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Warnaco Hits Black in Quarter

NEW YORK — The Warnaco Group Inc. on Thursday reported improved fourth-quarter results, ending the period with a profit compared with the year-ago loss.<BR><BR>Income for the three months ended Jan. 1 was $16.2 million, or 35 cents a diluted...

NEW YORK — The Warnaco Group Inc. on Thursday reported improved fourth-quarter results, ending the period with a profit compared with the year-ago loss.

Income for the three months ended Jan. 1 was $16.2 million, or 35 cents a diluted share, versus a $4.7 million loss, or 10 cents, a year ago. Revenues gained 10.8 percent to $374.4 million from $338 million.

By division, revenues in the intimate apparel group rose 9.9 percent to $160.5 million from $146 million; the sportswear group increased by 12.4 percent to $131.8 million from $117.3 million, and the swimwear group gained 10 percent to $82 million from $74.6 million.

For the year, Warnaco reported income of $42.5 million, or 93 cents, versus a loss of $22.5 million, or 50 cents, in 2003. The results for 2003 are for an 11-month period, the time when Warnaco was no longer in bankruptcy proceedings. Including adjustments for the month of January 2003, when the company was still in bankruptcy, 2003’s loss was $2.38 billion. Revenues in 2004 rose by 3.6 percent to $1.42 billion from $1.37 billion.

Joseph Gromek, president and chief executive officer, told analysts on a conference call the company is “delighted” with its 2004 results. He added that Warnaco “expect[s] to build up strong momentum going forward.”

He also told analysts that Warnaco is looking at opportunities in the areas of licensing and strategic acquisitions.

In addition to the expansion of Chaps through licensing, Warnaco last year acquired Ocean Pacific for $40 million in cash and $1 million in assumed debt, plus earn-out provisions.

Speaking about Federated Department Stores’ acquisition of May Department Stores, Gromek said: “Obviously, when competition is reduced, there is concern. The combination of the two for Warnaco represents less than 13 percent of revenues. We do more business with Federated than May.”

He said Chaps represents Warnaco’s “largest revenue growth opportunity.” As for its other brands, 2004 saw “substantial growth and market improvement at Calvin Klein Jeans,” which Gromek said is “poised” for revenue growth.

The Calvin Klein Underwear operation has had product and geographic expansion as well as retail initiatives that included the aggressive entry into markets such as China and Russia.

In the fall, company executives said, there will be CK365, a new underwear line targeting the consumer between the ages of 18 to 25. The product will launch in more than 800 doors.

Frank Ohmes, analyst at Banc of America Securities, wrote in a research note last month that Warnaco’s successful turnaround after emerging from bankruptcy in 2003 should continue, supported by growth initiatives and margin expansion in key licensed brands such as Calvin Klein jeans, Chaps, Calvin Klein Underwear and Speedo.

Shares of Warnaco on Thursday closed at $24.65, up 29 cents, in trading on the New York Stock Exchange.