• Profit fell 17% to $1.2m
  • Sales increased 8% to $30.9m
  • Gross margin slipped to 44% from 47%

Denim brand Joe's Jeans has reported a 17% decline in second-quarter net profit, after increased expenses from its Else and Vintage Reserve lines weighed on margins.

Net income reached US$1.2m for the three months to 31 May, compared to $1.4m in the same period last year.

Sales, meanwhile, increased 8% to $30.9m from $28.6m the prior year. Retail store sales reached $6.5m, up 14% from $5.7m last year, while same-store sales dropped 6%. Wholesale revenue rose 6% to $24.4m from $22.9m the previous year.

Gross margin slipped to 44% from 47% last year, due to an increased mix of sales from its lower margin brand Else and higher expenses of producing its Vintage Reserve line in the US.

President and CEO Marc Crossman said: "Our second quarter of fiscal 2013 resulted in continued top line growth for the company. With that said, both our wholesale and retail segments posted healthy growth for the quarter which translated into strong consolidated revenues.

"Further, we will continue to work to reduce our input costs on our Else brand and transition our Vintage Reserve line to our facility in Mexico."

The news comes as Joe's Jeans agreed to acquire rival denim company Hudson Clothing Holdings for $97.6m.