NEW YORK – Hartmarx Corp. late Monday reported second-quarter results that failed to meet even its subdued expectations for a small profit.
In the three months ended May 31, the Chicago-based men’s and women’s apparel manufacturer was hit by a net loss of $1.5 million, or 4 cents a diluted a share, versus year-ago net income of $5.4 million, or 15 cents. Hartmarx had earlier forecast earnings of 5 to 8 cents a share and analysts on average had expected EPS at the low end of that projection.
Net sales fell 15.7 percent to $131.5 million from $156 million in the 2007 quarter, in line with the guidance of $125 million to $135 million provided in March. Women’s apparel accounted for about 23 percent of revenues versus 21 percent in the second quarter of 2007.
Gross margin fell to 33 percent of sales from 35.8 percent during the second quarter of last year.
“The overall economic and retail environment remains very difficult and contributed to results falling far below our expectations,” said Homi Patel, chairman and ceo of the company. “Consumer confidence has been unfavorable for a number of months and any discretionary spending, including the income tax rebate checks, in all likelihood is going toward higher food and gas costs rather than for discretionary apparel purchases.”
Patel pointed out that Hartmarx results also were adversely affected by its decision to reduce its dependence on moderately priced tailored clothing offerings by not renewing its licenses with Tommy Hilfiger and Perry Ellis. He said that while these moves have “had a significant negative near-term impact on reported revenues and earnings, we strongly believe these actions will have a positive impact on longer-term profitability.”
Assuming no further deterioration in the economy, the firm expects to be profitable during the second half and post a breakeven performance or small profit for the entire year. Full-year revenues are expected to land between $530 million and $550 million.
For the six months, Hartmarx’s net loss was $5 million, or 14 cents a diluted share, as compared with net income of $2 million, or 5 cents, in the first half of last year. Sales dipped 9.2 percent to $250.5 million from $276 million.