Tarrant Apparel Group trimmed its first-quarter loss despite the evaporation of more than one-quarter of its revenues.
The Los Angeles-based firm reported a net loss of $171,000 for the three months ended March 31, compared with the $253,000 loss in the first quarter of 2008. The loss per diluted share was unchanged at 1 cent.
Revenues slid 26.1 percent to $37.3 million during the quarter from $50.5 million in the same period last year. While private brand sales rose to $11.1 million from $8.3 million in the year-ago quarter, private label sales fell to $26.2 from $42.2 million.
Gross profit dropped to $8 million from $10 million, but gross margin rose to 21.4 percent of sales from 19.9 percent a year ago.
A more than $10 million reduction in the cost of sales and smaller cuts in selling, general and administrative and royalty costs helped Tarrant post a $153,000 operating profit versus a $43,000 operating loss in last year’s first quarter. Year-ago figures were hurt by a charge of $848,000 from damages imposed by U.S. Customs.
The reduction in royalty expenses, down 21.6 percent to $262,000, was because of lower rates under Tarrant’s amended licensing agreement with American Rag Cie LLC.
Tarrant in February agreed to be sold for $15.2 million to Sunrise Acquisition Co. LLC, a firm controlled by Tarrant’s founders, chief executive officer Gerard Guez and vice chairman Todd Kay. The acquisition of the shares not already owned by Guez and Kay is subject to approval by holders of at least two-thirds of the outstanding shares of the firm and other closing conditions. Tarrant said in a regulatory filing with the Securities and Exchange Commission that it will be filing the necessary proxy materials but didn’t specify a date.