Another solid quarter - Warnaco's President, CEO
The Warnaco Group Inc, reported results for the second quarter ended July 2, 2011.
"We are pleased to report another solid quarter. Our second quarter results reflect the success of our growth strategies and the benefits of our global and diverse operating model," said Joe Gromek, Warnaco's President and CEO. "We continued to invest in our key growth initiatives, namely maximizing our Calvin Klein business, broadening our international footprint and expanding our direct to consumer business, which produced powerful topline results and delivered a 15% increase in adjusted income per share from continuing operations."
"For the quarter, total Company net revenues grew double digits. Our global Calvin Klein business grew 19% in the quarter, benefiting from international and direct to consumer expansion, led once again by Latin America and Asia. Expanded square footage and a 7% increase in comparable store sales, contributed to a 38% increase in retail net revenues."
"While consolidated net revenues were strong, wholesale results in certain U.S. and European businesses unfavorably affected our operating results," added Gromek. "A more promotional environment and higher customer allowances adversely affected gross margin. We believe we have identified opportunities to drive improved performance in these markets and expect improved results as we move through the remainder of the year."
"As we look ahead, we are committed to and have the balance sheet to support investments in our long-term growth strategies. In July, we made an important investment in India, expanding our Calvin Klein licenses in the territory and taking a controlling interest in a joint venture, with the goal of accelerating the development of our Calvin Klein portfolio in this dynamic market. We expect to continue to realize the benefits of our investments, in both net revenue and earnings growth, as we move through the remainder of fiscal 2011 and beyond."
New Fiscal 2011 Outlook
For fiscal 2011, on an adjusted, non GAAP basis (excluding restructuring expense, certain tax related items and assuming minimal pension expense) and based on recent foreign currency exchange rates, the Company now anticipates:
* Net revenues will grow 10% - 12% compared to fiscal 2010, up from our prior guidance of 9% - 11% growth, and
* Adjusted income per diluted share from continuing operations in the range of $4.00 - $4.15 compared to our prior guidance of $3.95 - $4.15.
All three of the Company's segments (Sportswear, Intimates and Swimwear) reported growth, led by Sportswear and Intimates. The Company's international net revenues rose more than 32%, compared to the prior year quarter, reflecting the powerful growth in the Calvin Klein and direct to consumer businesses, which more than offset a 4% decline in the U.S. net revenues. Worldwide Calvin Klein net revenues grew 19%, led by Asia and Latin America, each reporting growth in excess of 35%. The Company's direct to consumer net revenues rose 38%, fueled by aggressive square footage expansion and a 7% increase in comparable store sales.