By  on August 13, 2009

Maidenform Brands Inc. reported a less-than-expected decline in second-quarter profits and raised full-year guidance Wednesday, boosting shares nearly 7 percent.

For the three months ended July 4, the innerwear vendor said net income fell 6.8 percent to $7.3 million, or 31 cents a diluted share, from $7.8 million, or 33 cents, in the year-ago quarter. Net sales rose 5.9 percent to $114.2 million, from $108.1 million in 2008, aided by a 9.2 percent increase in shapewear sales. Analysts expected earnings per share of 25 cents on revenue of $111.6 million, according to Yahoo.

Sales at department stores decreased 1.7 percent to $56.4 million in the quarter, while mass market revenues declined 7.4 percent to $26.4 million. Retail sales remained unchanged at $14.5 million although same-store sales slid 6.4 percent.

The company said increased promotional activity and strong sales from its lower-margin mass merchant and other channels pulled gross margins down to 36 percent of sales from 38.7 percent in last year’s quarter. Quarterly expenses rose 2.5 percent to $28 million as Maidenform launched licensed programs under the Donna Karan and DKNY brands.

“Building off of our successes and unique product strength, we would expect to grow our branded top line by midsingle digits on our total sales in the low- to midsingle digits in 2010,” chief executive officer Maurice Reznik said on the company call.

For the first half, profit contracted 4.2 percent to $13.3 million, or 57 cents a diluted share, versus $13.8 million, or 59 cents a share, a year earlier. Net sales grew 10.8 percent to $228.4 million from $206.2 million.

Maidenform estimated EPS for the third quarter of 34 to 38 cents, with sales expected to increase 12 to 16 percent. For the year, EPS is anticipated to be in the $1.10 to $1.16 range, up from previous guidance of $1 to $1.10. Revenues are estimated to increase in the high-single to low-double digits. Analysts are looking for third-quarter EPS of 33 cents on sales of $115.5 million, and full-year EPS of $1.05 on sales of $437.9 million.

Analyst Eric Beder, of Brean Murray, Carret & Co., upgraded the stock to “buy” from “hold” and set an $18 price target. He cited “strong core positions in innerwear and shapewear, new product initiatives and the continuing rollout of the Donna Karan line,” as well as material improvements in the company’s balance sheet, in his opinion.

Maidenform shares Wednesday rose 98 cents, or 6.9 percent, to close at $15.23.

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