by Vicki M. Young
From WWD Issue 05/06/2011
The Warnaco Group Inc. on Thursday posted a decline in first-quarter income, but said it has been investing in the business to drive revenue growth and raised fiscal year 2011 guidance.
For the three months ended April 2, income was $44 million, or 97 cents a diluted share, down from $48 million, or $1.02, last year. Excluding restructuring charges and other expense items, income per diluted share from continuing operations was $1.10 versus $1.09 a year ago. Revenues rose 12.6 percent to $662.2 million from $588.2 million, while comparable store sales rose 8 percent.
By segment, sportswear sales rose 10.8 percent to $339.5 million, intimate apparel sales increased 13.9 percent to $221 million and swimwear sales jumped 15.7 percent to $101.7 million. By region, the company’s biggest growth area was Mexico, Central and South America, where revenues rose 37.8 percent to $51.7 million. Asia was its second-largest-growing sector, with revenues climbing 30.6 percent to $126.8 million. The United States lagged with a 5.3 percent revenue gain to $285.1 million, with Europe was not much better, with revenues rising just 7.1 percent to $168.5 million.
Joe Gromek, president and chief executive officer, said the firm’s selling, general and administrative expenses rose 20 percent as it expanded its Calvin Klein business, grew company-owned retail locations and launched CK One as a lifestyle brand. He noted that “Calvin Klein revenues increased 13 percent, international revenues were up 19 percent and we increased our direct-to-consumer revenues 36 percent.”
Executives on the call noted that the firm has been able to pass through price increases in most regions, whether in Canada, Latin America or Asia. It also believes it can start to do the same in Europe, although in the U.S. perhaps not as much, since the market is more price sensitive.
The company raised guidance for fiscal year 2011, and now expects adjusted diluted earnings per share from continuing operations in the range of $3.95 to $4.15, up from an earlier estimate of $3.85 to $4.15.
