By  on February 13, 2006

NEW YORK — Maidenform Brands Inc. lowered its fiscal 2005 and 2006 sales and operating earnings projections last week, saying high promotional activity and "aggressive" retail consolidation were negatively affecting financial performance.

In fiscal 2005, Maidenform, which went public in July, said net sales were expected to reach $381 million to $383 million, up 13 percent from last year's $337 million. The intimate apparel company previously forecast annual sales to be $385 million to $390 million.

Maidenform cited the launch of its Dream franchise, new product rollouts and store growth from certain customers as benefiting sales, but said a strong promotional environment in the end of the fourth quarter hurt revenue. The company also said sales were negatively affected by certain customers who drove down inventories at yearend. In addition, the company said it had product shortages late in the fourth quarter, particularly in its Flexees and Lilyette brands. Maidenform is consequently securing additional capacity from its sourcing partners to deal with the increased customer demand for those products.

By division, annual net sales in its wholesale segment rose about 16 percent to $281.7 million in 2005, Maidenform said, including international sales of $18.2 million, an increase of 46 percent. Sales from department stores and national chain stores were up 7 percent to about $202.6 million. Mass merchant channel sales were up about 60 percent at $46.7 million, while sales in the "other" group, which includes sales to specialty and off-price retailers, as well as licensing income, totaled $45.7 million, up 9 percent.

In the retail segment, sales fell 1.5 percent to about $54.5 million, partly because of select store closings, especially among the company's outlet stores.

Same-store sales were up 5.5 percent, however, and Internet sales almost doubled to about $2.4 million, the company said in a statement.

Maidenform said operating income on a generally accepted accounting principle, or GAAP, basis is expected to hit $33 million to $34 million in 2005, which would be up significantly from $1.7 million in 2004.

On a non-GAAP basis, Maidenform sees adjusted operating income at $44.5 million to $45.5 million — down from a previous estimate for $46 million to $48 million — which compares with non-GAAP operating income of $39.7 million in 2004. The expected non-GAAP adjusted operating income for 2005 reflects the elimination of $7 million in charges that relate to the company's initial public offering, restructuring expenses, a special cash bonus and the elimination of $6 million in plant closing costs.

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