Joe’s Jeans Inc. (the “Company”) (NASDAQ: JOEZ) today announced
financial results for the second quarter ended May 31, 2014.
Highlights were:
- Second quarter net sales increased 56%
to $48.2 million;
- Wholesale net sales increased 66%;
- Retail store net sales increased 19%;
and
- Operating income increased 55% to $3.3
million compared to $2.1 million in the prior year period.
For the second quarter ended May 31, 2014, overall net sales
were $48.2 million compared to $30.9 million in the prior year
comparative period, or a 56% increase. We completed our acquisition
of Hudson Clothing Holdings, Inc. (“Hudson”) on September 30, 2013
and our results for the second quarter of fiscal 2014 reflect the
operation of Hudson as one of our wholly-owned subsidiaries.
Our overall gross profit for the quarter increased to $22.6
million from $13.5 million in the prior year comparative period, or
a 67% increase. Our overall gross margin in the second quarter of
fiscal 2014 was 47% compared to 44% in the second quarter of fiscal
2013. Operating expense in the second quarter of fiscal 2014 was
$19.3 million compared to $11.4 million a year ago. Our operating
income was $3.3 million compared to $2.1 million in the prior year
comparative period. We had net income of $2.3 million compared to
$1.2 million in the prior year period. As a result, our fully
diluted earnings per share was $0.01 for the second quarter of
fiscal 2014 compared to $0.02 in same period a year ago.
Marc Crossman, President and Chief Executive Officer, commented,
“We have been working these past two quarters to position both
companies to realize the cost savings benefits from our acquisition
of Hudson. We expect to begin to see the benefit of that work in
the third quarter of fiscal 2014. We expect the savings to continue
to ramp up during the fourth quarter and by year end, we expect to
be running at an annualized cost savings rate in excess of $10
million per year.” Mr. Crossman concluded, “Furthermore, we expect
our core results, excluding these cost savings, to pick up in the
back half of the year, as we are already seeing improvement in our
same store sales comps at our company owned retail stores.”
Wholesale
Net sales for our wholesale segment in the second quarter of
fiscal 2014 increased 66% to $40.4 million compared to $24.4
million in the year ago period. Wholesale net sales for the second
quarter of fiscal 2014 included $17.9 million in wholesale net
sales from Hudson®. Gross margin percentages for our wholesale
segment were 43% for the second quarter of fiscal 2014 compared to
37% in the prior year comparable quarter. For the second quarter,
wholesale operating expense increased to $5.7 million compared to
$3.2 million in the year ago period. Our wholesale operating income
increased to $11.6 million in the second quarter of fiscal 2014
compared to $5.7 million in the prior year comparative period.
Retail
Net sales from our retail segment in the second quarter
increased 19% to $7.8 million compared to $6.5 million in the prior
year comparative period. The growth in retail sales was driven by
revenue contribution of $837,000 from Hudson’s® e-shop as well as
growing our store base by three stores in the comparative period.
In addition, our same store sales, which includes Joe’s® stores
open at least 12 months and our Joe’s® e-shop, increased 1% during
the quarter. Gross margin percentages for our retail segment
decreased to 69% from 70% in the year ago period and were impacted
by increased promotional activity at our retail outlet stores as
our competitors were more promotional. Retail operating expense
increased as a result of additional expenses associated with
expanding our store base compared to the prior year period and the
addition of the operation of Hudson’s® e-shop. Overall, for the
second quarter, we had an operating income of $103,000 compared to
$132,000 in the year ago period for our retail segment.
Corporate and Other
For the second quarter of fiscal 2014, our corporate and other
expenses were $8.4 million compared to $3.7 million in the second
quarter a year ago. Corporate and other expenses increased due to
$4.2 million of expenses associated with Hudson’s corporate
operations for the second quarter of fiscal 2014.
The Company will host a conference call on Thursday, July 10,
2014 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 second quarter ended
May 31, 2014.
To access the live call, please dial 1(800) 264-7882 or 1(847)
413-3708. The conference ID number and participant passcode is
37590829 and is titled the “Q2 2014 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 July 10, 2014 until 2:59 a.m. Eastern
Time on July 19, 2014 by dialing 1(888) 843-7419 or 1(630) 652-3042
and using the conference passcode 37590829#. In addition, the
conference call will be archived for two weeks on the Company’s
website at www.joesjeans.com.
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
May 31, 2014 May 31, 2013
(unaudited) Net sales $ 48,167 $ 30,874 Cost of goods sold
25,594 17,369 Gross profit
22,573 13,505 Operating expenses Selling, general and
administrative 18,125 10,840 Depreciation and amortization
1,160 542
19,285 11,382 Operating income
3,288 2,123 Interest expense 3,355 127 Other income (4,818)
- Income before provision for taxes 4,751 1,996 Income tax
expense
2,412 823 Net
income and comprehensive income
$ 2,339
$ 1,173 Earnings per common share
- basic
$ 0.03 $
0.02 Earnings per common share - diluted
$ 0.01 $ 0.02
Weighted average shares outstanding: Basic 68,148 67,047
Diluted 87,096 68,411
The following table sets forth certain segment information for
the three months ended May 31, 2014 and 2013, respectively:
JOE'S JEANS INC. AND SUBSIDIARIES SEGMENT
RESULTS (in thousands)
Three months ended May 31,
2014 May 31, 2013 (unaudited)
Net sales: Wholesale $ 40,401 $ 24,366 Retail
7,766 6,508 $
48,167 $ 30,874 Gross
profit: Wholesale $ 17,218 $ 8,955 Retail
5,355
4,550 $ 22,573
$ 13,505 Operating income:
Wholesale $ 11,560 $ 5,716 Retail 103 132 Corporate and other
(8,375) (3,725)
$ 3,288 $ 2,123
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 also acquired
in September 2013 Hudson Clothing Holdings, Inc., a leading global
designer and marketer of women’s and men’s premium branded denim
apparel bearing the Hudson® brand name, and operates it as a wholly
owned subsidiary. 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; the ability to generate significant cost savings in the
third and fourth fiscal quarters of 2014; the ability to increase
our core results; unexpected costs or unexpected liabilities that
may arise from the transaction or the operation of our business;
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)
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