Highlights were:
Consolidated fourth quarter net sales increased 50% to $50.5 million;
Excluding transaction and amortization expenses associated with the purchase of Hudson Clothing Holdings, Inc. ("Hudson"), adjusted operating income was up 105% to $6.5 million dollars for the fourth quarter of fiscal 2013;
Wholesale net sales increased 60%; and
Retail store net sales increased 11%.
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For the fourth quarter ended November 30, 2013, overall net sales were $50.5 million compared to $33.7 million in the prior year comparative period, or a 50% increase. We completed our acquisition of Hudson on September 30, 2013 and our results for the fourth quarter of fiscal 2013 reflect the operation for two months of Hudson as one of our subsidiaries.
Our overall gross profit for the quarter increased to $21.7 million from $15.7 million in the prior year comparative period, or a 38% increase. Our overall gross margin in the fourth quarter of fiscal 2013 was 43% compared to 47% in the fourth quarter of fiscal 2012. Impacting our gross profit and gross margins for the quarter was a non-cash charge of approximately $2.0 million related to the fair value step up of inventory acquired in connection with the acquisition of Hudson that was subsequently sold in October and November 2013. Excluding this charge, our gross margin for the fourth quarter of fiscal 2013 would have been comparable at 47%. Operating expense in the fourth quarter of fiscal 2013 was $20.2 million compared to $12.5 million a year ago. Operating expense includes approximately $3.0 million in transaction expenses associated with the acquisition of Hudson. Excluding the transaction expenses, our operating expense would have been $17.2 million for the fourth quarter of fiscal 2013. Our operating income was $1.5 million compared to $3.2 million in the prior year comparative period and we had a net loss of $1.8 million compared to net income of $2.0 million in the prior year period. As a result, our fully diluted loss per share was $0.03 for the fourth quarter of fiscal 2013 compared to earnings per share of $0.03 in same period a year ago.
Excluding transaction expenses and the charge related to the acquired inventory, our operating income would have been $6.5 million, our net income would have been $2.4 million and our fully diluted earnings per share would have been $0.03 for the quarter. We refer you to our reconciliation of these non-GAAP financial measures at the end of this release.
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Marc Crossman, President and Chief Executive Officer, commented, "With just two months of our Hudson subsidiary included in our fourth quarter results, we are pleased to report record consolidated revenues and gross profits. Excluding the transaction expenses and inventory charge, our operating income would have doubled from the prior year period."
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By GlobalDataWholesale
Net sales for our wholesale segment in the fourth quarter of fiscal 2013 increased 60% to $42.8 million compared to $26.8 million in the year ago period, including net sales for two months of Hudson® in fiscal 2013. In addition, within our wholesale business, our men’s Joe’s® sales channels experienced growth and we benefited from sales from our else™ brand. Gross margins for our wholesale segment were 39% for the fourth quarter of fiscal 2013 compared to 41% in the prior year comparable quarter and were impacted by the charge related to the fair value step up of Hudson inventory. Excluding this charge, our gross margins would have been 44%. For the fourth quarter, wholesale operating expense increased to $4.8 million compared to $3.7 million in the year ago period. Our wholesale operating income increased to $11.9 million in the fourth quarter of fiscal 2013 compared to $7.3 million in the prior year comparative period.
Mr. Crossman commented, "With the addition of $15.6 million in net sales from Hudson, our wholesale division experienced tremendous growth for the quarter." Crossman continued, "Excluding the inventory charge and without the addition of Hudson, our Joe’s and else™ combined gross margins would have been improved to 42% compared to 41% in the year ago period. With the acquisition completed, we are now focused on implementing operational integrations and growing the two businesses for 2014."
Retail
Net sales from our retail segment in the fourth quarter increased 11% to $7.7 million compared to $7.0 million in the prior year comparative period. The growth in retail sales was driven by revenue contribution from growing our store base from 28 to 34 stores in the comparative periods. Gross margins for our retail segment decreased to 64% from 68% in the year ago period and were impacted by heavier promotional activity in the retail channel as our competitors were more promotional. Retail operating expense increased as a result of additional expenses associated with expanding our store base compared to the prior year period. Overall, for the fourth quarter, we had an operating loss of $421,000 compared to operating income of $526,000 a year ago for our retail segment.
Mr. Crossman commented, "Our retail store base grew by six stores from the fourth quarter of fiscal 2012 to 2013 and we faced tough comparisons from strong holiday sales in the year ago period. In addition, we were more promotional this quarter than the comparable quarter in order to keep pace with our competitors, which impacted our overall retail operations. With that said, we are seeing improvement in our retail same store sales for the first quarter of fiscal 2014."
Corporate and Other
For the fourth quarter of fiscal 2013, our corporate and other expenses were $9.9 million compared to $4.7 million in the fourth quarter a year ago. Corporate and other expenses increased due to transaction related expenses in connection with the acquisition of Hudson in the fourth quarter of fiscal 2013. Excluding the transaction expenses and expenses associated with Hudson’s corporate operations, our corporate expenses would have decreased by approximately $1 million.
