DESIGNS INC. SUFFERS $7.8M QUARTERLY LOSS
NEW YORK — Special charges and promotional selling produced heavy fourth-quarter losses for Designs Inc., which hopes to improve this year with expense controls and strategic purchasing.
Net losses for the quarter grew to $7.8 million, or 53 cents a share, from the year-ago deficit of $286,000, or 2 cents a share.
Results were dragged into the red by an $8 million noncash charge to reduce the carrying value of certain deferred tax assets. Pretax profits mounted $600,000 during the quarter and compared with year-ago pretax losses of $500,000.
Sales for the period inched up 1.6 percent to $53.7 million from $52.9 million a year ago. Comparable-store sales rose 2.3 percent.
In a statement, president and chief executive officer David Levin attributed the “marginally profitable” operating results to the “weak macroeconomic environment throughout 2001, coupled with the company’s more promotional stance.”
Designs has sought to offset this by tightening expense control, as evidenced in the fourth quarter by a 471-basis-point drop in its selling, general and administrative expense ratio to 18.2 percent of sales.
Dennis Hernreich, senior vice president and chief financial officer, said: “Although we intend to maintain a promotional posture during fiscal 2003, gross margins are expected to improve during the year as we focus on intensifying opportunistic purchases of close-out and special-buy merchandise.”
Losses for the year totaled $7.9 million, or 54 cents a share compared with last year’s profits of $3.2 million, or 20 cents. Sales advanced 0.3 percent to $195.1 million from $194.5 million last year. Comp-store sales slid 3.9 percent.
In fiscal 2003, the Needham, Mass.-based firm will add 15 to 20 new doors to the 101 outlet stores it currently operates under the Levi’s, Dockers and Candie’s brands.
“We also continue to have discussions with several manufacturers who have expressed interest in our retail brand outlet strategy,” said Levin.