Warnaco Makes Return to Black

Warnaco posted results for the last two months of its first quarter, in which it emerged from bankruptcy, with $22.6 million in profit on sales of $326.3 million.

NEW YORK — The Warnaco Group Inc. on Thursday reported results for the last two months of its first quarter, the period in which it was freed from the constraints of bankruptcy court.

This story first appeared in the May 16, 2003 issue of WWD.  Subscribe Today.

For the period ending April 5 income was $22.6 million, or 50 cents a share, on revenues of $326.3 million. The company, which emerged from bankruptcy court protection on Feb. 4, has 45 million shares outstanding and trades under the stock symbol WRNC in the Nasdaq.

On a pro forma basis, as if the company had emerged from Chapter 11 at the beginning of fiscal 2003, Warnaco would have posted a monumental 181 percent gain in income to $32.1 million, or 71 cents a diluted share, from $11.4 million, or 25 cents, in the year-ago quarter. Revenues would have risen 7.9 percent to $442.3 million from $410.1 million.

The actual year-ago quarter translated into a loss of $857.8 million, or $16.20 a share, on revenues of $410.1 million. The actual result includes an $801.6 million goodwill impairment write-down on a pro forma basis to account for a change in the valuation of the company.

According to Warnaco, current pro forma results show that gross profit improved to $167.2 million, or 37.8 percent of revenues, from $121.8 million, or 29.7 percent of revenues, last year. Operating income increased to $60.9 million, or 13.8 percent of revenues, from $29.5 million, or 7.2 percent of revenues, a year ago. Working capital management improvements included an increase in inventory turns to 2.9 times from 2.7 times and a decrease by 3.3 days in accounts receivables day’s sales outstanding to 58.6 days from 61.9 days.

James Fogarty, chief financial officer, proclaimed in an interview, “Warnaco is finally in the black again. We have positive earnings and the swimwear group in particular did very well.”

The cfo explained that all three groups — intimates, sportswear and swimwear — performed well, but described the year-over-year gains in the swimwear category as having “improved dramatically.”

He pointed out that the Speedo brand was very strong in the quarter. Details about divisional performance are expected to be made public next week when the firm files its Form 10-Q with the Securities and Exchange Commission, Fogarty said.