Joe’s Inks Deal With Dahan
Joe Dahan, creative director at Joe’s Jeans, is getting a nice payout from his employer.
Joe’s Jeans, based in Commerce, Calif., has agreed to pay Dahan $9.168 million for an accelerated earn-out agreement made Oct. 25, 2007, when Dahan and his company, JD Holdings Inc., merged with Joe’s Jeans.
Under that 10-year agreement, Dahan was to be paid 11.33 percent of the gross profit when it was between $11.25 million and $22.5 million; 3 percent of the gross profit from $22.5 million to $31.5 million; 2 percent of the gross profit from $31.5 million to $40.5 million; or 1 percent of the gross profit when it was above $40.5 million.
“We are pleased that we were able to enter into this new agreement with Joe Dahan. As a result, going forward, Mr. Dahan’s sole financial incentive comes from stock-price appreciation through revenue and earnings growth,” said Marc Crossman, president and chief executive of Joe’s Jeans. “As we continue with our retail strategy, we expect our gross profit and gross margin to grow. … Now that we have purchased the earn-out, the company fully benefits from retail store and other growth going forward.”
The company expects to record the full amount of the buyout payment in the first quarter of fiscal 2013. The payout will be every week until Nov. 27, 2015.
Meanwhile, Joe’s Jeans on Feb. 21 reported that net sales for its fourth quarter, ending Nov. 30, were $33.7 million, a 33 percent increase from the previous year’s period, when they totaled $25.4 million.
Net income was $1.93 million for the fourth quarter, compared with a net loss of $268,000 a year earlier.
Retail net sales were up 18 percent as the company added six new stores to its self-named retail chain, which now totals 28 outlets. Same-store sales were up 6 percent.
Crossman noted in a conference call with analysts that the company was planning to add 10 stores this year and reduce the size of some stores.
“We are refining our retail model,” he said.
He noted the company launched its chain with 2,200-square-foot models that were generating $430 per square foot. But the company’s smaller, 1,500- square-foot outposts were more lucrative, with sales of about $700 per square foot.
Another big winner for the company was its Else brand, developed last year for Macy’s. The private-label brand brought in $2.4 million in sales for the company during the fourth quarter, Crossman said.
Crossman said Else jeans, which sell for under $78, started out in 149 stores, but they are now in 319 doors. The average Joe’s Jeans denim pant sells for $158 and upward.
Net sales for the company’s wholesale operations increased 37 percent to $26.8 million. Sales of men’s apparel were up 32 percent. “Men’s color trend was a big contributor to these increases. The color trend started a year after the women’s,” Crossman said.
Women’s apparel sales were up 25 percent. “During the quarter, we were pleased to see our women’s wholesale business increase as our Vintage Reserve and revamped core basics brought back customers,” Crossman said.—D.B.
