Nice call on TAGS Jenna, beat estimates by 40%!!!
Tarrant Apparel Group Announces Record Third Quarter Results
Net Sales Increase 66% to $115 million; Net Income More than Doubles to $7.1 million
LOS ANGELES--(BUSINESS WIRE)--Nov. 5, 1998-- Earnings per Share of $0.49 Significantly Exceed
Analysts' Expectations
Tarrant Apparel Group (Nasdaq:TAGS - news), a leading provider of private label casual apparel, today announced sales and earnings for the third quarter and nine months ended September 30, 1998.
Net sales for the third quarter increased 66.1% to $114.9 million compared to $69.2 million for the comparable quarter last year. Net income for the third quarter increased 161.6% to $7.1 million, or $0.49 per share on a diluted basis, compared to last year's third quarter net income of $2.7 million, or $0.20 per share.
Commenting on the results, Gerard Guez, Chairman and Chief Executive Officer stated, ''We are very pleased to note that Tarrant's financial performance benefited not only from substantial gross margin improvement, but from greater than expected order volume at TAMEX, our Mexican sourcing operations which were commenced in 1997. We now anticipate that TAMEX sales in 1998 will exceed $100 million, compared to $19 million last year. We view this trend, which has significantly exceeded internal expectations, as a clear validation by our customers of the viability of Tarrant's vertical integration programs. Our other operations, including Asian-based importing, continue to grow at a double digit rate.''
Mr. Guez continued, ''We have more capacity than ever before with which to accommodate additional orders from both new and existing customers, while maintaining our commitment to on-time deliveries and quality workmanship. Consequently, we have greatly enhanced our customers' satisfaction and reinforced our role as a value-added supplier. Importantly, our acquisition of Rocky Apparel at the beginning of the quarter further built our presence in men's apparel, and we look forward to continued growth in this category.''
''We are pleased with our accomplishments, and are confident that our growth and operating initiatives leave us well positioned to maintain our role as a leader in this competitive and consolidating industry,'' Mr. Guez concluded.
Net sales for the nine months increased 42% to $279.3 million, compared to $196.7 million for the comparable period last year. Net income for the nine months increased 113.8% to $17.1 million, or $1.21 per share on a diluted basis, compared to $8.0 million, or $0.59 per share, reported during the prior year.
Tarrant Apparel Group serves both specialty retail and mass merchandise store chains by designing, merchandising, contracting for the manufacture of and selling casual, moderately-priced apparel, for women, men and children, under private label.
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 involve known and unknown risks and uncertainties which may cause the Company's actual results in future periods to differ materially from forecasted results. Those risks include a softening of retailer or consumer acceptance of the Company's products, pricing pressures and other competitive factors, or the unanticipated loss of a major customer. These and other risks are more fully described in the Company's filings with the Securities and Exchange Commission.
TARRANT APPAREL GROUP
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
September 30, September 30,
1998 1997 1998 1997
(Unaudited) (Unaudited)
Net sales $114,948,224 $69,217,716 $279,305,521 $196,701,774
Cost of sales 95,258,023 59,527,963 228,403,202 167,161,595
Gross profit 19,690,201 9,689,753 50,902,319 29,540,179
Selling and
distribution
expenses 3,055,548 2,075,759 7,569,704 6,325,934
General and
administrative
expenses 5,260,433 3,551,201 15,726,802 10,667,296
Income from
operations 11,374,220 4,062,793 27,605,813 12,546,949
Interest expense (806,288) (389,158) (1,677,854) (1,147,024)
Interest income 88,038 59,429 236,757 109,367
Other income 438,231 253,289 522,597 263,676
Income before
provision for
income taxes 11,094,201 3,986,353 26,687,313 11,772,968
Provision for
income taxes (4,000,000) (1,275,000) (9,590,000) (3,775,000)
Net income $7,094,201 $2,711,353 $17,097,313 $7,997,968
Net income per share
Basic $ 0.52 $ 0.21 $ 1.27 $ 0.61
Diluted $ 0.49 $ 0.20 $ 1.21 $ 0.59
Weighted average common and common
equivalent shares outstanding
Basic 13,591,741 13,202,828 13,435,151 13,163,828
Diluted 14,453,810 13,612,454 14,154,577 13,582,772
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