Apparel firm Innovo Group Inc has posted a first quarter net loss of $4.96 million, compared with net income of $282,000 in the same period a year earlier.

The California-based company also reported net sales of $16.6m for the quarter, up 39 per cent from $11.91m in the first quarter of fiscal 2003.

According to CEO Jay Furrow, the first quarter is traditionally a "weak" quarter for Innovo.

"While we were able to sell off a significant amount of excess inventory during the period, we did not recognise our traditional margin on these goods," he said.

"We also incurred an increase in expenses associated with marketing and advertising our product lines compared with these expenses in the prior period last year."

During the first quarter, Innovo entered into a licensing agreement under the Betsey Johnson brand name, as well as a master distribution agreement with Beyond Blue Inc for Joe's and Joe's Jeans products.