NEW YORK — After a $560,000 gain on the purchase of its debt at a discount, Movie Star Inc. narrowed its loss in the first quarter ended Sept. 30 to $63,000 and projected profits for the half.
In the year-earlier quarter, the intimate apparel firm lost $1.1 million.
During the first quarter, Movie Star purchased $1.3 million of its 12.875 percent debentures notes and converted them to the 8 percent notes.
Sales for the three months ended Sept. 30 dropped 48.3 percent to $12.9 million from $24.9 million, primarily due to the elimination of the men’s work and leisure shirt division.
Looking ahead, Mark M. David, chairman and chief executive officer said in a statement, “With about half of the second quarter of this fiscal year behind us, we can say with a large measure of confidence that second-quarter sales will be substantially higher than those of the first quarter and anticipate that the first half of the year will be profitable.”
The company said that continued efforts to reduce low margin business and lower sales of the company’s popular-priced intimate apparel contributed to the weaker sales.
With an improved sales mix, Movie Star said it experienced an overall improvement in its intimate apparel margins. Gross margins jumped to 25.5 percent of sales from 19.1 percent a year ago.
Selling general and administrative expense declined 32 percent to $3.2 million as a result of the company’s restructuring, elimination of the low-margin men’s business and across-the-board reductions in corporate and divisional overhead.
Interest expense declined 37 percent to $737,000, primarily due to reduced borrowing needs and to the restructuring of its long-term debt.