Rafaella Apparel Group Inc. narrowed its third-quarter loss despite a reduction in sales.
This story first appeared in the May 26, 2010 issue of WWD. Subscribe Today.
The women’s sportswear firm said the loss attributable to stockholders for the three months ended March 31 was $25,000 compared with a $1.3 million loss a year ago. Excluding the $1 million in dividends accrued on redeemable convertible preferred stock, the company’s net income was $975,000 against a loss of $276,000 last year.
Sales in the third quarter fell 3.3 percent to $33.4 million from $34.6 million. Despite the slip, cost of sales declined 9.2 percent to $22.5 million, and gross profits rose 11.5 percent to $10.9 million, in the quarter. Gross margin hit 32.7 percent of sales versus 28.4 percent in the year-ago period.
The company said in a regulatory filing with the Securities and Exchange Commission that an arbitrator on April 10 issued an award directing the firm to pay $400,000 to Kobra International Ltd., which does business as Nicole Miller. The parties were disputing Rafaella’s decision to suspend performance under a licensing agreement. Kobra initially sought $1.5 million in damages.
Additionally, Rafaella said it exited one of its warehouses, in Bayonne, N.J., during the first quarter of this year.
For the nine months, the loss was $553,000, versus the $18.6 million loss last year. Sales fell 29.1 percent to $88.1 million from $124.1 million.