People's Liberation Reports Second Quarter Financial Results

Wednesday, August 13, 2008 4:07 PM

People's Liberation, Inc. (OTCBB:PPLB), designer of high-end casual apparel under the brand names People's Liberation™ and William Rast™, today announced financial results for its fiscal 2008 second quarter ended June 30, 2008.

Financial highlights for the quarter included:

Strong revenue growth, year over year. Net sales in Q2-2008 grew 46%, to $6.75 million from $4.61 million in Q2-2007.
Gross margins sustained near 50%. Gross margin in Q2-2008 was 47.1% as compared to 48.7% in Q2-2007.
Strong increase in gross profit. Gross profit in Q2-2008 advanced 41%, to $3.18 million from $2.25 million in Q2-2007.

“We continue to execute on our core strategic objectives for increasing shareholder value,” said Colin Dyne, Chairman and Chief Executive Officer of People’s Liberation. “With our marketing investments we are securing increased brand awareness in the demographics we have targeted.”

The Company will be launching its Fall 2008 collection and “My Name Is William Rast” campaign in the form of print, short film, and through its new e-commerce website. The campaign stars Justin Timberlake as William Rast and will be featured in publications including, Vogue, Vanity Fair, GQ, Lucky, Details, and W. The short films will be released virally through social network websites beginning at the end of August. William Rast is establishing itself as a lifestyle brand, with worldwide acclaim and exposure.

In Spring 2009, the Company will be launching a new, modern collection of People’s Liberation branded apparel, with a design theme built around the concept of social values. The product line will include an extensive offering of denim and knits. “We are extremely excited about our new collection of People’s Liberation branded apparel, and the initial feedback on our new collection from our major customers has been fantastic,” commented Mr. Dyne.

“We are also pleased that we have successfully added the J. Lindeberg brand in the U.S. to our portfolio of luxury apparel lines,” continued Mr. Dyne. “The J. Lindeberg brand is highly recognized, with a modern position in golf, tailoring as well as jersey. The New York flagship store gives the Company a strong retail presence. Our collaboration with J. Lindeberg USA Corp. to source, market and sell J. Lindeberg branded apparel in the United States is another important step in our strategy to grow revenues and increase profitability.”

Mr. Dyne continued, “We believe that we are in a unique position as a company with a portfolio of three progressive luxury brands. Our focus right now is centered on brand building and growing our revenues.”

For the second quarter ended June 30, 2008 net sales increased to $6.75 million from $4.61 million in the second quarter ended June 30, 2007, a 46.4% increase. Gross margin for the quarter was approximately 47.1% compared to 48.7%, and the slight decrease was based on a strong increase in international sales, which occur at lower margins. In aggregate, operating expenses increased 34%, to $3.29 million in Q2-2008, compared to $2.45 million in Q2-2007 primarily due to marketing initiatives and sampling expenses incurred for the William Rast™ collection.

In the quarter ended June 30, 2008, basic and diluted loss per share amounted to one cent, compared to a one cent loss in the corresponding year-ago period.

At June 30, 2008, the Company had cash and equivalents of approximately $333,000, a working capital balance of $3.8 million, and approximately $2.4 million of available financing from its factor.

Six Month Financial Highlights

Net sales increase 62.2% in the six months ended June 30, 2008, to $13.7 million compared to $8.4 million in the six months ended June 30, 2007;
Gross profit increased to 48.4% of net sales for the six months ended June 30, 2008, compared with 46.8% in the six months ended June 30, 2007;
General and administrative expenses declined 4.2% in the first six months of 2008, to $2.4 million, compared to $2.5 million in the six months ended June 30, 2007;
Operating income increased to $265,000 for the six months ended June 30, 2008, compared to an operating loss of $1.2 million during the previous year;
Net loss for the first six months of 2008 was approximately $394,000, after minority interest of $607,000, a 72.2% improvement on the net loss of $1.4 million after minority interest of $286,000 in the first six months of 2007;
Basic and diluted loss per share amounted to one cent in the first six months of 2008, compared to a four cents per share loss in the first six months of 2007.

CONFERENCE CALL

Investors are invited to participate in a conference call featuring management’s commentary on financial results and a question and answer session on Wednesday, August 13, 2008, at 4:30 p.m. Eastern Daylight Time. To access the conference call, please dial 1-866-696-7913 if calling within the United States or 1-706-758-4510 if calling internationally.

A replay will be available until August 19, 2008, which can be accessed by dialing 1-800-642-1687 if calling within the United States or 1-706-645-9291 if calling internationally. Please use passcode 59342663 to access the replay.

The call will also be accompanied by a live webcast over the Internet. The live webcast and an archive of the event will be accessible on the Company's web site at http://www.peoplesliberation.com.

ABOUT PEOPLE'S LIBERATION, INC.

Los Angeles-based People’s Liberation designs, markets and sells premium contemporary apparel under the brand names People's Liberation™ and William Rast™ and also markets and sells J. Lindeberg™ branded apparel in the United States in collaboration with J. Lindeberg USA Corp., a subsidiary of J. Lindeberg AB, a Swedish company. The clothing consists of premium denim, knits, wovens and outerwear for men and women. The William Rast™ brand is 50% jointly owned by the Company and Justin Timberlake. The Company distributes its merchandise to better domestic department stores and boutiques, including Nordstrom, Saks Fifth Avenue, Neiman Marcus, Bloomingdales, and Fred Segal. Outside the U.S., its products are sold directly and through distributors to better department stores and boutiques in 16 nations. The Company also sells merchandise on its websites; www.peoplesliberation.com and www.williamrast.com.

(Financial Tables Follow)

PEOPLE'S LIBERATION, INC. Consolidated Balance Sheets

	June 30, 2008			December 31, 2007
Assets	(Unaudited)
Current Assets:
Cash and cash equivalents	$	333,428		$	362,505
Due from factor		1,271,461			1,517,029
Accounts receivable, net of allowance for doubtful accounts		619,399			1,029,510
Inventories		3,680,759			3,833,170
Refundable income taxes		-			11,500
Prepaid expenses and other current assets		510,844			196,730
Prepaid design fees		1,354,545			-
Deferred income taxes		38,000			38,000
Total current assets		7,808,436			6,988,444

Property and equipment, net of accumulated depreciation and amortization		926,344			612,264
Trademarks, net of accumulated amortization		470,915			363,359
Intangible asset		428,572			428,572
Other assets		59,126			265,020
Total assets	$	9,693,393		$	8,657,659

Liabilities and Stockholders’ Equity
Current Liabilities:
Accounts payable and accrued expenses	$	3,356,524		$	2,628,906
Minority interest payable		607,153			-
Income taxes payable		26,298			13,390
Total current liabilities		3,989,975			2,642,296

Deferred tax liabilities		93,000			93,000
Total liabilities		4,082,975			2,735,296


Stockholders’ equity:
Common stock, $0.001 par value, 150,000,000 shares authorized; 36,002,563 shares issued and outstanding at June 30, 2008 and December 31, 2007		36,002			36,002
Additional paid-in capital		7,857,707			7,775,255
Accumulated deficit		(2,283,291	)		(1,888,894	)
Total stockholders’ equity		5,610,418			5,922,363
Total liabilities and stockholders’ equity	$	9,693,393		$	8,657,659

PEOPLE'S LIBERATION, INC. Consolidated Statements of Operations

	Three Months Ended June 30,						Six Months Ended June 30,
		2008			2007			2008			2007

Net sales	$	6,745,745		$	4,606,598		$	13,662,384		$	8,423,316
Cost of goods sold		3,570,319			2,361,083			7,054,735			4,478,901
Gross profit		3,175,426			2,245,515			6,607,649			3,944,415

Selling expenses		1,167,131			714,256			2,359,649			1,602,028
Design and production		793,187			491,244			1,549,629			1,012,974
General and administrative		1,326,500			1,245,463			2,433,129			2,540,485

Total operating expenses		3,286,818			2,450,963			6,342,407			5,155,487

(Loss) income from operations		(111,392	)		(205,448	)		265,242			(1,211,072	)

Interest expense, net		23,157			14,213			44,408			25,853
Other income		(6,112	)		(108,785	)		(6,112	)		(106,518	)
Total other expense (income)		17,045			(94,572	)		38,296			(80,665	)

(Loss) income before income taxes and minority interest		(128,437	)		(110,876	)		226,946			(1,130,407	)
Provision for income taxes		5,790			-			14,190			3,200
(Loss) income before minority interest		(134,227	)		(110,876	)		212,756			(1,133,607	)

Minority interest		322,505			285,916			607,153			285,916

Net loss	$	(456,732	)	$	(396,792	)	$	(394,397	)	$	(1,419,523	)

Basic and diluted loss per common share	$	(0.01	)	$	(0.01	)	$	(0.01	)	$	(0.04	)

Basic and diluted weighted average common shares outstanding		36,002,563			34,942,563			36,002,563			34,942,563

People's Liberation
Darryn Barber, President and CFO, 213-745-2123
or
CCG
Sean Collins, Senior Partner, 310-477-9800, ext 202
www.ccgir.com

(Source: Business Wire )

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