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SAN DIEGO -- Beeba's Creations Inc. and its 51 percent-owned subsidiary, Body Drama Inc., reported third-quarter losses and said losses are expected to continue at Body Drama in the fourth quarter.
Beeba's lost $1.4 million in the quarter ended May 31 against a year-ago profit of $40,322, or 2 cents a share.
Sales declined 4 percent to $29 million from $30.2 million.
In the nine months, Beeba's lost $3.3 million against a profit of $862,675, or 32 cents. Sales rose 10.1 percent to $88.7 million from $80.6 million. At Body Drama, the third-quarter loss totaled $1.4 million against a profit of $205,923, or 6 cents, a year ago. Sales dropped 37.6 percent to $6.7 million from $10.7 million.
In the nine months, Body Drama's losses widened to $2.4 million from $42,545. Sales rose 3.2 percent to $23.9 million from $23.2 million. Included in the latest quarter is an income tax valuation allowance of $660,000, or 21 cents a share, set up because of the size of the company's operating loss for the current year.
Richard P. Wyandt, Beeba's chief executive officer, said retail sales were promising in March, but were disappointing in April and May, resulting in lower-than-expected sales and gross margins at most divisions. Wyandt said efforts are under way to reduce inventory and slash operating expenses at both companies.
Based on current order backlog, recent increases in cotton prices and current market conditions, sales and gross margins are expected to be below year-ago levels at both Beeba's and Body Drama. Body Drama is expected to post a fourth-quarter loss greater than the $605,000 loss in the year-ago quarter, while Beeba's results are projected to be significantly lower than the $462,000 year-ago profit, the companies said. Body Drama said it also expects that an income tax valuation allowance will be established related to the fourth-quarter losses.
As reported, Body Drama has retained the investment banking firm of Wedbush Morgan Securities, Los Angeles, to consider options, including sale of the company. Thomas P. Baumann, chief financial officer of Beeba's and Body Drama, declined to comment on whether Body Drama will be put on the block.
Body Drama produces intimate apparel under Body Drama and Body Tease labels, and daywear under the Gaviota label. Beeba's imports and wholesales junior, misses' and large-size sportswear.
-- Fairchild News Service