NEW YORK – The severity of I.C. Isaacs’ problems finally came to light Wednesday when the company reported a $2.1 million first-quarter loss as its sales dropped by a third.
In the three months ended March 31, the marketer of denim and casual apparel under the François & Marithé Girbaud brand reported a net loss of $2.1 million, or $0.17 a diluted share, versus net income of $2.5 million, or $0.20, in the 2006 quarter.
Sales tumbled 33.2% to $14.2 million from $21.3 million. Gross margin fell to 34.5% of sales in this year’s quarter from 42.6% in the comparable year-ago period.
Robert Stec, who replaced Peter Rizzo as chief executive officer one month ago, made no attempt to minimize the firm’s difficulties. “There is no question that we have a challenging time in front of us,” said Stec, who earlier in his career had managed the Girbaud business for VF Corp. “Even so, we are making progress toward several key initiatives. We have greatly improved our inventory level, begun the process of reducing our operating expenses, and are working with our licensor to reposition our brand with a more growth-oriented approach.
“As we move through the remainder of the year, it is our belief that we can position our business to regain profitability and to resume growth,” he concluded.
Including in the company’s earnings report for the quarter was $613,000 for severance which, though hardly lavish by contemporary corporate standards, did serve the purpose of pushing operating expenses for the quarter to $6.9 million, beyond the $6.7 million spent during the comparable 2006 quarter.
A week after leaving I.C. Isaacs, Rizzo was named president and CEO of Isaac Mizrahi’s men’s business. His retail résumé prior to joining I.C. Isaacs including the presidency of Bergdorf Goodman and of Polo Ralph Lauren’s retail group. He also served as a consultant to Neiman Marcus Group and earlier in his career spent 19 years with Barneys New York, most recently as its head merchant.
The company released its results after the equity markets closed on Wednesday. Earlier in the day, shares fell $0.01 to close at $1.34 in over-the-counter trading. On April 9, the day of Rizzo’s resignation, they fell $0.45 to close at $1.00. During the last 52 weeks, they’ve been as high as $6.20 and as low as $0.75.