Nitches, Inc., which recently acquired the Backwoods outdoor chain, reported sales increased 13.1% in the second quarter ended Feb. 29, to $16.1 million from $14.3 million a year ago. The San Diego-based company posted a net loss of $1.9 million for the quarter versus a net loss of $530,000 in the prior year.


 


The sales increase was attributable primarily to an increase in shipments of men's sportswear and women's sleepwear product. Nitches owns a number of niche men's and women's apparel brands. In the sports space, it operates Nat Nast, Newport Blue, and Dockers swimwear; The Skins Game golf apparel; ZOIC mountain biking apparel; and SO-CAL Speed Shop motorcross apparel.


 


Nitches announced that its eighth Backwoods store location will be opening in Austin this weekend, April 26-27th, with day-long activities including live music, a climbing wall and vendor-hosted product demonstrations. During the quarter, the company acquired Backwoods, a specialty outdoor retailer with a 30 year history selling technical gear, clothing and footwear for active lifestyles and adventure travel. Backwoods operates in Kansas, Nebraska, Oklahoma and Texas.


 


Net sales and consequently earnings were negatively impacted during the current three months period by lower realized gross margins due to pricing pressures and higher sales allowances granted to significant customers amid a weakening retail environment. Furthermore, an increase in interest expense related to the convertible debentures issued in June 2007, as well as increased borrowings under the company's factoring agreement, also contributed to the net loss.


 


At February 29, the company had unfilled customer orders of $33.7 million compared to $28.1 million at the same time last year, with such orders generally scheduled for delivery by August 2008 and August 2007, respectively. The increase in backlog is due to growth in orders across product lines, most significantly for men's sportswear and for Paula Deen dinnerware and related items sold under the recently signed license.


 


“We are disappointed with the sales and margin performance of our wholesale businesses, but satisfied with our efforts to contain costs,” expressed Steve Wyandt, chairman and CEO of Nitches. “The general economic climate continues to present challenges that are placing downward pressure on selling prices and upward pressure on our costs of manufacturing. In order to combat these challenges we remain focused on shifting our revenue mix from lower margin private label products to higher margin branded lines of business such as our Paula Deen products and direct ownership of specialty retail stores like Backwoods.”