Double-digit increases in same-store sales within its own retail network helped Joe’s Jeans Inc. post double-digit gains in its second-quarter profits and sales and improvement in its gross margin.
In the three months ended May 31, the Los Angeles-based premium jeans firm recorded net income of $1.4 million, or 2 cents a diluted share, 88.8 percent above the year-ago mark of $751,000, or 1 cent a share.
Revenues advanced 16 percent to $28.6 million, from $24.7 million in the comparable 2011 period, while gross margin grew to 47.3 percent of sales from 46.6 percent in last year’s quarter.
Wholesale operating income improved 10 percent to $6.3 million from $5.7 million while retail profitability quadrupled to $570,000 from $143,000. Wholesale revenues expanded 13.7 percent to $23 million from $20.2 million while, paced by a 10 percent increase in same-store sales, retail revenues reached $5.7 million, 26.1 percent above the 2011 level of $4.5 million.
“Our retail sales continue to perform well above our expectations and, in particular, our full-price retail stores,” said Marc Crossman, president and chief executive officer. “Full-price retail stores posted same-store sales gains of 38 percent for the quarter. With healthy gross margin expansion and same-store sales gains, our retail segment posted record revenue and profitability this quarter.”
Crossman noted that the Else brand, a less expensive denim-based label launched at Macy’s stores in February, contributed $750,000 in sales for the quarter and that plans for fall include a doubling of its door count at Macy’s.
He also noted that operating income in the quarter was up 82.3 percent, to $3.1 million from $1.7 million.
At the end of the quarter, Joe’s operated six full-price stores and 17 outlet stores in the U.S. Although shops-in-shop are operated by distributors in overseas markets, the company currently has no plans to open stores of its own outside the U.S.
In the U.S., the company, which opened its first U.S. flagship last year in New York, will unveil a 2,500-square-foot flagship at 8432 Melrose Place in Los Angeles later this month.
“These highly coveted locations, like SoHo, Aventura, South Coast Plaza and now Melrose, are wonderful vehicles to increase brand awareness and reach new customers,” said Crossman.
Joe Dahan, the brand’s founder and creative director, has been spearheading the design of the new flagship, which will include an outdoor garden and seating area, crystal chandeliers and French doors. The store will carry Joe’s Jeans denim and contemporary collections for men, women and children, handbags and shoes. The Melrose Place flagship will be Joe’s Jeans seventh full-price store, and the company plans to double its full-priced store count by the end of the year.
For the first six months, net income was up 135.1 percent to $2.2 million, or 3 cents a diluted share, from $941,000, or 1 cent. Revenues improved 19 percent to $54.6 million from $45.9 million in the first half of 2011.
Shares of Joe’s closed at $1.14, down 3 cents or 2.6 percent, on Tuesday.