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Warnaco Q1 revenues decline 7%
May '12
The Warnaco Group Inc. reported results for the first quarter ended March 31, 2012.

First Quarter Highlights
Net revenues declined 7% compared to the prior year period to $615.5 million. Growth in the Company's Intimate Apparel segment was more than offset by declines in the Sportswear and Swimwear segments.

Net revenues in the Company's Calvin Klein businesses declined 7%, compared to the prior year period, primarily in Calvin Klein Jeans, which reflects planned reductions in value channel sales, the effects of macroeconomic challenges and our performance at retail.

Direct-to-consumer net revenues grew 7% (notwithstanding a decline in comparable store sales of approximately 2%), while wholesale net revenues fell 12%, which includes the anticipated reduction in Sportswear net revenues.

Gross margin decreased 110 basis points to 43% of net revenues, due primarily to product cost inflation and increased customer allowances. Gross profit decreased 9% compared to the prior year quarter to $267.5 million, while SG&A expense was down 4%, compared to the prior year quarter, to $212.6 million.

However, as a percentage of net revenues SG&A expense increased 90 basis points to 35% of net revenues, which reflects the expansion of the Company's direct-to-consumer business as a percentage of total Company net revenues and lower net revenues in the quarter.

Operating income was $52.2 million, a 25% decline compared to the prior year quarter. Income from continuing operations decreased to $32.9 million, or $0.78 per diluted share, compared to $44.5 million, or $0.98 per diluted share, in the prior year quarter. On an adjusted, non-GAAP basis (excluding costs related to restructuring expenses, pension expense and tax related items), income from continuing operations was $ 37.9 million, or $0.90 per diluted share, compared to $49.8 million, or $1.10 per diluted share, in the prior year period.

The effect of fluctuations in foreign currency exchange rates for the quarter compared to the prior year quarter resulted in a decrease in net revenues of approximately $7.6 million and an increase in income per diluted share from continuing operations of approximately $0.03.

An additional discussion regarding the effects of fluctuations in foreign currency exchange rates on operating results can be found in the Company's Form 10-Q, for the quarter ended March 31, 2012, which will be filed with the Securities and Exchange Commission.

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The Warnaco Group Inc

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