On Thursday the Innovo Group (NASDAQ:INNO) reported their fiscal 2006 Third Quarter Results. These are the guys that make and market Joe's Jeans. Despite painful losses the numbers are in line with expectations.
For the quarter ended August 26, 2006, net sales from continuing operations were $12.4 million compared to net sales of $12.6 million in the prior year period, a 1% decrease. The company reported a narrower loss from continuing operations of $429,000, or ($0.01) per share, compared to a loss from continuing operations of $592,000, or ($0.02) per share in the corresponding period a year ago.
The Company's Joe's Jeans branded sales during the third quarter increased by 2% over the prior year comparative period to $12.4 million from $12.2 million during the third quarter of fiscal 2005. The slight decline in overall net sales was attributable to decreased sales in non-Joe's Jeans branded products of $77,000 during the third quarter versus $441,000 a year ago, which reflects the Company's plan to exit all other businesses to focus on its Joe's Jeans business.
Go to Yahoo Finance for more scoop and statements.
Here's some other info I gleamed from their conference call:
Overall gross margins for the third quarter increased to 40% from 38% in the corresponding period a year ago. This change is due to Innovo's decision to move the much of its production to Mexico, which will provide them with a GM of 58% before dilution. Currently 42% of Joe's Jeans production (cut, sew, wash) is in Puebla, Mexico (with the full package manufacturer AZP). The plan is to eventually ramp it up to 90% by the end of next year. Don't be so shocked. Paper Denim & Cloth and gangs of others migrated long ago.
They are currently holding 2-3 months of Joe's inventory. At one point they were keeping merely weeks worth of denim. Production issues or just watching inventory like a hawk?
They claim to be gaining ground with department store accounts like Bloomingdale's, Macy's West, and Nordstrom. They are also working the specialty stores circuit (Anthropologie, for women's line).
FYI, Joe's Jeans retail for $158-196 (basic jeans) and $216-275 (premium jeans).
Conference Call Audio Stream
UPDATED 10/09/06: Some of you have asked me who AZP is. AZP is of course Azteca Production International.
Through its IAA subsidiary (AKA Innovo Azteca Apparel, which it sold to Cygne Designs Inc. in May) INNO used to own a private label apparel division purchased from Azteca. It's a long story laced with non-compete agreements, indemnification provisions, and heartbreak.
Oh yeah and INNO is looking to change its name to Joe's Jeans in order to better reflect their primary business.