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NEW YORK — Increased sales from new businesses helped Kellwood Co. post big numbers for the second quarter.
Net income shot up 52.9 percent for the period to $10.2 million, or 36 cents a diluted share. This compared with $6.7 million, or 25 cents, a year ago. Without losses of $1.2 million from discontinued operations a year ago, earnings rose 30.2 percent.
Analysts were looking for earnings of 35 cents a share, according to Reuters. Prior to the earnings announcement, shares of the firm fell 56 cents, or 1.5 percent, to $36.96 on the New York Stock Exchange Thursday.
Sales for the three months ended July 31 advanced 10.1 percent to $560.5 million, from $508.9 million a year earlier. Phat Fashions and Phat Farm, which the firm acquired in February, added sales of $17 million to the quarter. The top line was also helped along by licensed sportswear businesses such as Calvin Klein and Izod.
Chairman and chief executive officer Hal Upbin said in a statement that he expects the economy at large, including the rate of job creation, consumer confidence and spending on apparel, to continue to improve, but not at the levels seen earlier this year.
“Like our customers, Kellwood would rather focus on gross margin and inventory turnover than get too far ahead of a cautious consumer with orders and inventory,” said Upbin. “As a result of the recent softening in demand for apparel, as indicated by fall orders from customers and some delays in launching certain new marketing initiatives from the third to the fourth quarter, we expect sales in the third quarter to increase by 12 to 13 percent and be in the range of $720 million to $730 million versus $644 million last year.”
Kellwood, as well as other major players in the moderate market such as Jones Apparel Group, is trying to attract additional customers and drive more full-price selling by marketing better-known names. For fall, the company is introducing O Oscar, a new moderate line produced under license from Oscar de la Renta Ltd. and supported by a national ad campaign.
Kellwood is also embarking on an effort to more effectively brand its $600 million Sag Harbor business. This entails a multimillion-dollar marketing campaign, including ads in national women’s magazines, outdoor ads, a vacation sweepstakes and in-store visuals.
This story first appeared in the August 27, 2004 issue of WWD. Subscribe Today.
During the first half, Kellwood’s earnings jumped 28.2 percent to $35.3 million, or $1.26 a diluted share, from $27.5 million, or $1.03, a year ago. Sales rose 5.5 percent to $1.25 billion.