NEW YORK — Boosted by lower expenses and higher merchandise margins, profits at Movie Star rose 18.8 percent in the third quarter ended March 31.
The maker of women’s sleepwear, robes, panties and daywear earned $240,000, or 2 cents a share, up from $202,000, or 1 cent, a year ago. Sales dipped 1.5 percent to $14.5 million from $14.7 million. Sales in the intimate apparel wholesale division decreased less than 1 percent to $12.9 million while sales in its 26-unit retail division decreased 6 percent to $1.6 million.
“Our efforts to become more efficient are improving our earnings,” said Mel Knigin, president and chief executive, in a statement. Gross margins in the intimate apparel division increased to 30.9 percent of sales from 29.1 percent a year ago due to a better product mix and cost efficiencies from a continued shift to offshore production and the elimination of a sewing manufacturing facility in Virginia. Lower markdowns lifted gross margins at retail to 39.3 percent from 34.9 percent.
Selling, general and administrative expenses rose to 22 percent of sales from 19.5 percent as a result of startup costs for the Meant to Be line, as well as higher salary and overhead expenses
“Most of our costs are now fixed, so we expect to see a large portion of incremental sales flow to the bottom line,” Knigin said. “We continue to strengthen our internal direct sales team and emphasize our fashion-forward products. Though our top line has not started to reflect our recent sales initiatives, the core of our new team is in place and the initial response to our new fall fashion line has been very positive.”
In the nine months, profits fell 17.1 percent to $3.08 million, or 19 cents, from $3.7 million, or 26 cents, a year ago. Sales slid 4 percent to $57.1 million from $59.5 million.
More than half of Movie Star’s sales go to national chains and discounters. Its top customers in 1999 were Wal-Mart, 22 percent of sales; Sears, 14 percent, and Target, 11 percent. Movie Star also sells to department and specialty stores.