News Flash

Warnaco Intimate Apparel revenues up 14% to $200.3 mn

08 Nov '08

6 min read

- The Company's prior guidance was net revenue growth in the range of 13% - 15% and adjusted diluted earnings per share in the range of $2.80 - $2.90.

Net revenues rose 16% to $548.7 million and gross margin increased 520 basis points to 47% of net revenues. Operating income was $47.9 million, or 9% of net revenues, compared to $36.8 million, or 8% of net revenues, in the third quarter of fiscal 2007.

Income from continuing operations was $29.3 million, or $0.62 per diluted share, compared to $16.6 million, or $0.36 per diluted share, in the prior year quarter. Income from continuing operations for the third quarter of 2008 and 2007 includes approximately $4.4 million and $14.1 million, respectively, of pre-tax restructuring expense.

On an adjusted, non-GAAP basis (excluding certain tax items, restructuring expenses, other items and pension income/expense), income from continuing operations was $34.7 million, or $0.74 per diluted share, compared to $31.5 million, or $0.68 per diluted share, in the prior year period.

The Company's effective tax rate in the quarter was 31% and the adjusted non-GAAP effective tax rate in the quarter was approximately 32%. The Company now anticipates a full year non-GAAP effective tax rate of approximately 32% (compared to a full year non-GAAP effective tax rate of approximately 25% in fiscal 2007) and has presented its adjusted results from the prior quarters of fiscal 2008 to reflect that rate. The increased tax rate reflects the shift in earnings from lower to higher taxing jurisdictions.

Sportswear - Revenues for the Sportswear Group increased 20% to $316.8 million and operating income was $39.7 million, or 13% of net revenues. Calvin Klein Jeans drove revenue growth, with all geographies reporting double digit gains. Strong gains in Chaps operating profit complemented a 1% gain in operating profit of the Calvin Klein Jeans business, which was negatively affected by approximately $8.0 million of SG&A expense related to declines, relative to the dollar, in foreign currency exchange rates (primarily in Asia), and restructuring charges of $3.1 million.

Intimate Apparel - Intimate Apparel Group revenues rose 14% to $200.3 million and operating income was $34.6 million, or 17% of Intimate Apparel Group net revenues. The successful global launch of Calvin Klein Seductive Comfort and the re-launch of Calvin Klein Body were key contributors to the strong revenue gains this quarter. Operating income, while strong, was affected by incremental marketing spend to support Calvin Klein and the Company's heritage brands. Results were also negatively affected by approximately $4.0 million of SG&A expense related to declines, relative to the dollar, in foreign currency exchange rates (particularly in Europe).

Swimwear - Swimwear Group revenues were down 4% to $31.6 million and the segment recorded an operating loss of $10.2 million. Segment revenues were affected by the timing of certain Speedo(R) shipments relative to the prior year period. While Speedo benefited from increased visibility and the strong branding opportunity presented by the Summer Olympics, operating results were affected by, among other things, incremental marketing expense related to the Olympic games.

"We ended the quarter in a strong financial position. We successfully refinanced our revolver and have substantially reduced our long-term debt. Based on our present financial position, we believe we are sufficiently capitalized to continue to fund our long-term initiatives and weather the challenges of the current macroeconomic environment," stated Larry Rutkowski, Warnaco's Executive Vice President and Chief Financial Officer.

Warnaco Group Inc

More Warnaco Group Inc News... More Fashion News - United States Of America...