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Warnaco Ongoing Operating Net Climbs 11.2% in First Quarter

NEW YORK -- The Warnaco Group, shaking off disruption caused by the Los Angeles earthquake, reported Wednesday that pretax profits from continuing operations rose 11.2 percent in the first quarter ended April 9.<BR><BR>Warnaco's profits from...

NEW YORK — The Warnaco Group, shaking off disruption caused by the Los Angeles earthquake, reported Wednesday that pretax profits from continuing operations rose 11.2 percent in the first quarter ended April 9.

Warnaco’s profits from continuing operations rose to $12 million, or 60 cents a share, from $10.8 million, or 54 cents, a year ago.

The bottom line included a charge of $3 million, or 15 cents a share, to cover costs related to the destruction of the distribution center for the Olga intimate apparel division in Sylmar, Calif., caused by the Los Angeles earthquake last January.

After the charge, net income in the latest quarter came to $8.96 million, or 45 cents a share. In the 1993 quarter, Warnaco had profits of only $252,000, or 1 cent, after a provision of $10.5 million to cover an accounting change for post-retirement benefits.

Sales slipped 5.8 percent, to $147.7 million from $156.8 million, reflecting earthquake damage and the discontinuance of the men’s wear brands of Christian Dior, Nicklaus and Puritan.

Intimate apparel sales, which included three weeks of shipments of the recently acquired Calvin Klein underwear division, rose 3.2 percent to $99.1 million.

The loss of the distribution center caused a $14 million drop in sales in the Olga brand. Warnaco expects to receive $8 million in reimbursement from its insurance company after a $3 million deductible. Warnaco has since relocated its distribution center and resumed Olga shipments in March.

In a telephone interview, Linda J. Wachner, chairman, president and chief executive officer of Warnaco, said the Calvin Klein men’s underwear and accessories brands are “doing great,” and the company is in the process of designing new products for Calvin Klein’s women’s intimate apparel when it takes over the license at yearend.

She said the company’s intimate apparel has a 37 percent share of the department store market and demand is “very strong.” The licensed Fruit of the Loom bra line, which she said has an 8 percent market share in the mass market area, also continues to do well. Its rollout of intimate apparel with Avon Products is performing above expectations, she said.

Warnaco stock closed Wednesday at 34 7/8, up 1 1/4 on the New York Stock Exchange.