• 9-month gross sales fall 46.2%
  • Gross profit down 44.0%
  • Sees FY losses narrowing by 33.4%

Children's apparel company My Vintage Baby Inc has seen its gross profit and sales almost halve in the first nine-months of its financial year as it takes steps to change its business model.

But the Mckinney, Texas-based firm says the move from a showroom to direct selling helped cut operating and overhead costs by 22.5% from $640,992 in the nine months to 30 September.

Gross sales, however, fell 46.2% to $521,086 in the period, while gross profit dropped 44.0% to $244,937.

"We made a significant change to our business model during the fall by testing a Direct Sales Representative (DSR) organisation to sell via in-home trunk shows," explained CFO Jeff Welsh.

 "We launched the national expansion on 1 December with 91 sales representatives and the hiring of a national sales director."

"The Direct Sales model has also caused our current inventories and liabilities to increase as we hold inventories longer before recognising revenue.

"The representative's trunk shows are held and sales generated throughout the season versus the retail model where shipments and revenue primarily occurred at one time early in the season."

The company expects gross sales of $915,000 for the year to 31 December, and net losses to narrow by 33.4% to $396,056.

It also expects its new business model to contribute to additional profit growth into 2010.