Improvements in gross margin and sales of nonluxury accessories helped Swank Inc. cut its first-quarter losses by a third.
The New York-based marketer of men’s accessories and leather goods reported that the net loss for the three months ended March 31 was $279,000, or 5 cents a diluted share, an improvement over the loss of $411,000, or 7 cents, in last year’s quarter.
Sales pulled back 3 percent to $24 million from $24.7 million a year ago with lower sales in luxury, which was launched for spring 2008, and jewelry offset by lower markdowns and a 13.6 percent increase in sales of nonluxury goods. The increase in the nonluxury component came despite a 2 percent drop in belt revenues in that segment.
The company’s shares soared 48 cents, or 47.5 percent, to close at $1.49 in over-the-counter trading Tuesday.
The firm described the effects of the recession on the luxury segment of the market as “particularly severe.”
Gross margin improved to 31.3 percent of sales from 30.1 percent a year ago.
The firm noted that cost of sales was reduced by 4.6 percent to $16.5 million based in part on high year-ago expenditures resulting from a fixturing program undertaken for a large customer. Product royalty expenses dropped 4.7 percent because of lower sales and, in some instances, a reduction in contractual minimums.
John Tulin, chairman and chief executive officer, said, in addition to improving margins and strengthening the company’s balance sheet, “we were also able to control our expense levels and made great strides toward positioning the company for an eventual economic recovery. For example, we recently established a representative office in China to give us a stronger Asian presence, which will enable us to improve the overall efficiency of our supply chain.”
Additionally, Swank in March signed a license with Buffalo David Bitton for men’s and women’s belts, small leather goods and men’s fashion jewelry. The first Swank-produced product under the denim maker’s name will be in stores this holiday, with retail prices of $45 to $85. Distribution is planned for U.S. and Canadian better department stores, specialty stores and the 35 Buffalo David Bitton shops in Canada.