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Warnaco Q1 profit declines on restructuring expenses

13
May '08

The Warnaco Group Inc reported results for the first quarter ended April 5, 2008. The Company notes that the quarter ended April 5, 2008 comprised 14 weeks compared to 13 weeks in the prior year period. Revenues related to the extra week were approximately $23 million. The accompanying tables provide a reconciliation of actual results to the as adjusted results.

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.

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Sportswear - Revenues for the Sportswear Group increased 28% to $300.1 million, driven by continued momentum in Calvin Klein Jeans, with notable strength in Europe and Asia. Operating income, however, decreased to $22.1 million, or 7% of Sportswear Group net revenues. Strong results in Calvin Klein Jeans were more than offset by $18.7 million of restructuring expense primarily related to the Company's previously announced transfer of the Calvin Klein Collection business.

Intimate Apparel - Intimate Apparel Group revenues rose 22% to $167.6 million and operating income increased to $32.4 million, or 19% of Intimate Apparel Group net revenues. Momentum at both retail and wholesale, in Calvin Klein Underwear, driven by ongoing strength in Calvin Klein Steel contributed tothe strong results. Additionally, the Company's Core brands reported both top and bottom line growth. Expanded distribution and strong product offerings led to market share gains for both Warner's(R) and Olga(R).

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