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Orange 21, the parent company of Spy Optics, issued a press release today outlining its cost-cutting initiatives. The company also released third quarter results that showed sales fell 9 percent to $12 million. Orange 21 recorded net income of $6,000 in the third quarter vs. a loss of $58,000 the same period last year.
Here's the release:
Orange 21 Inc. Reports Financial Results for Third Quarter 2008 and Announces Investor Conference Call
CARLSBAD, Calif.-(BUSINESS WIRE)-November 14, 2008 Orange 21 Inc. (NASDAQ:ORNG), a leading developer of brands that produce premium products for the action sports and youth lifestyle markets, today announced financial results for the three and nine months ended September 30, 2008.
We achieved net income of $6,000 for the three-month period ended September 30, 2008, compared to a net loss of $58,000 for the comparable period in 2007. We sustained a net loss of $1.1 million for the nine-month period ended September 30, 2008, compared to a net loss of $3.3 million for the comparable period in 2007. Consolidated net sales for the three and nine month periods ended September 30, 2008 were $12 million and $37.6 million, respectively, compared to $13.2 million and $34.5 million for the comparable periods in 2007.
"We are clearly feeling the effects of the general slowdown in the economy," commented Stone Douglass, the Company's newly appointed Chief Executive Officer. "In response, we are doing everything we can to maintain our sales while dramatically reducing expenses.
"Examples of recent expense reductions include:
"Further, we have implemented several additional cost reduction measures and we expect to begin to see tangible results from those initiatives in the fourth quarter of this year and expect more robust savings in 2009.
"We are also focused on improving our efficiencies. Since joining the board in August, I have already made multiple trips to Italy to focus on streamlining our manufacturing operations. We expect to announce modifications to our organizational structure in the coming weeks that we believe will result in substantial savings in 2009. In addition, we are beginning to make changes to our production processes that we believe will more fully utilize our manufacturing capacity, thus further reducing our cost of goods sold and G&A expense.
"Although we are focused on reducing expenses, we are conducting a top-down analysis of the business to ensure that our cuts will not be at the expense of top line sales, leading product designs or our reputation for quality and innovativeness in the market."
Jerry Collazo, the Company's Chief Financial Officer, further commented, "We have met with several of our business partners, including vendors and customers, in an effort to renew and strengthen these relationships.
For example, we are working with our vendors to improve our purchasing terms and are working with our existing manufacturing customers to better understand how we can service their needs and perhaps provide additional manufacturing services.
Finally, we have commenced a new sales initiative. We are sending our sales managers into the field to visit all of our customers and independent sales representatives regularly in order to better connect with customers and help them to better market and sell our products. We believe that we will begin to see dividends from these efforts in the fourth quarter, notwithstanding the downturn in the economy."
Concluding, Stone Douglass added, "Notwithstanding these efforts, we absolutely expect to face challenges in the market. As you know, retail sales in general are down substantially compared to last year. We expect to continue to feel pressure on our sales and collections as a result. However, given the strength of our brand, quality of our products and recent initiatives to improve sales and control costs, we remain optimistic about our future prospects."