Innovo Group Inc. Reports First Quarter Fiscal 2001 Results; Revenues Increase 42%, SG&A Decreases 41%

Apr 17, 2001, 01:00 ET from Innovo Group Inc.

    KNOXVILLE, Tenn., April 17 /PRNewswire/ --
     Innovo Group Inc. (Nasdaq:   INNO), a sales and marketing organization
 designing and selling craft, accessory and apparel products to the retail,
 specialty and premium markets, announced today results for the three months
 ended March 3, 2001.
     Net sales for the period increased 42% to $1,153,000 compared to $812,000
 for the same period in fiscal 2000.  This increase is primarily a result of a
 greater demand for the Company's craft products and spring/summer tote lines
 and the Company's ability to better meet the production demands associated
 with the Company's increased sales.  Additionally, the Company's revenues
 increased as a result of the sales generated from the Company's newly created
 Joe's Jeans subsidiary.
     For the first quarter of 2001, the Company's operating loss decreased 92%
 to $56,000 or $0.01 per share from $716,000 or $0.11 per share for the
 corresponding period of fiscal 2000 pursuant to an increase in revenues and a
 reduction in Selling, General and Administrative expenses.  The Company's net
 loss also decreased 87% from $823,000 to $103,000, or from $0.13 to $0.01 per
 share.
     Selling, General and Administrative costs decreased $379,000 or 41% from
 the same period in 2001 as a result of Company's operational restructuring
 during the end of fiscal 2000.  The Company's operational restructuring
 included the closure of its domestic production and distribution facilities, a
 reduction of employees and a decrease in the Company's fixed and variable
 expenses.
     During the reported period, the Company's gross margin percentage
 increased 7.9% from 35.3% in 2000 to 43.2% in 2001.  The increase is a result
 of the Company's decision to outsource all craft production through an
 affiliated strategic partner's Mexican production facilities, its ability to
 negotiate lower pricing from its Oriental suppliers and the high margins
 associated with the Company's Joe's Jeans apparel products.
     Jay Furrow, President of Innovo Group Inc., commented that, "We are very
 pleased with the trend shown in the first quarter of fiscal 2001.  It is
 encouraging to see that the operational changes that occurred in fiscal 2000
 are creating an effective operational platform with a reduced expense
 structure and the ability to support increased growth.  With the strength of
 our traditional product lines, the newly created Bongo product line and our
 Joe's Jeans division, the Company is offering well designed, quality products
 to a wide variety of retailers at competitive prices and delivered in a timely
 fashion."
     Furrow further stated, "With the operational structure now in place, we
 believe that the Company has the ability to continue to increase revenues both
 internally and externally while at the same time limiting expenses thus
 resulting in a formula for profitability.  While not satisfied, we are pleased
 with the Company's improved performance and we are looking forward to
 capitalizing on the current state of the Company and the current results for
 the quarter."
 
     About Innovo Group Inc.
     Innovo Group Inc. through its subsidiary Innovo Inc. and Joe's Jeans, is a
 sales and marketing organization designing and selling craft, accessory and
 apparel products to the retail and premium markets.  The Company's craft
 products include canvas and denim totebags and aprons.  The Company's
 accessory product line is comprised of such products as licensed and non-
 licensed backpack, totebags, waist packs and handbags.  The Company's apparel
 products consist of women's high-end denim jeans and knit shirts featuring the
 Joe's brand.  For more information, visit the company web site at
 www.innovogroup.com.
 
     Statements in this news release which are not purely historical facts are
 forward-looking statements, including statements containing the words
 "believe," "estimate," "project," "expect" or similar expressions.  These
 statements are made pursuant to the safe harbor provisions of Section 21E of
 the Securities Exchange Act of 1934, as amended.  All forward-looking
 statements are based upon information available to Innovo Group Inc. on the
 date of this release.  Any forward-looking statement inherently involves risks
 and uncertainties that could cause actual results to differ materially from
 the forward-looking statements.  Factors that would cause or contribute to
 such differences include, but are not limited to, continued acceptance of the
 Company's products in the marketplace, successful implementation of its
 strategic plan, the extension or refinancing of its existing bank facility and
 the restrictions any such extension or refinancing could place on the Company,
 the ability to obtain new financing from other financing sources, the ability
 to generate positive cash flow from operations and asset sales, competitive
 factors, dependence upon third-party vendors and manufacturing, and other
 risks detailed in the Company's periodic report filings with the Securities
 and Exchange Commission.  By making these forward-looking statements, the
 Company undertakes no obligation to update these statements for revisions or
 changes after the date of this release.  Readers are cautioned not to place
 undue reliance on forward-looking statements.
 
 
                       INNOVO GROUP INC AND SUBSIDIARIES
                     CONSOLIDATED CONDENSED BALANCE SHEETS
                         (000's except for share data)
                                  (unaudited)
 
                                                          3/3/01       11/30/00
 
     ASSETS
     CURRENT ASSETS
       Cash and cash equivalents                        $   426        $ 1,179
 
       Accounts receivable, net of allowance                774            712
       Inventories                                        2,741          3,343
       Prepaid expenses & other current assets               28             94
       Due from related parties
       TOTAL CURRENT ASSETS                                 220             --
                                                          4,189          5,328
 
     PROPERTY, PLANT and EQUIPMENT, net                      45             56
     PROPERTY, PLANT and EQUIPMENT, held for sale         2,028          2,028
 
     LICENSING RIGHTS                                       476             --
 
     OTHER ASSETS                                             4              4
 
     TOTAL ASSETS                                       $ 6,742        $ 7,416
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     CURRENT LIABILITIES
       Notes payable                                    $    37        $   449
       Current maturities of long-term debt                  84             94
       Accounts payable and accrued expenses              1,261          1,869
       TOTAL CURRENT LIABILITIES                          1,382          2,412
 
     LONG-TERM DEBT, less current maturities              1,238          1,246
     TOTAL LIABILITIES                                    2,620          3,658
 
     COMMITMENTS AND CONTINGENCIES
 
     STOCKHOLDERS' EQUITY
       Common stock, $0.10 par - shares
        Authorized 15,000,000
        Outstanding    14,221,264 in 2001 and
                       13,721,264 in 2000                 1,421          1,371
       Additional paid-in capital                        39,394         38,977
       Deficit note                                     (33,564)       (33,461)
       Promissory note - officer                           (703)          (703)
 
       Treasury stock                                    (2,426)        (2,426)
     TOTAL STOCKHOLDERS' EQUITY                           4,122          3,758
 
     TOTAL LIABILITIES and STOCKHOLDERS' EQUITY         $ 6,742        $ 7,416
 
 
 
                         INNOVO GROUP INC. AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                       (000's except share and per share data)
                                     (unaudited)
 
                                                        Three Months Ended
                                                       3/3/01        2/29/00
 
     NET SALES                                         $1,153          $ 812
     COST OF GOODS SOLD                                   654            526
       Gross profit                                       499            286
 
     OPERATING EXPENSES
       Selling, general and administrative                544            923
       Depreciation and amortization                       11             79
                                                          555          1,002
 
     LOSS FROM OPERATIONS                                 (56)          (716)
 
     INTEREST EXPENSE                                     (73)           (82)
     OTHER INCOME (EXPENSE), net                           26            (25)
 
     INCOME (LOSS) BEFORE INCOME TAXES                   (103)          (823)
 
     INCOME TAXES (BENEFIT)                                --             --
 
 
     NET INCOME (LOSS)                                 $ (103)        $ (823)
 
     NET INCOME (LOSS) PER SHARE:
       Basic and diluted                               $(0.01)        $(0.13)
 
     WEIGHTED AVERAGE SHARES OUTSTANDING               13,855          6,310
 
 

SOURCE Innovo Group Inc.
    KNOXVILLE, Tenn., April 17 /PRNewswire/ --
     Innovo Group Inc. (Nasdaq:   INNO), a sales and marketing organization
 designing and selling craft, accessory and apparel products to the retail,
 specialty and premium markets, announced today results for the three months
 ended March 3, 2001.
     Net sales for the period increased 42% to $1,153,000 compared to $812,000
 for the same period in fiscal 2000.  This increase is primarily a result of a
 greater demand for the Company's craft products and spring/summer tote lines
 and the Company's ability to better meet the production demands associated
 with the Company's increased sales.  Additionally, the Company's revenues
 increased as a result of the sales generated from the Company's newly created
 Joe's Jeans subsidiary.
     For the first quarter of 2001, the Company's operating loss decreased 92%
 to $56,000 or $0.01 per share from $716,000 or $0.11 per share for the
 corresponding period of fiscal 2000 pursuant to an increase in revenues and a
 reduction in Selling, General and Administrative expenses.  The Company's net
 loss also decreased 87% from $823,000 to $103,000, or from $0.13 to $0.01 per
 share.
     Selling, General and Administrative costs decreased $379,000 or 41% from
 the same period in 2001 as a result of Company's operational restructuring
 during the end of fiscal 2000.  The Company's operational restructuring
 included the closure of its domestic production and distribution facilities, a
 reduction of employees and a decrease in the Company's fixed and variable
 expenses.
     During the reported period, the Company's gross margin percentage
 increased 7.9% from 35.3% in 2000 to 43.2% in 2001.  The increase is a result
 of the Company's decision to outsource all craft production through an
 affiliated strategic partner's Mexican production facilities, its ability to
 negotiate lower pricing from its Oriental suppliers and the high margins
 associated with the Company's Joe's Jeans apparel products.
     Jay Furrow, President of Innovo Group Inc., commented that, "We are very
 pleased with the trend shown in the first quarter of fiscal 2001.  It is
 encouraging to see that the operational changes that occurred in fiscal 2000
 are creating an effective operational platform with a reduced expense
 structure and the ability to support increased growth.  With the strength of
 our traditional product lines, the newly created Bongo product line and our
 Joe's Jeans division, the Company is offering well designed, quality products
 to a wide variety of retailers at competitive prices and delivered in a timely
 fashion."
     Furrow further stated, "With the operational structure now in place, we
 believe that the Company has the ability to continue to increase revenues both
 internally and externally while at the same time limiting expenses thus
 resulting in a formula for profitability.  While not satisfied, we are pleased
 with the Company's improved performance and we are looking forward to
 capitalizing on the current state of the Company and the current results for
 the quarter."
 
     About Innovo Group Inc.
     Innovo Group Inc. through its subsidiary Innovo Inc. and Joe's Jeans, is a
 sales and marketing organization designing and selling craft, accessory and
 apparel products to the retail and premium markets.  The Company's craft
 products include canvas and denim totebags and aprons.  The Company's
 accessory product line is comprised of such products as licensed and non-
 licensed backpack, totebags, waist packs and handbags.  The Company's apparel
 products consist of women's high-end denim jeans and knit shirts featuring the
 Joe's brand.  For more information, visit the company web site at
 www.innovogroup.com.
 
     Statements in this news release which are not purely historical facts are
 forward-looking statements, including statements containing the words
 "believe," "estimate," "project," "expect" or similar expressions.  These
 statements are made pursuant to the safe harbor provisions of Section 21E of
 the Securities Exchange Act of 1934, as amended.  All forward-looking
 statements are based upon information available to Innovo Group Inc. on the
 date of this release.  Any forward-looking statement inherently involves risks
 and uncertainties that could cause actual results to differ materially from
 the forward-looking statements.  Factors that would cause or contribute to
 such differences include, but are not limited to, continued acceptance of the
 Company's products in the marketplace, successful implementation of its
 strategic plan, the extension or refinancing of its existing bank facility and
 the restrictions any such extension or refinancing could place on the Company,
 the ability to obtain new financing from other financing sources, the ability
 to generate positive cash flow from operations and asset sales, competitive
 factors, dependence upon third-party vendors and manufacturing, and other
 risks detailed in the Company's periodic report filings with the Securities
 and Exchange Commission.  By making these forward-looking statements, the
 Company undertakes no obligation to update these statements for revisions or
 changes after the date of this release.  Readers are cautioned not to place
 undue reliance on forward-looking statements.
 
 
                       INNOVO GROUP INC AND SUBSIDIARIES
                     CONSOLIDATED CONDENSED BALANCE SHEETS
                         (000's except for share data)
                                  (unaudited)
 
                                                          3/3/01       11/30/00
 
     ASSETS
     CURRENT ASSETS
       Cash and cash equivalents                        $   426        $ 1,179
 
       Accounts receivable, net of allowance                774            712
       Inventories                                        2,741          3,343
       Prepaid expenses & other current assets               28             94
       Due from related parties
       TOTAL CURRENT ASSETS                                 220             --
                                                          4,189          5,328
 
     PROPERTY, PLANT and EQUIPMENT, net                      45             56
     PROPERTY, PLANT and EQUIPMENT, held for sale         2,028          2,028
 
     LICENSING RIGHTS                                       476             --
 
     OTHER ASSETS                                             4              4
 
     TOTAL ASSETS                                       $ 6,742        $ 7,416
 
     LIABILITIES AND STOCKHOLDERS' EQUITY
     CURRENT LIABILITIES
       Notes payable                                    $    37        $   449
       Current maturities of long-term debt                  84             94
       Accounts payable and accrued expenses              1,261          1,869
       TOTAL CURRENT LIABILITIES                          1,382          2,412
 
     LONG-TERM DEBT, less current maturities              1,238          1,246
     TOTAL LIABILITIES                                    2,620          3,658
 
     COMMITMENTS AND CONTINGENCIES
 
     STOCKHOLDERS' EQUITY
       Common stock, $0.10 par - shares
        Authorized 15,000,000
        Outstanding    14,221,264 in 2001 and
                       13,721,264 in 2000                 1,421          1,371
       Additional paid-in capital                        39,394         38,977
       Deficit note                                     (33,564)       (33,461)
       Promissory note - officer                           (703)          (703)
 
       Treasury stock                                    (2,426)        (2,426)
     TOTAL STOCKHOLDERS' EQUITY                           4,122          3,758
 
     TOTAL LIABILITIES and STOCKHOLDERS' EQUITY         $ 6,742        $ 7,416
 
 
 
                         INNOVO GROUP INC. AND SUBSIDIARIES
                   CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                       (000's except share and per share data)
                                     (unaudited)
 
                                                        Three Months Ended
                                                       3/3/01        2/29/00
 
     NET SALES                                         $1,153          $ 812
     COST OF GOODS SOLD                                   654            526
       Gross profit                                       499            286
 
     OPERATING EXPENSES
       Selling, general and administrative                544            923
       Depreciation and amortization                       11             79
                                                          555          1,002
 
     LOSS FROM OPERATIONS                                 (56)          (716)
 
     INTEREST EXPENSE                                     (73)           (82)
     OTHER INCOME (EXPENSE), net                           26            (25)
 
     INCOME (LOSS) BEFORE INCOME TAXES                   (103)          (823)
 
     INCOME TAXES (BENEFIT)                                --             --
 
 
     NET INCOME (LOSS)                                 $ (103)        $ (823)
 
     NET INCOME (LOSS) PER SHARE:
       Basic and diluted                               $(0.01)        $(0.13)
 
     WEIGHTED AVERAGE SHARES OUTSTANDING               13,855          6,310
 
 SOURCE  Innovo Group Inc.