NEW YORK — Nautica Enterprises Inc., which said a week ago it would be acquired by VF Corp., on Tuesday posted narrower first-quarter losses than it did a year ago.
For the three months ended May 31, the loss was $1.6 million, or 5 cents a diluted share, versus a loss of $2.6 million, or 8 cents, in the year-ago period. The company’s improved operations also nearly halved its operating loss to $2.4 million from $4.6 million last year.
Sales for the quarter gained 10.6 percent to $139.2 million from $125.9 million. The company’s wholesale segment grew 12.4 percent to $107.1 million from $95.3 million, boosted in part by increases in Nautica men’s jeans, Nautica women’s sleepwear and Nautica underwear. Retail sales increased 5 percent to $32.1 million from $30.6 million, although comparable-store sales in the Nautica outlet division were down 3.3 percent. The company operates seven full-priced retail stores and 114 outlets.
Royalty income jumped 19.3 percent to $2.8 million from $2.4 million, with gains coming from Nautica Home Collection, Nautica Women’s Swimwear and Beachwear Collections and the newly launched Nautica Competition fragrance.
Harvey Sanders, chairman, president and chief executive officer, said in a statement, “This is an exciting time for the Nautica business as we move towards completing the previously announced plans to merge with VF Corp. We are particularly pleased with the company’s first-quarter earnings results, which were in line with consensus estimates.”
Higher markdowns and wholesale allowances drove down gross margins to 42 percent of sales from 44.3 percent a year ago, but, aided by consolidation of its distribution operations, selling, general and administrative expenses, declined to 43.4 percent of sales from 47.2 percent in last year’s quarter.
The company said it remained “conservative” in its outlook for fiscal 2004, given the state of consumer confidence, the uncertainty with the economy and continuing difficulties in the men’s collection business. Full-year diluted earnings per share are expected to land between 95 cents and $1, excluding one-time aftertax charges in connection with the previously announced transition of its Nautica Europe business to a licensing arrangement. The company also guided second-quarter earnings per share at between 31 cents to 32 cents, excluding the special charge.In other news, Nautica is the official apparel sponsor of Sports Illustrated’s first swimsuit model search. Nautica will provide swimwear, dressy and casual clothing and accessories for contestants. After paying a $25 processing fee, submitting two photographs of themselves and summing up their passion for sports, select applicants will be invited to four contests at pro beach volleyball tournaments this summer, which will air live on NBC. The winner will appear in the magazine’s 40th anniversary swimsuit issue next year.
Nautica founder and designer David Chu, said, “Spirited competition, a sense of adventure and an active lifestyle are synonymous with the Nautica brand, and this competition embodies those ideals perfectly.”
Molly Sims, a former SI swimsuit model, will serve as spokeswoman and will be one of the judges for the event. The winner will be revealed on Dateline NBC prior to the magazine’s newsstand launch on Feb. 16.
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