Joe's Jeans 2Q net slips; company to buy Hudson
LOS ANGELES (AP) — Joe's Jeans Inc. reported Monday that its second-quarter net income fell 17 percent and it agreed to acquire rival jeans maker Hudson Clothing for $97.6 million.
The results fell shy Wall Street expectations and investors sent the company's shares down 11 percent in aftermarket trading.
Net income for the three months ended May 31 totaled $1.2 million, or 2 cents per share, down from net income of $1.4 million, or 2 cents per share, in the prior year. The number of shares outstanding rose 3 percent to 68.4 million. Analyst had been expecting 3 cents per share, according to FactSet.
Revenue rose 8 percent to $30.9 million from $28.6 million last year. Analysts expected $32 million. Wholesale revenue rose 6 percent and retail store net revenue rose 14 percent.
The company's results were hurt by higher sales of its lower margin brand Else compared with higher-priced lines, as well as the increased cost of producing its Vintage Reserve line in the U.S. The company said it is looking to reduce costs related to making the Else brand and will start making its Vintage Reserve line in Mexico.
Meanwhile, Los Angeles-based Joe's Jeans said it had agreed to buy privately held jeans company Hudson for $97.6 million in cash. The deal will nearly double the company's business, and allow it to expand its international and e-commerce presence, Joe's CEO Marc Crossman said.
He added the acquisition will help save money on everything from fabric and trim to labor. The greater distribution reach will help grow sales, he said.
The deal is expected to close Aug. 31.
Shares in Joe's Jeans fell 20 cents to $1.66 in aftermarket trading. The stock has traded between 80 cents and $2.04 during the past 52 weeks.