Growth in international markets and a boost in sales from the opening of four stores lifted results for Joe’s Jeans in the first quarter.
This story first appeared in the May 1, 2009 issue of WWD. Subscribe Today.
For the three months ended Feb. 28, the premium denim label said earnings jumped 149.2 percent to $800,000, or 1 cent a diluted share, compared with earnings of $321,000, or 1 cent a share, in the same period a year ago. Earnings per share stayed flat because of the rounding of EPS figures.
Sales gained 8.4 percent to $16.5 million from $15.2 million. According to the company’s quarterly filing with the Securities and Exchange Commission, sales in the European market improved by $149,000, or 24 percent. Joe’s Jeans also opened four branded stores during the quarter, adding $927,000 in sales.
Marc Crossman, president and chief executive officer, said sales gains were attributable to an updating of the core basics program as well as shifting more of the assortment from basics to fashion pieces.
“We saw the consumer was reacting to more fashion details and fashion silhouettes, and we needed to change that in our business,” Crossman said during a conference call with analysts.
The company also responded to the pricing pressures being felt by its retail customers with the introduction of two women’s jeans and a men’s style priced at $138, lowering the brand’s opening price point from $150.
“The success of these changes is evidenced by the strong sell-through we’re seeing with our retailers,” Crossman said.
The company’s women’s business rose 6 percent, and the men’s business spiked 42 percent. The U.S. women’s business fell by $187,000, and department store sales declined 8 percent.
Two outlet stores and two full-price stores opened in the fourth quarter. Crossman said plans to launch more stores were on hold, and it would be “prudent” to wait for further declines in rent rates before signing new leases.
Joe’s Jeans has moved more than 65 percent of its production to Mexico since 2007. Crossman said reports that the Mexican government may shutter private businesses for days in response to concerns over swine flu would not materially impact operations, because the company had enough inventory to offer to retailers to get them through a shutdown.
The denim brand also revealed year-end results for 2008, which had been delayed because of questions from the SEC regarding how the company accounted for the acquisition of founder and head designer Joe Dahan’s businesses. Earnings for 2008 rose 117.5 percent to $4.9 million, or 8 cents a share, compared with earnings of $2.3 million, or 5 cents, in 2007. Sales rose 10.2 percent to $69.2 million from $62.8 million.