NEW YORK — Diminished gross margins and an expected sales decline slashed Marisa Christina Inc.’s third-quarter profits, forcing the firm to revise its guidance downward.
For the three months ended Sept. 30, the New York-based better apparel and sweater marketer said net income slumped 42.2 percent to $1.1 million, or 15 cents a diluted share, from $1.9 million, or 26 cents, a year ago.
As forecast, net sales for the quarter dipped 1.7 percent to $10.3 million from $10.5 million a year ago, and selling, general and administrative costs decreased 210 basis points to 22.1 percent of sales. However, that was more than offset by a 400 basis-point reduction in gross margin to 37.9 percent of sales.
“The third-quarter sales were in line with our projections and so were our planned savings in overhead,” said chairman Michael Lerner in a statement. “Unfortunately, our gross margin was adversely affected by an extremely difficult retail environment and a variety of other factors. We expect such difficulties to continue to negatively impact the fourth quarter. We have therefore lowered our expectations for operating profit for 2003 at this time, to the possibility of breaking even or a small loss for the year.”
Overall, for the first nine months of the fiscal year, Marisa Christina reported an 87.9 percent fall in net income to $92,000, or 1 cent a diluted share. That compares with last year’s earnings of $758,000, or 10 cents. Net sales for the period fell 8.2 percent to $18.4 million from $20.1 million a year ago.