Joe’s Jeans Inc. (the “Company”) (NASDAQ: JOEZ) today announced
financial results for the third quarter ended August 31, 2013.
Highlights were:
- Joe’s® wholesale net sales increased
2%;
- Retail store net sales increased 14%;
and
- Consolidated third quarter net sales
decreased 3% to $29.4 million.
For the third quarter of fiscal 2013, overall net sales were
$29.4 million compared to $30.3 million from the prior year
comparative period, or a 3% decrease, with the decline entirely
attributable to sales from our else™ brand. Sales of our Joe’s®
brand grew in the domestic and international wholesale distribution
channel and in our Company owned retail stores. Our overall gross
profit for the quarter decreased to $12.8 million from $13.8
million in the prior year comparative period, or a 7% decrease. Our
overall gross margin in the third quarter of fiscal 2013 was 44%
compared to 46% in the prior year period. Operating expense in the
third quarter of fiscal 2013 was $13.1 million compared to $11.1
million in the prior year period. Excluding the impact of
professional fees and other transaction expenses of approximately
$1.3 million in connection with the acquisition of Hudson Clothing
Holdings, Inc. (“Hudson”) that was completed on September 30, 2013,
operating expenses would have been $11.9 million. Our operating
loss was $295,000 for the third quarter of fiscal 2013. Excluding
the $1.3 million charge related to the Hudson acquisition, our
operating income would have been $970,000 for the quarter and our
fully diluted earnings per share would have been $0.01 per share
instead of $0.00 per share for the third quarter of fiscal
2013.
Marc Crossman, President and Chief Executive Officer, commented,
“Our third quarter of fiscal 2013 marked a transition for us as we
worked toward the completion of the acquisition of Hudson, which
was successfully closed on September 30th. Against this backdrop,
our retail segment continued to post top line growth, while our
Joe’s® women’s wholesale sales improved due to strong performance
of our women’s product offerings.” Crossman continued, “If we
excluded the Hudson transaction expenses incurred during the
quarter, we would have generated positive operating income for the
quarter even with the expenses associated with our eight additional
retail stores.”
Wholesale
Net sales for our wholesale segment in the third quarter of
fiscal 2013 decreased 7% to $23.1 million from $24.8 million in the
prior year period. However, wholesale net sales from our Joe’s®
brand increased 2% to $22.3 million versus $21.9 million in the
year ago quarter. Our else™ brand sales were down $2.1 million from
the previous year. This quarter was a challenging quarter for us
for else™ as we were up against a major door rollout of 175 doors
from Macy's in the year ago quarter. Gross margins for our
wholesale segment were 37% for the third quarter of fiscal 2013
compared to 40% in the prior year comparable quarter. For the third
quarter, wholesale operating expense increased slightly to $3.5
million from $3.4 million a year ago. Our wholesale operating
income decreased to $5.2 million in the third quarter of fiscal
2013 compared to $6.5 million in the prior year comparative
period.
Mr. Crossman commented, “We are pleased to see our efforts in
earlier quarters with our Joe’s® women’s product offerings driving
healthy sales increases in both our domestic and specialty store
channels.”
Retail
Net sales from our retail segment in the third quarter increased
14% to $6.3 million compared to $5.5 million in the prior year
comparative period. The growth in retail sales was driven by
revenue contribution from 33 stores compared to 25 stores in the
prior year period. Same stores sales were down 6% and driven
primarily by weaker than expected traffic as our promotional
activity commenced later in the quarter than our competitors. Gross
margins for our retail segment decreased to 67% from 71% in the
year ago period. Our gross margin declined as a result of more
promotional activity from our peers that caused us to be more
promotional in our stores than we were in the year ago period.
Retail operating expense increased due to the expansion of our
store base. Overall, for the third quarter of fiscal 2013, we had
an operating loss of $524,000 compared to operating income of
$140,000 a year ago for our retail segment.
Mr. Crossman commented, “We continue to see top line growth in
retail net sales. As we have said in prior quarters, our new
smaller footprint stores continue to exceed our expectations and
are among our best performing full price retail stores.”
Corporate and Other
For the third quarter of fiscal 2013, our corporate and other
expenses were $4.9 million compared to $4.0 million in the third
quarter a year ago. Corporate and other expenses increased due to
professional fees and other transaction expenses of approximately
$1.3 million in connection with the acquisition of Hudson.
Excluding these expenses, corporate and other expense would have
been approximately $3.6 million in the third quarter of fiscal 2013
compared to $4.0 million in the prior year period.
The Company will host a conference call on Tuesday, October 15,
2013 at 4:30 p.m. Eastern Time with the Company’s Chief Executive
Officer, Marc Crossman, and its Chief Financial Officer, Hamish
Sandhu, to discuss financial results for the third quarter ended
August 31, 2013.
To access the live call, please dial 1(800) 264-7882 (U.S.) or
1(847) 413-3708 (International). The conference ID number and
participant passcode is 35883390 and is titled the “Q3 2013 Joe’s
Jeans Inc. Earnings Conference Call.” The information provided on
the teleconference is only accurate at the time of the conference
call, and the Company will take no responsibility for providing
updated information. A telephone replay of the conference call will
be available beginning at 7:00 p.m. Eastern Time on October 15,
2013 until 11:59 p.m. Eastern Time on October 22, 2013 by dialing
1(888) 843-7419 (U.S.) or 1(630) 652-3042 (International) and using
the conference passcode 35883390#. In addition, the conference call
will be archived for two weeks on the Company’s website at
www.joesjeans.com.
About Non-GAAP Financial Measures
This press release contains non-GAAP financial measures for
earnings that exclude the effect of professional fees and other
transaction expense related to the acquisition of Hudson.
Generally, a non-GAAP financial measure is a numerical measure of a
company's historical or future financial performance, financial
position, or cash flows that either excludes or includes amounts
that are not normally excluded or included in the most directly
comparable measure calculated and presented in accordance with
accounting principles generally accepted in the United States
(GAAP). Management used these non-GAAP financial measures to
internally evaluate the performance of its business and make
operating decisions. We believe that providing the non-GAAP
measures is useful to investors for a number of reasons. The
non-GAAP measures provide a consistent basis for investors to
understand our financial performance in comparison to historical
periods, and it allows investors to evaluate our performance using
the same methodology and information as that used by management.
However, investors need to be aware that non-GAAP measures are
subject to inherent limitations because they do not include all of
the expenses included under GAAP and they involve the exercise of
judgment of which charges are excluded from the non-GAAP financial
measure. These non-GAAP financial measures are intended to
complement, and not considered as an alternative to, the most
directly comparable GAAP financial measure.
We have provided a reconciliation table of the non-GAAP measure
to the equivalent GAAP measure.
JOE'S JEANS INC. AND SUBSIDIARIES NON-GAAP
CONDENSED CONSOLIDATED STATEMENTS OF NET (LOSS) INCOME AND
COMPREHENSIVE (LOSS) INCOME (in thousands, except per share
data) Three months
ended August 31, 2013
August 31, 2012 (unaudited)
GAAP net (loss) income and comprehensive (loss)
income $ (287 ) $ 1,390 Transaction expenses, net of tax
779 - Non - GAAP net
income and comprehensive income, excluding transaction expenses
$ 492 $
1,390 GAAP (loss) earnings per
common share - basic
$ (0.00
) $ 0.02 Non - GAAP
earnings per common share - basic
$ 0.01
$ 0.02 GAAP (loss)
earnings per common share - diluted
$
(0.00 ) $ 0.02
Non - GAAP earnings per common share - diluted
$ 0.01 $
0.02 Adjusted weighted average shares
outstanding: Basic 67,413 65,676 Diluted 68,503 66,756
JOE'S JEANS INC. AND SUBSIDIARIES NON-GAAP
OPERATING INCOME AND SEGMENT RESULTS (in thousands)
Three months ended August 31,
2013 August 31, 2012
(unaudited) GAAP operating income (loss) $ (295 ) $
2,677 Transaction expenses
1,265
- Non-GAAP operating income, excluding
transaction expenses
$ 970
$ 2,677 Non- GAAP operating
income: Wholesale $ 5,157 $ 6,514 Retail (524 ) 140 Corporate and
other, excluding transaction expenses
(3,663
) (3,977 ) Non-GAAP
operating income, excluding transaction expenses
$
970 $ 2,677
JOE'S JEANS INC. AND SUBSIDIARIES
NON-GAAP SEGMENT OPERATING EXPENSES (in thousands)
Three months ended August 31,
2013 August 31, 2012
(unaudited) GAAP operating expenses: Wholesale $
3,476 $ 3,397 Retail 4,736 3,767 Corporate and other
4,928 3,977 GAAP
operating expenses
$ 13,140
$ 11,141 Non- GAAP
operating expenses: Wholesale $ 3,476 $ 3,397 Retail 4,736 3,767
Corporate and other, excluding transaction expenses
3,663 3,977 Non-GAAP
operating expenses, excluding transaction expenses
$
11,875 $ 11,141
JOE'S JEANS INC. AND
SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF NET (LOSS)
INCOME AND COMPREHENSIVE (LOSS) INCOME (in thousands, except
per share data) Three
months ended August 31, 2013
August 31, 2012
(unaudited) Net sales $ 29,385 $ 30,304 Cost of goods sold
16,540 16,486 Gross
profit 12,845 13,818 Operating expenses Selling, general and
administrative 12,619 10,778 Depreciation and amortization
521 363
13,140 11,141 Operating
(loss) income (295 ) 2,677 Interest expense
116
63 (Loss) income before provision for
taxes (411 ) 2,614 Income tax (benefit) expense
(124 ) 1,224 Net
(loss) income and comprehensive (loss) income
$
(287 ) $ 1,390
(Loss) earnings per common share - basic
$
(0.00 ) $ 0.02
(Loss) earnings per common share - diluted
$
(0.00 ) $ 0.02
Weighted average shares outstanding: Basic 67,413 65,676
Diluted 67,413 66,756
The following table sets forth certain segment information for
the three months ended August 31, 2013 and 2012, respectively:
JOE'S JEANS INC. AND SUBSIDIARIES SEGMENT
RESULTS (in thousands)
Three months ended August 31,
2013 August 31,
2012 (unaudited) Net sales: Wholesale $ 23,060 $
24,778 Retail
6,325
5,526 $ 29,385
$ 30,304 Gross profit:
Wholesale $ 8,633 $ 9,911 Retail
4,212
3,907 $ 12,845
$ 13,818 Operating
income (loss): Wholesale $ 5,157 $ 6,514 Retail (524 ) 140
Corporate and other
(4,928 )
(3,977 ) $
(295 ) $ 2,677
About Joe’s Jeans Inc.
Joe’s Jeans Inc. designs, produces and sells apparel and
apparel-related products to the retail and premium markets under
the Joe's® brand and related trademarks. The Company recently
announced the acquisition of Hudson Clothing Holdings, Inc., a
leading global designer and marketer of women’s and men’s premium
branded denim apparel, as a wholly owned subsidiary of Joe’s Jeans.
Visit: joesjeans.com or facebook.com/joesjeans and hudsonjeans.com
or facebook.com/HudsonJeans
This release contains forward-looking statements within the
meaning of the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995, as amended. The matters discussed in
this document involved estimates, projections, goals, forecasts,
assumptions, risks and uncertainties that could cause actual
results or outcomes to differ materially from those expressed in
the forward-looking statements. All statements in this news release
that are not purely historical facts are forward-looking
statements, including statements containing the words “intend,”
“believe,” “estimate,” “project,” “expect” or similar expressions.
Any forward-looking statement inherently involves risks and
uncertainties that could cause actual results to differ materially
from the forward-looking statements. Factors that would cause or
contribute to such differences include, but are not limited to: our
ability to successfully integrate the business of Hudson Clothing
Holdings, Inc., or Hudson, and realize cost savings and any other
synergies; unexpected costs or unexpected liabilities that may
arise from the transaction; the inability to retain key personnel;
the diversion of management's time and attention from our ongoing
business during this time period, the impact of the acquisition on
our stock price, the anticipated benefits of the acquisition on our
financial results, business performance and product offerings, the
risk that the credit ratings of the combined company or its
subsidiaries may be different from what the companies expect,
continued acceptance of our product, product demand, competition,
capital adequacy, general economic conditions and the potential
inability to raise additional capital, if required, the risk that
the Company will be unsuccessful in gauging fashion trends and
changing customer preferences; the risk that changes in general
economic conditions, consumer confidence, or consumer spending
patterns will have a negative impact on the Company’s financial
performance or strategies; the highly competitive nature of the
Company’s business in the United States and internationally and its
dependence on consumer spending patterns, which are influenced by
numerous other factors; the Company’s ability to respond to the
business environment and fashion trends; continued acceptance of
the Company’s brands in the marketplace; the ability to generate
positive cash flow from operations; competitive factors, including
the possibility of major customers sourcing product overseas in
competition with our products; the risk that acts or omissions by
the Company’s first party vendors could have a negative impact on
the Company’s reputation; a possible oversupply of denim in the
marketplace; and other risks. The Company discusses certain of
these factors more fully in its additional filings with the SEC,
including its last annual report on Form 10-K filed with the SEC,
and this release should be read in conjunction with that annual
report together with all of the Company’s other filings made with
the SEC through the date of this release. The Company urges you to
consider all of these risks, uncertainties and other factors
carefully in evaluating the forward-looking statements contained in
this release.
Any forward-looking statement is based on information current as
of the date of this document and speaks only as of the date on
which such statement is made, and the Company undertakes no
obligation to update these statements to reflect events or
circumstances after the date on which such statement is made.
Readers are cautioned not to place undue reliance on
forward-looking statements.
Joe’s Jeans Inc.Hamish Sandhu323-837-3700 x 304(Investor
Relations)orAlejandra
Dibos323-837-3700alejandra@joesjeans.com(Press)
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