Earnings dipped for I.C. Isaacs during the third quarter as rising expenses wiped out the benefits of an increase in sales.
For the three months ended Sept. 30, the New York-based denim company, which holds the U.S. license for Marithé & François Girbaud, reported that earnings fell 7.6 percent to $2.1 million, or 17 cents a diluted share, compared with earnings of $2.3 million, or 17 cents, in the same period a year ago.
Operating expenses, which include selling, general and administrative expenses, increased 5.5 percent to $6.7 million from $6.4 million.
Sales increased 4.8 percent to $21.3 million from $20.3 million in the year-ago period. However, back-to-school sales from the company’s specialty-store customers were weaker than anticipated.
“The upside we had hoped to see from strong reorder sales in the season did not materialize,” Peter Rizzo, chairman and chief executive officer, said during a conference call with analysts.
As a result, inventories jumped 147.8 percent to $13.1 million, compared with inventories of $5.3 million reported at the close of 2005. Rizzo said the company would work through those inventories over the next several months but added that he believed the impact would be minimal.
Rizzo announced during the call that the firm would increase the number of deliveries made during a season to four from three in an effort to keep its product assortment fresher and improve communication with retailers.
Earnings for the nine months to date increased 2.9 percent to $7 million, or 55 cents a share, compared with $6.8 million, or 50 cents, during the same period a year ago. Sales rose 1.3 percent to $66.6 million from $65.7 million.
Management is sticking with its guidance for the year of 76 cents to 79 cents a diluted share.