Sales dip marginally at intimate apparel brand Maidenform

06 Nov '08

4 min read

Maidenform Brands, Inc., a global branded marketer of intimate apparel, today reported earnings of $0.36 per diluted share (EPS) for the third quarter of 2008 which included $0.04 per share of start-up costs related to the new women's intimate apparel license agreement for the Donna Karan(R) and DKNY(R) brands. EPS for the third quarter of 2007 was $0.32.

Net sales for the first nine months of 2008 decreased $7.6 million, or 2.3%, to $318.8 million as increased sales in the mass merchants channel was more than offset by lower sales in the department stores and national chain stores channel as well as the Company's other channel.

Wholesale segment net sales, on a year-to-date basis, decreased $9.6 million, or 3.4%, to $275.1 million, with wholesale branded sales up 1.0%. Total international net sales, which are included in the wholesale segment, increased $2.8 million, or 10.2%, to $30.2 million. Retail segment net sales for the first nine months of 2008 increased $2.0 million, or 4.8%, to $43.7 million.

Same store sales for Maidenform's retail outlet stores increased 1.5%. Internet sales increased $1.0 million, or 34.5%, to $3.9 million on a year-to-date basis. The Company's net sales performance by channel of distribution is highlighted in Exhibit 1 to this press release.

Consolidated gross margins, on a year-to-date basis, decreased 30 basis points to 38.5%, as a result of the effect of customer and product mix which included continued strong sales in the mass merchants channel.

Year-to-date operating income was $41.3 million and 13.0% of net sales versus $55.3 million and 16.9% of net sales for the first nine months of 2007 (15.1% excluding a pension curtailment gain of $6.1 million in the first quarter of 2007).

Net income for the first nine months of 2008 was $22.3 million, and EPS was $0.95, including $0.05 per share of start-up costs related to the new women's intimate apparel license agreement for the Donna Karan(R) and DKNY(R) brands.

Net income for the first nine months of 2007 was $27.9 million and EPS was $1.15, including $0.09 per share from a pension curtailment gain and deferred financing costs associated with the refinancing of the Company's credit facility.

Business Update on New Donna Karan(R) and DKNY(R) Women's Intimate Apparel License:
As announced on May 6, 2008, Maidenform entered into an exclusive worldwide women's intimate apparel license agreement for the Donna Karan(R) and DKNY(R) brands commencing on January 1, 2009. The Company expects to begin shipping product to customers in early January 2009.

Maidenform continues to project that this business will add approximately 5% to the Company's net sales growth in 2009 and will provide a new channel of distribution to high-end department and specialty stores. Initially, gross margins are expected to be generally in line with Maidenform's department store business.

The Company believes this license relationship will have strong long-term sales growth and gross margin expansion opportunities, particularly internationally.

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