positive performances in its three other divisions and cost cuts, should help bring it back to profitability in the new fiscal year.
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"