I.C. Isaacs has loss, ends deal with BOSS

Sportswear maker blames competition, soft sales of clothing

March 31, 2001|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

I.C. Isaacs & Co. Inc., a Baltimore- and New York-based sportswear maker, reported a net loss for the fourth quarter and year-end in 2000 and ended a licensing agreement that had become an increasing financial burden in the past three years, company officials said yesterday.

I.C. Isaacs sells apparel in the United States, Europe and Puerto Rico under the licensed brand names of Marithe and Francois Girbaud, Beverly Hills Polo Club, Urban Expedition and, until this past week, BOSS.

For its fourth quarter, which ended Dec. 31, I.C. Isaacs had a net loss of $14 million, or $1.77 per share, including an $8.1 million charge it took in connection with dropping the BOSS line. Excluding the charge, the loss was $5.9 million, or 75 cents per share, compared with a loss of $4.6 million, or 66 cents per share, for the corresponding period in 1999.

For the year, the company reported a net loss of $15.2 million, or $2 per share, including the charge. It had a net loss of $10.2 million, or $1.47 per share, in 1999.

Sales for the quarter were $17.1 million, up $700,000 from the same period in 1999. Annual sales rose 15 percent to $97.3 million.

Robert J. Arnot, I.C. Isaacs' president and chief executive officer, said the company was hurt by an extremely competitive retail market and soft consumer spending on clothing, particularly during the holidays.

And for the past several years, he said, the company has been burdened by high royalty payments for the BOSS clothing line, even as the line's sales declined from $120 million in 1997 to $11 million last year.

Under a previous agreement with Ambra Inc., which licenses the BOSS trade name, I.C. Isaacs would have paid $3.2 million this year, $2.6 million next year, and $2.1 million in 2003. Under a new agreement, I.C. Isaacs will pay $810,000 in royalties this year, and $1.7 million per year for the next five years although it no longer is making the BOSS line.

Arnot said the lowered obligation to BOSS will enable I.C. Isaacs to focus on its other, more profitable licensed brands, such as the Girbaud brand. That brand had a 144 percent increase in sales last year.

"We have a more diverse mix [of clothing] with Girbaud," said Arnot. "It's a first-tier brand that has a cache with different standing" insofar as there is a "a healthy balance between department store and specialty-store customers."

I.C. Isaacs also received a 21-month extension on its $25 million line of credit with Congress Financial Corp., which will help to fund their operations, said Arnot.

Shares of the I.C. Isaacs, which trade on the Nasdaq stock exchange, closed yesterday at 53 cents, up from the previous day's 52-week low of 44 cents.

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