• Net income drops 71% to $558m
  • Sales increased 20% to $25.5m
  • Staff costs lift operating expenses

Despite posting higher sales and margins in its third quarter, profit at Joe's Jeans Inc fell by more than two-thirds, the apparel maker said yesterday (14 October) as higher expenses dragged on the bottom line.

Net income at the company tumbled 71% to $558m or $0.01 per share, in the three months to 31 August, down from $1,934m or $0.03 per share, in the same period last year.

But net sales increased 20% to $25.5m from $21.2m last time. And gross margin rose to 46% from 44%.

Wholesale revenues were up 7% to $21.3m, with growth in all three sales channels (men's, women's and international).

"While the premium denim business remains challenging, we have been able to offset declines by utilising our existing distribution channels as a gateway to expansion for our non-denim categories," president and CEO Marc Crossman explained.

"This is evidenced by our sales mix of non-denim products increasing from 3% of sales a year ago to 16% of sales this year."

Retail segment sales increased 223% to $4.2m from $1.3m, driven by a 23.5% rise in same-store sales and the addition of new stores.

However, operating expense in the Wholesale division rose to $3.8m from $3.0m on higher staffing and sampling costs. While costs in the Retail unit surged to $2.3m from $968,000 a year ago as the store count rose from five to 14.