Joe’s Jeans Inc. (the “Company”) (NASDAQ: JOEZ) today announced
financial results for the first quarter ended February 28, 2013.
Highlights were:
- Consolidated first quarter net sales
increased 13% to $29.4 million;
- Wholesale net sales increased 11%;
- Retail store net sales increased 23%;
and
- Operating income increased 30%,
excluding the one-time charge for contingent consideration buy-out
expense.
For the first quarter of fiscal 2013, overall net sales were
$29.4 million compared to $26.0 million from the prior year
comparative period, or a 13% increase. Our overall gross profit for
the quarter increased to $14.3 million from $13.1 million in the
prior year comparative period, or a 9% increase. Our overall gross
margin in the first quarter of fiscal 2013 was 49% compared to 50%
in the prior year period. Operating expense in the first quarter of
fiscal 2013 was $20.7 million compared to $11.3 million in the
prior year period. Excluding the impact of a one-time charge of
$8.7 million that represents the net present value of the
contingent consideration buy-out expense, operating expenses would
have been $12.0 million. Also excluding this charge, our operating
income would have increased to $2.3 million for the quarter and our
fully diluted earnings per share would have been $0.03 per share
instead of a loss of $0.10 per share for the first quarter of
fiscal 2013.
Marc Crossman, President and Chief Executive Officer, commented,
“Our first quarter of fiscal 2013 continued another strong quarter
of sales and income increases.” Crossman continued, “With that
said, both our wholesale and retail segments posted healthy double
digit growth for the quarter which translated into strong
consolidated revenue and earnings growth for us, excluding the
one-time charge.”
Wholesale
Net sales for our wholesale segment in the first quarter of
fiscal 2013 increased 11% to $23.1 million from $20.8 million in
the prior year period. Sales gains came from both our Joe’s® men’s
and women’s sales channels and our else™ brand. Gross margins for
our wholesale segment were 44% for the first quarter of fiscal 2013
compared to 46% in the prior year comparable quarter. For the first
quarter, wholesale operating expense decreased to $3.5 million from
$3.8 million a year ago. As a result of our improved sales and
decreased operating expense, our wholesale operating income
increased to $6.7 million in the first quarter of fiscal 2013
compared to $5.7 million in the prior year comparative period.
Mr. Crossman commented, “We are pleased to see our efforts in
earlier quarters pay off with the performance of our men’s
business, our Vintage Reserve program, and the addition of our
else™ brand. Our men’s wholesale channel continues to perform with
strong double digit growth as we grow with our department store
partners.”
Retail
Net sales from our retail segment in the first quarter increased
23% to $6.3 million compared to $5.2 million in the prior year
comparative period. The growth in retail sales was driven by
revenue contribution from 30 stores compared to 22 stores in the
prior year period. Same stores sales were down 1%. This same store
sales decrease was due to tough comparisons at our full price
stores against our successful “55 Colors” program in the year ago
period. However, same store sales for our outlets increased. Gross
margins for our retail segment decreased to 64% from 70% in the
year ago period. Our gross margin declined as a result of heavy
promotions from our peers that caused us to be more promotional in
our outlets during the months of January and February than the year
ago period. Retail operating expense increased due to the expansion
of our store base. Overall, for the first quarter of fiscal 2013,
we had an operating loss of $326,000 compared to operating income
of $253,000 a year ago for our retail segment.
Mr. Crossman commented, “We are pleased with our growth in
retail net sales for the quarter. Our new stores continue to
perform well and we are pleased to see that our strategy to target
smaller footprint stores in top locations is paying off.” Crossman
continued, “Our recently opened Tysons Galleria store, at just
under 1,000 square feet, is currently our 4th best performing full
price retail store.”
Corporate and Other
For the first quarter of fiscal 2013, our corporate and other
expenses were $12.8 million compared to $4.1 million in the first
quarter a year ago. Corporate and other expenses increased due to
the contingent consideration buy out expense of $8.7 million that
we recorded. Excluding the contingent consideration buy-out
expense, corporate and other expense would have been $4.0 million
in the first quarter of fiscal 2013 compared to $4.1 million in the
prior year period.
The Company will host a conference call on Monday, April 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 first quarter ended
February 28, 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 34619450 and is titled the “Q1 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 April 15, 2013
until 11:59 p.m. Eastern Time on April 22, 2013 by dialing 1(888)
843-7419 (U.S.) or 1(630) 652-3042 (International) and using the
conference passcode 34619450#. 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 expense related to the
contingent consideration buy-out expense. 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.
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
February 28, 2013 February 29,
2012 (unaudited) GAAP net (loss)
income and comprehensive (loss) income $ (6,388 ) $ 794 Contingent
consideration buy-out expense, net of tax
8,104
-
Non-GAAP net income and comprehensive
income, excluding contingent consideration buy-out expense
$ 1,716 $
794 GAAP (loss) earnings per common
share - basic
$ (0.10 )
$ 0.01
Non-GAAP earnings per common share -
basic
$ 0.03 $
0.01 GAAP (loss) earnings per common share -
diluted
$ (0.10 )
$ 0.01
Non-GAAP earnings per common share -
diluted
$ 0.03 $
0.01 Adjusted weighted average shares
outstanding: Basic 66,646 65,043 Diluted 67,641 65,338
JOE'S JEANS INC. AND SUBSIDIARIES NON-GAAP
OPERATING INCOME AND SEGMENT RESULTS (in thousands)
Three months ended
February 28, 2013 February 29,
2012 (unaudited) GAAP operating income
(loss) $ (6,396 ) $ 1,799 Contingent consideration buy-out expense
8,732 -
Non-GAAP operating income excluding contingent consideration
buy-out expense
$ 2,336
$ 1,799
Non-GAAP operating income (loss):
Wholesale $ 6,704 $ 5,671 Retail (326 ) 253 Corporate and other,
excluding contingent consideration buy-out expense
(4,042 ) (4,125
) Non-GAAP operating income, excluding contingent
consideration buy-out expense
$ 2,336
$ 1,799
JOE'S JEANS INC. AND SUBSIDIARIES NON-GAAP SEGMENT
OPERATING EXPENSES (in thousands)
Three months ended February 28,
2013 February 29, 2012
(unaudited) GAAP operating expenses: Wholesale $
3,528 $ 3,827 Retail 4,409 3,333 Corporate and other
12,774 4,125 GAAP operating
expenses
$ 20,711 $
11,285
Non-GAAP operating expenses:
Wholesale $ 3,528 $ 3,827 Retail 4,409 3,333 Corporate and other,
excluding contingent consideration buy-out expense
4,042 4,125 Non-GAAP operating
expenses, excluding contingent consideration buy-out expense
$ 11,979 $
11,285 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 February 28, 2013
February 29, 2012 (unaudited) Net sales
$ 29,430 $ 25,962 Cost of goods sold
15,115
12,878 Gross profit 14,315 13,084
Operating expenses Selling, general and administrative 11,487
11,009 Depreciation and amortization 492 276 Contingent
consideration buy-out expense
8,732
- 20,711
11,285 Operating income (loss) (6,396 ) 1,799 Interest
expense
70 111
(Loss) income before provision for taxes (6,466 ) 1,688 Income tax
(benefit) expense
(78 )
894 Net (loss) income and comprehensive (loss) income
$ (6,388 ) $
794 (Loss) earnings per common share - basic
$ (0.10 ) $
0.01 (Loss) earnings per common share - diluted
$ (0.10 ) $
0.01 Weighted average shares outstanding: Basic
66,646 65,043 Diluted 66,646 65,338
The following table sets forth certain segment information for
the three months ended February 28, 2013 and February 29, 2012,
respectively:
JOE'S JEANS INC. AND SUBSIDIARIES SEGMENT
RESULTS (in thousands) Three
months ended February 28, 2013
February 29, 2012 (unaudited) Net
sales: Wholesale $ 23,087 $ 20,802 Retail
6,343
5,160 $
29,430 $ 25,962
Gross profit: Wholesale $ 10,232 $ 9,498 Retail
4,083 3,586
$ 14,315 $
13,084 Operating income (loss):
Wholesale $ 6,704 $ 5,671 Retail (326 ) 253 Corporate and other
(12,774 )
(4,125 ) $
(6,396 ) $
1,799
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. More information is
available at the Company website at www.joesjeans.com.
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: 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.
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