NEW YORK — Innovo Group Inc. is feeling aftershocks from its split with Eve’s Fetish brand, posting a wider year-over-year loss despite significantly higher sales.

This story first appeared in the July 15, 2004 issue of WWD. Subscribe Today.

The net loss for the quarter ended May 29 came in at $6.7 million, or 23 cents per diluted share, compared with a loss of $493,000, or 3 cents, in the prior year while sales rose 150 percent to $30 million from $12 million.

Only $2.9 million of those revenues came from Fetish and Shago, the company said. During a conference call, management said the firm’s core businesses accounted for about $400,000 of the loss in the most recent quarter.

The Los Angeles-based company chocked up much of the quarterly loss to ceasing operations with both Fetish and its other urban branded apparel venture, Shago.

“We are disappointed in our financial results, however we are not at all discouraged about our company’s future,” Jay Furrow, chief executive officer, said during a conference call to investors Wednesday. “Fetish and Shago are not the only assets of the company.”

Innovo hopes to rely on company mainstays like Joe’s Jeans and new ventures with Kmart and Betsey Johnson to bounce back from what was a tumultuous second quarter.

Just months after Innovo launched her line, rapper-turned-designer Eve dropped the firm for Marc Ecko Enterprises. Innovo chief financial officer Marc Crossman estimated that ceasing operations with Shago and Fetish accounted for $5.5 million, or 82 percent, of Innovo’s loss. Costs included writing down of the remaining Fetish inventory and paying legal and termination fees.

“We went out to try a new project that didn’t work,” Furrow said. “This obviously hasn’t been a fun 12 months.”

Beyond problems with urban apparel, Innovo also recently dissolved its Joe’s Jeans Japanese subsidiary and prepared to sell its former manufacturing facility in Springfield, Tenn. This fall, Innovo said it is launching a denim line with Betsey Johnson and will produce denim for the Route 66 brand at Kmart.

“Our efforts are moving us toward profitability,” Furrow said.

— Carrie Melago