Rafaella Apparel Group Inc. had to contend with reduced orders and provide markdown assistance to customers in its fourth quarter, but inventory control and reduced year-over-year charges swung the firm into the black.
For the three months ended June 30, the New York-based vendor’s net income totaled $131,000 compared with a net loss of $26.2 million a year ago. Sales in the quarter fell 42.7 percent to $23.8 million from $41.6 million in the 2008 period.
On a conference call, chief executive officer Christa Michalaros said in both the year and quarter, the firm’s department store customers reduced orders to keep inventories down. She added Rafaella had put a premium on keeping its own inventories in line.
For the fiscal year, the women’s sportswear maker reduced inventoried goods by 62.9 percent to $12.3 million from $33.2 million in 2008 primarily by making use of off-price sellers, Michalaros said.
Rafaela’s selling, general and administrative expenses included a goodwill writedown of $2.4 million in the quarter related to the decreased performance of its namesake brand. The year-ago period included a similar charge of $34.5 million. Barring those writedowns, the company reduced SG&A in the quarter by 31 percent to $6 million from $8.8 million.
Looking ahead to the current year, the ceo said fall and holiday bookings are down about 20 percent, but that heavy promotional activity is down as well.
“The retailers are selling more units this year versus last year at regular price….They’re turning the goods at a faster rate than they did a year ago,” Michalaros said. She added the company will aggressively pursue market share in the department store sector given Liz Claiborne’s recent exclusive deals with J.C. Penney Co. Inc. and QVC.
Cerberus Capital Management bought Rafaella in 2005 by issuing $172 million in public debt. The financing requires the privately held firm to file quarterly reports with the Securities and Exchange Commission.
For the fiscal year ended June 30, the group posted a net loss of $15.4 million versus a loss of $24.8 million in the year-ago period. Sales in the 12 months slid 16.9 percent to $148 million from $178 million in 2008.
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