US: Innovo exits private label as Q1 sales fall

By just-style.com | 7 April 2006

Clothing supplier Innovo Group is set to sell the assets of private label arm Innovo Azteca Apparel to Cygne Designs for US$10.4m, the company said.

The announcement was made as Innovo unveiled first-quarter sales of $21.9m, down from $23.1m for the same period in 2005. Losses for the quarter stood at $3.7m, compared to a loss of $616,000 for Q1 last year.

The losses included a write-down of $1.1m related to existing inventory of the indie brand, plus future inventory purchase commitments. Innovo experienced higher than expected returns for indie products during the period.

Marc Crossman, interim CEO, president and CFO, acknowledged that the results were "not positive", but said the company was very pleased with the performance of its Joe's Jeans business, which saw a near doubling of net sales in Q1.

Crossman said the sale of the private label business was a continuation of the process of streamlining the company. "When completed, [this] will allow us to further concentrate our efforts on our Joe's Jeans label with no long-term debt on the company," he said.

Innovo has also liquidated its former headquarters in Tennessee, agreed to outsource distribution and begun the process of relocating manufacturing to Mexico.

Crossman said that, as such, 2006 would be a transitional year for the company.

Sectors: Apparel, Finance, Retail

Companies: Innovo