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FOR IMMEDIATE DISTRIBUTION
CONTACT: KIRK MILLER, 615-384-0100, EXT. 464
INNOVO GROUP REPORTS SALES INCREASE IN CALL WITH ANALYSTS
Sales increase of 68% reported and outlook for 1997 discussed in
conference call
SPRINGFIELD, TENNESSEE, March 14, 1997 - INNOVO GROUP INC.
(NASDAQ Symbol: INNO), the manufacturer and marketer of a broad
line of fashion, utility and sport bags and licensed t-shirts, today announced
that its sales for the first quarter of fiscal 1997 were $2,221,000, which
represented a 68% increase over sales of $1,319,000 for the three months ended
February 28, 1996. The announcement was made in a conference call
with brokers and analysts in which company officials discussed
their outlook for 1997 and the upcoming April 4, 1997 annual
stockholders' meeting. Innovo indicated that an announcement
having additional details about the first quarter sales would be
made next week.
Patricia Anderson-Lasko, Innovo's president and chief
executive officer, told the group that the company anticipates real
growth in sales in fiscal 1997 as the result of the new Walt Disney
and Warner Bros. license product lines, as well as the continued
growth in domestic craft sales. Ms. Anderson-Lasko explained that
it takes six months from the time a new license is acquired until
the products are at market. The Warner and Disney licenses were
secured in late 1996, and the first quarter benefitted a little
from some initial Warner product shipments. Innovo's president
indicated that the company was currently on schedule to continue
initial Warner shipments in the second quarter, and to start Disney
product shipments in the third quarter. She concluded by saying
that the effect of these new licenses should be visible in the
third and fourth quarters, but added that a period of two years is
needed before the full potential of a new license is known or
reached, and that therefore these licenses could produce additional
growth in 1998. The company indicated that it was not presently
willing to quote a projection for sales due to the newness of the
Disney and Warner products and markets, but added that contingency
plans were in place in the event that the sales growth was lower
than internally projected.
In response to questions about the company's projected net
income for fiscal 1997, Ms. Anderson-Lasko and Scott Parliament,
Innovo's chief operating officer, indicated that the projected
increase in sales, as well as new focus and controls over product
costs and overhead allow the company to forecast real improvement
in operating results. They indicated that the first quarter had
been projected to be a loss, and would be, and that a loss in the
second quarter was also projected consistent with the seasonality
of the company's sales, and because the first and second quarters
will continue to reflect the expense of developing the new Warner
and Disney products. The company indicated that it projected that
70% of its 1997 sales would come in the second half of the year,
compared to 54% in fiscal 1996. As a result, the second half of
the year would be the key to the overall 1997 results. Innovo also
reminded the group that projections are subject to risks and
uncertainties and that consumer spending and product acceptance,
and the availability of working capital and labor, could affect
results.
With respect to the upcoming April 4 annual meeting, the
company indicated that it was aware that the proposal to increase
the number of authorized common shares was drawing a lot of
attention. Ms. Anderson-Lasko stated that she felt that it was
important to understand that while the company was asking for the
authorization of an additional 40 million shares, it currently had
no plans or commitments to issue the majority of them, and did not
anticipate near-term use of the majority of the new shares. Ten
million shares would be reserved for outstanding warrants,
conversion rights and options, but 775,000 would underlie warrants
that were out of the money, and 4 million would underlie a stock
option that would not enter the float near-term. Additionally, any
warrant exercise would produce working capital for the company.
Innovo's president also indicated that the company's current 1997
projections showed a possible need for between $250,000 and
$400,000 of working capital in the second quarter to support sales,
but that the company hoped to obtain that, if needed, from one or
a combination of warrant exercise, debt financing or debt
refinancing. If a common stock issuance was needed, it would still
leave the majority of the new shares unused.
Innovo Group manufactures and markets a wide range of both
fashion oriented and utility and sports designed tote, laundry and
duffle bags, lunch bags, fanny packs, aprons and other canvas craft
products, as well as sports-licensed bags and backpacks and
licensed t-shirts. The company's fashion lines are based on its
own designs, while the sports lines feature both company designs
and the logos of NFL, MLB, NHL, NBA and college teams. Innovo also
holds licenses from Walt Disney, Warner Bros. and Anheuser-Busch Cos.
Innovo's Thimble Square subsidiary manufactures and distributes a
ladies' ready-to-wear at home, sleep and lounge wear from plants in
Georgia.
LISTED: NASDAQ SmallCap Market
TRADING SYMBOL: INNO
