By  on December 3, 2004

NEW YORK — Kellwood Co. reported a healthy sales bump Thursday because of new products — from the acquired Phat Farm fashions to licensed Calvin Klein sportswear — but third-quarter earnings dropped 6.3 percent, partly from the costs of launching the lines.

Net income for the three months ended Oct. 30 fell to $28.4 million, or $1.01 a diluted share compared with year-ago earnings of $30.3 million, or $1.11, when results from the discontinued hosiery and True Beauty businesses contributed a $619,000 loss.

Selling, general and administrative expenses rose 15.8 percent to $97.8 million during the quarter, attributed to increased spending on new marketing initiatives such as the licensed O Oscar brand.

“The moderate customer has been hardest hit with this economic environment,” chairman and chief executive officer Hal Upbin said in an interview. “With the gasoline and the heating oil [prices], the jobless rate, the moderate customer has been beaten up and that’s why the numbers are a little frailer than we would have liked.”

Buoyed by the new businesses, Kellwood’s overall quarterly sales advanced 11.3 percent to $716.8 million from $644.1 million. Sales of women’s sportswear rose 4.4 percent to $413.5 million, while men’s, helped by the February acquisition of Phat Farm, pulled in $206 million, a 33.9 percent increase.

For the nine months, Kellwood’s earnings jumped 10.1 percent to $63.6 million, or $2.27 a diluted share, from $57.8 million, or $2.14, a year ago. Sales rose 7.6 percent to $1.96 billion.

In October, the firm warned its earnings for the quarter would come in at $1 a diluted share, 15 cents below previous estimates. The weakness was blamed on tepid consumer demand for apparel, driven by lofty fuel prices, abnormal weather and fashion miscues.

Some of the brands, which were too traditional in styling for the tastes of consumers and stores, will be imbued with a more modern sensibility for fall 2005.

To help diversify its portfolio, which traditionally has been geared toward the moderate customers, Kellwood has invested in higher-priced businesses, such as David Meister and Bill Burns, as well as the Calvin Klein license.

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