Joe's Jeans Inc. late Thursday said that its second quarter net income fell 60 percent as the cost of opening stores and expanding its product line offset strong revenue growth.
After the markets closed, Los Angeles designer denim maker and retailer reported net income of $532,000 (1 cent per share), compared with $1.3 million (2 cents) a year earlier. Revenue jumped 51 percent to $25.9 million.
Selling, general and administrative costs rose 48 percent to $10.2 million in part due t the opening of seven retail stores during the quarter. It also had higher costs on the manufacturing end, as the company expands into tops and accessories. These products are starting off with a lower profit margin until sales accelerate, the company said.
"With the build-up of our infrastructure to support new product classifications in place, we do not expect to see meaningful increases in our corporate expenses going forward," Executive Marc Crossman said in a statement.
Shares closed down 10 cents, or 4.6 percent, to $2.07 on the Nasdaq and were up 6 percent in after-market trading.
For reprint and licensing requests for this article, CLICK HERE.