People's Liberation Q1 net sales up 21%, gross margin rise 44.5%
17 May '07
4 min read
People's Liberation Inc designer of denim and high-end casual apparel under the brand names People's Liberation and William Rast reported financial results for the first quarter ended March 31, 2007.
Net sales for the first quarter of 2007 were $3.8 million up 21% from $3.1 million in the same quarter last year. The increase in sales reflected continued growth of the William Rast brand. Sequentially, net sales decreased approximately $613,000 from $4.4 million in the fourth quarter of 2006 due primarily to the seasonality of the Company's product mix, decreased sales to its Japanese distributor and increased returns from the Tommy Lee product line.
Gross profit as a percentage of net sales for the first quarter of 2007 was 44.5%, up from 41.8% for the first quarter of 2006. The increase in gross profit as a percentage of net sales was due to economies of scale achieved through improved manufacturing and sourcing processes as well as increased selling prices.
Sequentially, gross profit as a percentage of net sales decreased from 49.5% in the fourth quarter of 2006 as a result of the seasonal change in product mix and off-price sales of inventory related to prior seasons.
Operating expenses for the first quarter of 2007 totaled $2.7 million, compared with $1.6 million in the first quarter of 2006. The increase in operating expenses was primarily attributable to selling expenses and general and administrative expenses.
Selling expenses increased by approximately $450,000 due to the opening of the New York showroom and the hiring of additional salaried sales staff and continued promotion of the brands.
General and administrative (G&A) expenses increased by approximately $600,000 primarily due to higher professional fees, including fees related to public company reporting requirements, the hiring of additional personnel and increased compensation costs, including costs related to stock options granted in the second quarter of 2006.
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