Sunset Suits Reports 2009 Financial Results

NEW YORK and POZNAN, Poland, April 16, 2010 (GLOBE NEWSWIRE) -- Sunset Suits Holdings, Inc. (OTCBB:SNSX), a leading designer and retailer of high quality menswear, today reported financial results for the year ended December 31, 2009.

Mr. Miroslaw Kranik, Chief Executive Officer of Sunset Suits, commented, "The retail industry had experienced a softening in demand during the economic crisis, and Sunset Suits was no exception. Sales in 2009 totaled $26.6 million compared with $38.6 million in 2008, however, the company is ideally positioned to increase sales of higher margin items in 2010 and beyond as a result of strategic decisions made in 2009 that are now being implemented. As the economy begins to recover, the benefits of our recent initiatives will be even further enhanced. We maintain our net income guidance of at least $2.0 million, or $0.16 per share for 2010 and $3.4 million, or $0.27 per share for 2011."

Mr. Kranik continued, "While the company continues to hold its prominent position in the formal menswear market in Poland for the fifth consecutive year, beginning in 2010 we are focusing more attention on our "smart casual" line where we have a strong following among our target demographic of 18 – 35 year olds. This is the fastest growing segment of the market and sales of our casual items have been gaining momentum in the past few years among this group. We plan to introduce new fabric blends and styles in the months ahead at new, lower price points that should resonate well with this fashion-conscious group. Our goal is to draw new customers from both the higher end where value has become more of a concern in recent times and the lower end where our new lower price points will draw people in who previously could not afford Sunset Suits' merchandise.   We will also introduce new products under a co-branding program with third parties in 2010 that will complement our current product offerings and we are initiating a "rewards" program for loyal customers. We will be able to conduct better monitoring and forecasting by installing new software, which is expected to be completed by the end of August 2010."

"We are also taking steps to lower rent expense, one of our biggest expenditures. Our first course of action in this regard is to increase sales per square meter by reducing excess floor space per store in larger shopping malls and stocking our stores with the most popular and highest turnover items. Any new retail boutiques that we open will occupy a smaller footprint, but we plan to place them in very high traffic areas." 

"We achieved a key operational milestone in March 2010 when we sold Fashion Service Sp., our manufacturing facility in Poland, in favor of outsourcing this function, mainly to the Far East. This strategic initiative is expected to substantially improve operating efficiencies through economies of scale and the elimination of escalating costs associated with under utilization of our facility that had arisen from a shift in demand away from suits and more toward business casual attire. To accommodate this shift, the manufacturing facility, which is geared toward suit production, would have required extensive upgrades to accommodate our needs. With plans for geographic expansion over the next few years, our ability to produce quality merchandise at a brisk pace while achieving economies of scale has become paramount to our continued success as an industry leader in men's fashion and the sale of our manufacturing facility was important to fulfilling our mission. Fashion Service Sp. was sold to XCRITO Ltd, a company headquartered in Limassol, Cyprus, for US$16,000 in cash and the assumption of all assets and liabilities, except for long-term debt totaling US$6.8 million, which will remain with Sunset Suits. In addition to improving profit margins at Sunset Suits, this transaction is expected to increase shareholders' equity by more than $6.2 million."

Mr. Kranik concluded, "The restructuring of our operations is an important step in positioning us for future growth. With the sale of Fashion Service, a shift in product mix and a focus on retail expansion, we expect to increase gross margins to 70%, which is substantially higher than the near 60% levels we have sustained over the past couple of years. Beginning in 2010, we will build upon the Sunset Suits brand through a combination of global expansion and market repositioning. The pieces are now in place that will enable us to realize our vision over the next few years, especially as the broader economy begins to show signs of improvement."

Revenue for the twelve months ended December 31, 2009 was $26.6 million, as compared to $38.6 million for the twelve months ended December 31, 2008. The difference in revenue primarily reflects lower product demand due to broader economic conditions and the depreciation of the Polish zloty against the U.S.dollar by 22% for the year. In local currency terms, sales at Sunset Suits decreased 11%. Gross profit was $15.3 million for 2009, as compared to $21.6 million for 2008. Operating loss was $3.3 million for 2009, as compared to operating income of $1.7 million for 2008. Net loss from continuing operations was $4.1 million for 2009 compared to net income of $1.1 million in 2008. Net loss from discontinued operations was $961,000 versus net income from discontinued operations of $714,000 in 2008. Net loss for 2009 was $5.0 million, or $($0.40) per share versus net income of $1.8 million, or $0.18 per share in 2008. Shares outstanding at year-end 2009 totaled 12,499,645 versus 10,019,158 at year-end 2008. 

About Sunset Suits Holdings

Sunset Suits is a designer and retailer of high quality menswear based in Poland. The company's merchandise includes suits, sport coats, slacks, dress shirts and ties. Sunset Suits distributes its clothing primarily through its sales outlets. The company operates 85 domestic retail stores in Poland, 3 stores in Latvia, 8 stores in the Czech Republic, and 5 stores in Lithuania. Sunset Suits targets men in the 18 to 35 year-old age group, one of the most rapidly developing demographics in the industry.

This press release may contain forward looking statements. These forward looking statements involve known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. In some cases, forward-looking statements contain terms such as "anticipates," "believes," "could," "estimates," "expects," "intends," "may," "plans," "potential," "predicts," "projects," "should," "would" and similar expressions intended to identify forward-looking statements. Forward-looking statements reflect the Company's current views with respect to future events and are based on assumptions and subject to risks and uncertainties. Given these uncertainties, readers should not place undue reliance on these forward-looking statements. These forward-looking statements include, among other things, statements relating to: general economic conditions; expectations regarding the Company's ability to maintain and grow its business; expectations regarding the continued growth of the Polish clothing industry; beliefs regarding the competitiveness of the Company's products; expectations with respect to increased revenue growth and the ability to achieve increased profitability; future business development, results of operations and financial condition; and competition from other apparel companies. Also, forward-looking statements represent the Company's estimates and assumptions only as of the date of this press release and actual future results may be materially different from what the Company expects. Readers are encouraged to review the "Risks Factors" section in the Company's Registration Statement on Form S-1/A filed on January 12, 2010. The Company assumes no obligation, and does not intend, to update any forward-looking statements, except as required by law.