Kellwood Co.'s first-quarter earnings fell 19.7 percent, driven by softness in women's sportswear.
For the quarter ended May 5, the St. Louis-based manufacturer posted earnings of $7.4 million, or 28 cents a diluted share, from $9.2 million, or 36 cents, in the corresponding quarter last year.
Sales for the quarter dipped 1.9 percent to $484.4 million from $493.8 million.
Kellwood's women's sportswear, which still makes up more than half of the $1.9 billion firm's business, led the losses. Earnings fell 13.3 percent to $12.9 million from $14.8 million, and sales slipped 3.2 percent to $281.4 million from $272.5 million.
The company blamed retail consolidation plus weak performance in certain private brands, as well as Halmode dresses and suits and the Briggs New York bottoms business. But the launch of O Oscar, the Vince acquisition, and organic growth in Calvin Klein white label, My Michelle and XOXO partially offset those losses, according to the company.
"While moderate women's sportswear presents a core competency for Kellwood, we have also succeeded in expanding our better and above-price brands," Robert C. Skinner Jr., president and chief executive officer of Kellwood Co., said in a conference call Friday morning. "Kellwood has always prided itself in a diversification of its sales by channel, by customer and by price point. This allows us to maximize growth while limiting exposure to any one brand or channel. Today, we have strategies in place to improve challenging areas of our company."
With acquisitions like Vince and Hollywould, Kellwood is continuing to grow its better and above-price brands, and as of the first quarter, those higher-margin offerings made up 34 percent of net sales, up from 29 percent last year.
Meanwhile, soft goods, including Gerber Childrenswear, proved strong for the company. Earnings climbed 29 percent to $9 million from $7 million, and sales grew 5.8 percent to $83.6 million from $79.1 million.
"Overall, it's a disaster, but I was impressed by the gross margins," said Brad Stephens, an analyst for Morgan Keegan & Co. Inc. "But the increased operating margins are coming from Gerber baby and camping products, while women's sportswear profits continue to decline, and women's makes up more than half of its business, so that's a big problem."
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"