NEW YORK — Hit by a gross margin squeeze in its core division, Marisa Christina Inc.’s third-quarter earnings slumped 48.2 percent to $2.1 million, or 25 cents a share, from $4.1 million or 48 cents a year ago.
Sales for the three months ended Sept. 30 gained 9.7 percent to $33.1 million from $30.2 million.
The company noted that income was in line with expectations and reflected lower sales and gross margins in the Marisa Christina division, partially offset by stronger performances in its other apparel lines.
“The retail market for higher-priced apparel has improved during the third quarter,” Michael Lerner, chairman and chief executive, said in a statement. “As a result, all three of our divisions are experiencing good sell-throughs, especially our Flapdoodles children’s and Adrienne Vittadini bridge lines.”
Lerner said Marisa Christina plans to invest between $2.5 million and $3 million in additional marketing and advertising programs in 1997. Due to this additional investment, the firm currently projects that 1997 earnings will be level with 1996. However, he gave no forecast for 1996.
Lerner added that the increase will more than double the company’s marketing expenditures and will be used for in-store shops, special events, public relations and advertising. The bulk of the budget will be devoted to the Vittadini brand, he added.
Reacting to the weak earnings performance in the quarter, Dillon Read & Co. downgraded the company’s stock to “neutral” from “buy.” The earnings came in 2 cents below Dillon Read’s estimate of 27 cents a share, causing the investment firm to lower its estimate for the year to 86 cents from 88 cents. The company earned $1.20 in 1995. Dillon Read still expects Marisa Christina to meet fourth-quarter estimates of 30 cents.