A decline in its women’s business, especially in the specialty market, dragged on second-quarter sales and profits at Joe’s Jeans Inc., the company said Wednesday.
In the three months ended May 31, net income at the Los Angeles-based premium denim firm fell 17.8 percent to $1.3 million, or 2 cents a diluted share, from $1.6 million, or 3 cents a share, in the year-ago period. Sales in the quarter fell 4.3 percent to $17.2 million from $18 million in the comparable period.
“Our women’s specialty store business experienced the most difficulty this quarter,” president and chief executive officer Marc Crossman said on a conference call with analysts. “While our Anthropologie business remained quite healthy, the majority of our small, independent boutique purchases were down from the previous year, concurrent with their weak financial performance. This market segment continues to have the most difficult time in this economic climate.”
Crossman said many boutiques are making their purchases for the spring and holiday seasons and that reorders have been down in the channel. He added that department stores sales were better and that Joe’s had made sales gains at Saks Fifth Avenue and Bloomingdale’s.
On the conference call, chief financial officer Hamish Sandhu said Joe’s had improved its gross margin in the quarter to 51 percent from 47 percent a year earlier, largely due to sales at its own stores and increased production in Mexico and Morocco.
The company said rent costs related to five new stores pushed selling, general and administrative expenses up 8.3 percent to $6.9 million from $6.4 million.
For the six months, the denim firm’s profits increased 10 percent to $2.1 million, or 4 cents a share, from $1.9 million, or 3 cents a share, in the year-ago period. Sales in the first half grew 1.5 percent to $33.7 million from $33.2 million a year ago. Sandhu attributed the year-to-date sales gain to growth in the company’s men’s and international business, as well sales at its signature stores.
Before the company reported its results, shares of Joe’s Jeans fell 12 cents, or 12.9 percent, in trading Wednesday to close at 81 cents.