Continued progress in Asia and Latin America more than compensated for softness in U.S. and southern Europe as Warnaco Inc. matched analysts’ estimates with a 7.5 percent increase in third-quarter profits.
In the three months ended Oct. 1, the New York-based apparel marketer generated net income of $44.6 million, or $1.03 a diluted share, versus profits of $41.5 million, or 90 cents, in the year-ago period.
Revenues expanded 8.1 percent, to $645.1 million from $596.8 million, led by a 28.6 percent increase in Asia, to $130 million, and 30.3 percent increase in Central and South America and Mexico, to $62.8 million. Without currency fluctuation, the increases in the two regions would have been 21.7 percent and 24.4 percent, respectively.
Meanwhile, revenues in the U.S. declined 3.3 percent, to $241.8 million, and in Europe rose 9.3 percent, to $182.3 million. Excluding currency impact, European increases would have been 0.4 percent higher, with strength in northern Europe offset by weakness in critical markets like Spain and Italy.
The Calvin Klein jeans and underwear businesses accounted for 80 percent of company revenues and generated double-digit revenue growth, the company said. Calvin Klein Jeans revenue was up 8 percent, with international up 19 percent.
Excluding special items, EPS came in at $1.07, in line with analysts’ consensus estimates, which also called for revenues of $656.4 million.
Joseph Gromek, president and chief executive officer, said on a Thursday conference call that international revenues accounted for 63 percent of Warnaco’s business in the quarter. “Asia and Latin America continue to lead the growth,” he said. “Our China business, approaching $200 million by yearend, remains a dynamic growth vehicle as we aggressively expand our direct-to-consumer penetration.”
Retail revenues overall rose 30.5 percent, to $186.2 million, with comparable-store sales up 2 percent. “Direct-to-consumer revenues now represent 29 percent of total company sales and we expect that percentage to climb significantly in the fourth quarter,” Gromek added.
Asked by an analyst to quantify pockets of resistance to higher prices this year, Helen McCluskey, chief operating officer, said there’s been “no resistance whatsoever” in Latin America and Asia. To respond to growing price sensitivity in southern Europe, “we’ve been much more promotional to make sure that we’re keeping inventory cleared.”
She also acknowledged that “it’s been difficult to pass on price increases” within U.S. value channels. “We’re not planning any additional price increases going into the fourth quarter,” she said.
While spring Calvin Klein underwear bookings were up at a double-digit pace, McCluskey said that global jeanswear booking were “probably close to flat.”
For the nine months, net income rose 12.3 percent to $134.1 million, or $3 a diluted share, while revenues grew 11.4 percent to $1.9 billion.
A room full of toiles at the haute couture atelier in the Dior exhibition at Les Arts Décoratifs, open in Paris since July 5. This is just one of three major exhibitions that have been timed to coincide with the house's 70th anniversary. See the rest of the exhibits, plus read WWD's look into the iconic brand's history. Link in bio. #wwdfashion (📷: @dominiquemaitre)
For spring, Pamplemousse's Danica Zheng presented her signature slip dresses attached to a white T-shirt along with floral windbreakers, off-the-shoulder cotton blouses and more. For more highlights from the New York trade shows, go to WWD.com. #wwdfashion
The Green Carpet Fashion Awards closed out Milan Fashion Week yesterday. The fashion industry flocked to the event, showing its efforts to support and spread the message of sustainability. Supermodel Gisele Bündchen said "if each one of us took at least one step is this direction, there is no saying how much could be done." #wwdeye #wwdfashion #mfw (📷: Lodovico Colli di Felizzano)
Etro’s show, titled “The Tree of Life,” was a celebration of the house’s 50th anniversary. “My father founded the company in 1968, which was the year of counterculture and psychedelia. It’s really a show that celebrates that and the paisley design of India and its origin,” said Veronica Etro. #wwdfashion #mfw #ss18 (📷: @delphineachard)
For @msgm’s spring 2018 show, creative director @massimogiorgetti said “Words, sounds, colors. Synthesis and therapy of a collection,” were the inspirations behind the collection, showing today. Read the rest of Milan spring 2018 inspirations on WWD.com. #mfw #wwdfashion #ss18
For her first solo album in over 10 years, Fergie tapped Carine Roitfeld, Mert and Marcus, Giovanni Bianco and more to create a fashion-focused video approach for the record, Double Dutchess. "Giovanni really helped me get back in touch with my tomboy side, my hardside," said the singer. #wwdeye #wwdfashion ( : @slovekinpics)