Tarrant Apparel Group Announces Fiscal 2005 First Quarter Results
- Net Sales Increase 6.3%
LOS ANGELES, May 11 /PRNewswire-FirstCall/ -- Tarrant Apparel Group
(NASDAQ:TAGS), a design and sourcing company for private label and private
brand casual apparel, today announced financial results for the first quarter
ended March 31, 2005.
Financial Results Net sales increased 6.3% to $44.8 million from $42.2 million in the first
quarter of fiscal 2004, primarily reflecting increased sales from the Company's
Private Brands business. Gross profit increased 19.3% to $8.9 million from
$7.5 million and gross margin increased 220 basis points to 20.0% from 17.8% in
the year-ago period, primarily due to increased sales of Private Brands.
Selling, general and administrative expenses decreased 37.3% to $8.4 million
from $13.4 million in the comparable period last year, as a result of sales
leverage and non-recurring costs in last year's period related to the
reclassification of certain Mexico operating expenses. Net loss was $0.1
million, or breakeven earnings per diluted share, compared to a net loss of
$3.0 million, or $0.10 per diluted share, in last year's first quarter.
Barry Aved, President and CEO of Tarrant Apparel Group, commented, "Our first
quarter results demonstrate the progress we are making in improving our
business. During the quarter, we increased our top line led by the increasing
contribution from our strong portfolio of private brands, particularly Gear7. In addition, we increased gross margin and reduced SG&A expenses, while
significantly increasing development costs in preparation for launching our
newest private brands. These advances led to our breakeven bottom line, a
significant improvement versus last year's first quarter net loss per share." Company Outlook Based on business and economic conditions, the Company reiterates its
previously announced expectations for fiscal 2005. The Company currently
anticipates sales to be in the range of approximately $240 million to $250
million and net income to be between approximately $9 million and $12 million. This outlook contemplates Private Brands to contribute in the range of $60
million to $70 million in revenue and Private Label to contribute in the range
of $175 million to $185 million in revenue.
Mr. Aved concluded, "As we look to the remainder of fiscal 2005, we are
encouraged by our first quarter performance as well as the initial positive
market reaction to our Jessica Simpson products. In addition, we are excited
about the June launch of House of Dereon by Beyonce Knowles. Our Private Label
business is also being well received and appears to be on trend. With our
improved operating results, we are on the right track in our pursuit of long
term growth and profitability as well as enhanced shareholder value." Conference Call Tarrant Apparel Group will host a conference call Wednesday, May 11, 2005 at
10:00 a.m. Eastern Time that may be accessed via the Internet at:
http://www.tags.com/ or by dialing (800) 922-0755. Additionally, a replay of
the call will be available through May 18, 2005 and can be accessed by dialing
(877) 519-4471, passcode 6055257.
About Tarrant Apparel Group Tarrant Apparel Group serves specialty retailers, mass merchants, national
department stores, and branded wholesalers by designing, merchandising,
contracting for the manufacture of, and selling casual and well-priced apparel
for women, men, and children. Through its subsidiary, Private Brands, Inc.,
Tarrant designs, markets, and manufactures privately owned brands, including
American Rag CIE, and has exclusive license agreements with several celebrity
brands such as Jessica Simpson and Beyonce Knowles' House of Dereon.
Forward-Looking Statements Except for historical information contained herein, the statements in this
release are forward-looking and made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are inherently unreliable and actual results may differ materially. Examples of forward looking statements in this news release include sales and
net income guidance for fiscal 2005 and the anticipated launch of the Jessica
Simpson and Beyonce Knowles brands. Factors which could cause actual results
to differ materially from these forward-looking statements include a softening
of retailer or consumer acceptance of the Company's products, pricing pressures
and other competitive factors, continued delays at West Coast ports, the
unanticipated loss of a major customer, delays in the launch of new private
brands, and the inability to raise additional capital necessary to support
anticipated growth. These and other risks are more fully described in the
Company's filings with the Securities and Exchange Commission. The Company
undertakes no obligation to publicly update or revise any forward- looking
statements, whether as a result of new information, future events or otherwise.
TARRANT APPAREL GROUP
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
(Unaudited) March 31, 2005 December 31, 2004 ASSETS
Current assets:
Cash and cash equivalents $201 $1,215
Accounts receivable, net 43,283 37,759
Due from related parties 7,336 10,652
Inventory 18,278 19,144
Current portions of notes
receivable from related parties 5,324 5,324
Prepaid expenses and other
receivables 1,134 1,252
Prepaid royalties 3,397 2,258
Income tax receivable 173 145 Total current assets 79,126 77,749 Property and equipment, net 1,735 1,875
Notes receivable 39,890 40,107
Equity method investment 2,044 1,880
Deferred financing costs, net 1,125 1,203
Other assets 186 414
Goodwill, net 8,583 8,583 Total assets $132,689 $131,811 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short term bank borrowings $12,659 $17,951
Accounts payable 18,526 24,395
Accrued expenses 11,754 11,243
Income taxes 16,903 16,826
Current portion of long-term debt 31,484 19,629 Total current liabilities 91,326 90,044 Long-term obligations 2,125 2,545
Convertible debentures, net 8,469 8,330
Long term deferred tax liabilities 162 214 Minority interest - - Commitments and contingencies Shareholders' equity 30,607 30,678 Total liabilities and
shareholders' equity $132,689 $131,811
TARRANT APPAREL GROUP
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data) Three Months Ended Three Months Ended
March 31, 2005 March 31, 2004
(Unaudited) (Unaudited) Net sales $44,830 $42,155
Cost of sales 35,884 34,655 Gross profit 8,946 7,500
Selling and distribution expenses 2,562 2,642
General and administrative expenses 5,856 10,779 Income (loss) from operations 528 (5,921)
Interest expense (813) (794)
Interest income 553 94
Other (expense) income (73) 3,137
Minority interest - 881 Income (loss) before provision for
income taxes 195 (2,603)
Provision for income taxes 301 371 Net loss $(106) $(2,974) Net loss per share:
Basic $(0.00) $(0.10) Diluted $(0.00) $(0.10) Weighted average common and common
equivalent shares:
Basic 28,814,763 28,485,093 Diluted 28,814,763 28,485,093
DATASOURCE: Tarrant Apparel Group CONTACT: Corazon Reyes, Chief Financial Officer of Tarrant Apparel Group, +1-323-780-8250; or Investors: Melissa Myron or Lila Sharifian, both for Tarrant Apparel Group, +1-212-850-5600 Web site: http://www.tags.com/
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