Ailing Innovo Group Names New President
Innovo Group Inc., which produces Joe’s Jeans, has promoted Chief Financial Officer Marc B. Crossman to president, replacing founder Pat Anderson, who recently resigned.
The Commerce, Calif.–based company, which just launched a new denim line called Indie, has been trailing red ink lately, posting a $6.7 million loss during its second quarter, which ended May 29, and an $11.7 million loss for the year-to-date period.
J.P. Mark, a financial analyst with Providence, R.I.–based Farmhouse Equity Research LLC, said the move was a sign that the company wants to streamline its operations and become profitable.
“Pat Anderson was the founder and was a key driver for the company’s growth for many years,” Mark said. “But her main contributions came at the crafts and accessories area, and I think the company wants to directly focus on where the growth is now [in branded apparel].”
Innovo officials said they hope Crossman, who will remain chief financial officer, can lead them back into the black by strengthening the company’s branded-apparel strategies. Aside from Joe’s Jeans and Indie, the company also has the license for Betsey Johnson denim and has a significant private-label business.
Innovo partly blamed its recent woes on a licensing deal with hiphop artist Eve and her company, Blondie Rockwell Inc. Innovo ended the deal in May but had to pay $837,000 to terminate the agreement and pay for accelerated royalties. Eve’s Fetish label and Shago by Bow Wow, which also was dropped, generated only $2.9 million of Innovo’s $30 million in sales during the second quarter yet accounted for $5.5 million of the company’s $6.7 million loss.
This summer, Innovo launched Indie, a denim line aimed at the moderate market. The collection’s price points, ranging from $78 to $88, offer an alternative to the $110 to $250 price points of Joe’s Jeans.
Jay Furrow, Innovo’s chief executive officer, suggested there could be more housecleaning to come within the company’s Innovo Inc. subsidiary, which makes accessories. “Upon further evaluation, it will likely become necessary for certain businesses within the Innovo Inc. subsidiary to be phased out and/or eliminated; however, we believe that such efforts will ultimately have a positive impact on the company’s financial performance,” he said in a statement.
The chief executive officer also said Crossman has “become an invaluable asset of our management team, and he will continue to play a pivotal role in the company’s development, growth and success.”
—Robert McAllister
