Innovo Group Inc. Reports Results For the Nine Month and Three Month Periods Ending September 1, 2001
For the nine months ending September 1, 2001, the Company's net operating income increased to $16,000 from an operating loss of $1,707,000 for the comparative period in 2000. For the same nine month periods, the Company experienced a net loss of $78,000 in 2001 compared to a net loss of $1,853,000 for 2000.
Net Sales for the nine months ended September 1, 2001 increased to $5,747,000 from $5,492,000 in the comparative period of 2000. The 4.4% increase is largely attributable to the Company's increased sales in the first and second quarters of 2001 from the Company's Innovo, Inc. and Joe's Jeans subsidiaries.
Selling, General and Administrative costs, for the nine months ended September 1, 2001, decreased by $1,088,000 or 33.6% compared to the same period in 2000. The decrease is a result of the Company's ability to significantly reduce its fixed and variable costs throughout the period while still maintaining an effective operational structure.
Jay Furrow, President of Innovo Group Inc., stated that ``we are pleased to be able to announce that the Company was able to continue to generate positive results during difficult economic conditions. We believe, despite the current economic realities, that the Company is positioned to experience significant growth in the immediate future based on recent developments with the Company's historical customer base and as a result of the opportunities afforded the Company through its recent acquisitions. With the expected future growth and the Company's streamlined operational expense structure, we believe the Company has created a formula which will lead to long-term profitability and increased shareholder value.''
For the three months ended September 1, 2001, Company's loss from operations improved by 95% to an operating loss of $12,000 compared to an operating loss of $241,000 for the corresponding period of the prior year. For the period, the Company experienced a net loss of $16,000 in contrast to a net loss of $288,000 in the third period of 2000.
Net Sales for the period were $2,625,000 compared to $3,579,000 for the corresponding period in 2000, a 26.6% decrease. The decrease is largely attributable to the general economic uncertainty in the retail market place and the Company's decision to focus on branded and private label markets as opposed to more seasonal and unpredictable niche markets. The Company believes that the move toward branded and private label business will allow the Company to experience significant long-term growth in revenues both with its historical customer base as well as with the customer base of its recent acquisitions.
For the third quarter of fiscal 2001, the Company's gross margin percentage increased 4.5 to 36.2% as a result of the Company's ability to continue to effectively source its products at lower prices and the higher margins associated with the Company's Joe's Jeans product line.
Selling, General and Administrative costs during the third quarter of 2001 decreased 28.3% from $1,321,000 in 2000 to $947,000. This decrease can be attributed to the successful implementation of the Company's new operating model throughout 2001 and management's efforts to closely monitor expenses.
About Innovo Group Inc.
Innovo Group Inc. through its subsidiaries Innovo Inc., Innovo Apparel, Inc. and Joe's Jeans, is a sales and marketing organization designing and selling craft, accessory and apparel products to the retail and premium markets. The Company's craft products include canvas and denim totebags and aprons. The Company's accessory product line is comprised of such products as licensed and non-licensed backpacks, totebags, waist packs and handbags. The Company's apparel products consist of knit shirts and fleece products and women's high-end denim jeans and knit shirts featuring the Joe's Jeans brand. For more information, visit the company web site at www.innovogroup.com.
Statements in this news release which are not purely historical facts are
forward-looking statements, including statements containing the words
``believe,'' ``estimate,'' ``project,'' ``expect'' or similar expressions.
statements are made pursuant to the safe harbor provisions of Section 21E of
the Securities Exchange Act of 1934, as amended.
statements are based upon information available to Innovo Group Inc. on the
date of this release.
Any forward-looking statement inherently involves risks
and uncertainties that could cause actual results to differ materially from
the forward-looking statements.
Factors that would cause or contribute to
such differences include, but are not limited to, continued acceptance of the
Company's products in the marketplace, successful implementation of its
strategic plan, the extension or refinancing of its existing bank facility and
the restrictions any such extension or refinancing could place on the Company,
the ability to obtain new financing from other financing sources, the ability
to generate positive cash flow from operations and asset sales, competitive
factors, dependence upon third-party vendors, and other risks detailed in the
Company's periodic report filings with the Securities and Exchange Commission.
By making these forward-looking statements, the Company undertakes no
obligation to update these statements for revisions or changes after the date
of this release.
Readers are cautioned not to place undue reliance on
INNOVO GROUP INC AND SUBSIDIARIES CONSOLIDATED CONDENSED BALANCE SHEETS (000's except for share data) (unaudited) 9/1/01 11/30/00 ASSETS CURRENT ASSETS Cash and cash equivalents $ 376 $ 1,179 Accounts receivable, net of allowance 1,817 712 Inventories 1,893 3,343 Prepaid expenses & other current assets 154 94 TOTAL CURRENT ASSETS 4,240 5,328 PROPERTY, PLANT and EQUIPMENT, net 41 56 PROPERTY, PLANT and EQUIPMENT, held for sale 948 2,028 LICENSING RIGHTS, net 452 -- INTANGIBLE ASSETS, net 4,484 -- OTHER ASSETS -- 4 TOTAL ASSETS $ 10,165 $ 7,416 LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Notes payable $ -- $ 449 Current maturities of long-term debt 44 94 Accounts payable and accrued expenses 498 1,869 Due to Related Parties 957 -- TOTAL CURRENT LIABILITIES 1,499 2,412 DUE TO RELATED PARTIES, less current maturities 2,984 -- LONG-TERM DEBT, less current maturities 606 1,246 TOTAL LIABILITIES 5,089 3,658 COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock, $0.10 par - shares Authorized 40,000,000 Outstanding 14,921,264 in 2001 and 13,721,264 in 2000 1,491 1,371 Additional paid-in capital 40,256 38,977 Deficit (33,539) (33,461) Promissory note - officer (703) (703) Treasury stock (2,429) (2,426) TOTAL STOCKHOLDERS' EQUITY 5,076 3,758 TOTAL LIABILITIES and STOCKHOLDERS' EQUITY $ 10,165 $ 7,416 INNOVO GROUP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (000's except share and per share data) (unaudited) Three Months Ended 9/1/01 8/31/00 NET SALES $ 2,625 $ 3,579 COST OF GOODS SOLD 1,674 2,441 Gross profit 951 1,138 OPERATING EXPENSES Selling, general and administrative 947 1,321 Depreciation and amortization 16 58 963 1,379 LOSS FROM OPERATIONS (12) (241) INTEREST EXPENSE (25) (55) OTHER INCOME, net 21 8 LOSS BEFORE INCOME TAXES (16) (288) INCOME TAXES -- -- NET LOSS AND COMPREHENSIVE LOSS $ (16) $ (288) NET LOSS PER SHARE: Basic and Diluted $ (0.00) $ (0.04) WEIGHTED AVERAGE SHARES OUTSTANDING 14,283 7,970 INNOVO GROUP INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (000's except share and per share data) (unaudited) Nine Months Ended 9/1/01 8/31/00 NET SALES $ 5,747 $ 5,492 COST OF GOODS SOLD 3,551 3,765 Gross profit 2,196 1,727 OPERATING EXPENSES Selling, general and administrative 2,142 3,230 Depreciation and amortization 38 204 2,180 3,434 INCOME (LOSS) FROM OPERATIONS 16 (1,707) INTEREST EXPENSE (161) (173) OTHER INCOME, net 70 27 LOSS BEFORE INCOME TAXES (78) (1,853) INCOME TAXES -- -- NET LOSS AND COMPREHENSIVE LOSS $ (78) $ (1,853) NET LOSS PER SHARE: Basic and Diluted $ (0.00) $ (0.24) WEIGHTED AVERAGE SHARES OUTSTANDING 14,126 7,566
SOURCE: Innovo Group Inc.