Warnaco Sportswear net revenues flat on constant currency basis
The Warnaco Group Inc reported results for the second quarter ended July 4, 2009. The Company believes it is valuable for users of the Company's financial statements to be made aware of the as adjusted financial information, as such measures are used by management to evaluate the operating performance of the Company's continuing businesses on a comparable basis.
“The ongoing success of our strategies to grow our Calvin Klein businesses globally, increase our international presence and expand our direct-to-consumer channel led to a solid quarter for Warnaco,” stated Joe Gromek, Warnaco's President and Chief Executive Officer. “While overall revenues in constant dollars were flat, international revenues in constant dollars rose 8% led by double digit growth in Asia and Latin America. We continue to capitalize on the significant opportunity that exists for our Calvin Klein businesses outside the U.S., and our international revenues, in constant dollars, now account for approximately 53% of total Company revenues. Our direct-to-consumer business recorded positive comparable store sales, we opened 43 new locations during the quarter and we remain on track to grow 2009 square footage by 24%, or an additional 120,000 square feet.”
Mr. Gromek continued, “As we begin the second half of the year, we remain encouraged about our business prospects and have therefore increased our annual guidance range. Our team has been successful implementing our expense reduction initiatives and managing inventory and, while we expect challenges related to the economy and currency to continue, we are confident in our ability to achieve our goals. We expect 2009 to represent another year of solid accomplishments for Warnaco and increased value for our shareholders.”
For fiscal 2009, on an adjusted basis (excluding restructuring expense and certain tax related items and assuming minimal pension expense):
- The Company now anticipates net revenues will decline 7% -9% and expects constant dollar net revenues to decline 0%-2%.
- Based on recent currency exchange rates, the Company now expects diluted earnings per share from continuing operations in the range of $2.60 - $2.75
- The Company's prior guidance was for net revenue declines in the range of 9%-12% and diluted earnings per share from continuing operations of $2.50 - $2.66 per share
- The accompanying tables provide a reconciliation of expected diluted earnings per share from continuing operations, on a GAAP basis (and based on recent currency exchange rates) of $2.38 - $2.49 per diluted share (assuming minimal pension expense), to the adjusted fiscal 2009 outlook above.
Second Quarter Highlights
Net revenues fell 9%, and in constant dollars declined 0.5%, compared to the prior year quarter. Constant dollar growth in all our international businesses largely offset domestic declines, much of which related to a shift in timing of sales into the first quarter. Ongoing expansion of the Company's Calvin Klein businesses contributed to double digit growth, in constant currency, in Asia and Latin America.