• Q3 net income was $0.9m
  • Net sales up to $11.01m
  • Margin improved to 50.4% from 49.0%

Casual apparel group People's Liberation has returned to profit for the third quarter of 2009, thanks in part to lower operating costs.

The US company said its net income was $0.9m for the three months to 30 September, compared to a net loss of $0.9m the year before.

Its sales rose 0.3% to $11.01m, marginally up on last year's $10.98m, helped by an exclusive distribution deal with retailer Charlotte Russe and higher J Lindeberg branded apparel retail sales.

The company is in litigation with Charlotte Russe in relation to this distribution agreement, and believes the retailer will cease to purchase People's Liberation branded apparel for the remainder of 2009 and beyond.

Gross margin improved to 50.4% from 49.0% in the third quarter of last year, driven by a shift in sourcing denim products from contract manufacturers in Los Angeles to less costly full package suppliers in Mexico.

Total operating expenses for the quarter fell 25.8% to $4.6m, thanks to lower design and sample costs.

"Given the continued weakness in the global economy, we are extremely pleased to have delivered strong net sales and earnings results for the third quarter of 2009," said the company's CEO Colin Dyne.

"We have reacted in a strategic manner to these challenges by focusing on managing our inventory and expenses, and we have continued to strengthen our product offerings for our brands.

"In light of our recent litigation with Charlotte Russe, we are putting cost cutting measures into place to mitigate the anticipated loss of revenue derived from sales of People's Liberation branded apparel to Charlotte Russe.

"We are continuing our retail rollout strategy for our William Rast and J Lindeberg brands which will be complete over the next several years and include an estimated forty new stores."