People’s Liberation Inc. reduced its net loss in the first quarter but fell short of a profit despite improvements in sales and gross margin.

This story first appeared in the May 18, 2010 issue of WWD. Subscribe Today.

The company, which designs and distributes high-end and casual apparel under the People’s Liberation, William Rast and J.Lindeberg brand names, said for the quarter ended March 31, its net loss fell to $979,930, or 3 cents a diluted share, from a loss of $1.4 million, or 5 cents a share, in the year-ago period. Strong retail sales and sponsorship revenue lifted net sales 11 percent to $8.4 million, from $7.5 million, a year earlier.

Gross margin improved to 53.6 percent in the first quarter from 44.5 percent, a year earlier. The company said the improvement was led by “increased retail sales of J.Lindeberg and William Rast product lines at higher gross margins,” as well as a William Rast sponsorship agreement “generated without any corresponding cost of revenue.”

Stripping out sponsorship revenue, gross margin from product sales grew 360 basis points compared with the prior-year period.

On the company call, chairman and chief executive officer Colin Dyne said the economic environment had impacted the company, and wholesale sales have suffered. But Dyne added the firm looks forward to growth opportunities such as William Rast’s upcoming footwear line, as well as other initiatives that will help the company “continue to build” its retail model.

“Both our J.Lindeberg and William Rast retail stores have seen increased momentum and awareness.…We are continuing to execute on our key initiatives and are confident about the long-term opportunities for our business,” he said.

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