The turmoil at Innovo Group Inc. has come to a head.
Reeling from poor financial performances, the board of the Commerce-based apparel maker has dispatched its chief executive and will look into a sale.
Samuel (Jay) Furrow Jr., named to head the company in 2002, will be replaced on an interim basis by Marc Crossman, its chief financial officer and president. Furrow is son of company chairman Samuel Furrow.
In a statement, Crossman said Innovo aims to restructure itself to capitalize on its highest performing asset, premium denim brand Joe's Jeans, which are sold at high-end department stores and boutiques, such as Barneys New York.
"It is our intent to focus our efforts on unlocking the substantial value that this brand has developed over the last few years," he said.
Innovo also makes private label apparel for American Eagle Outfitters, Target Corp. and Kmart. In several recent quarters, most of Innovo's sales growth has been due to Joe's Jeans, while Innovo's private label business trended downward.
Company officials do not think they will meet analysts' expectations for the fourth quarter, with a projected loss of $5.1 million to $6.1 million on sales of about $19.8 million.
The shakeup comes after Dean Factor, founder of Culver City-based Smashbox Cosmetics, resigned from Innovo's board. In letters, he expressed dissatisfaction with the management and its failure to take the advice of the board.
"I believe that Jay is not the right person to run this business, and I believe that selling the business is the best course of action," he wrote.
The company will incur restructuring charges and additional costs associated with signing on an investment bank in the first quarter of this year. Innovo will pay a severance package to former chief executive Furrow amounting to his annual salary of $400,000 in monthly installments.
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