NEW YORK — The Warnaco Group Inc. said Wednesday that third-quarter income more than doubled compared with a year ago.
For the three months ended Sept. 30, income was $14.6 million, or 31 cents a diluted share, up from $6.9 million, or 15 cents, in the same year-ago quarter. Revenues rose by 38.5 percent to $452 million from $326.3 million.
For the nine months, income fell by 25.2 percent to $31.9 million, or 68 cents a diluted share, from $42.6 million, or 92 cents a year ago. Revenues rose by 19.7 percent to $1.36 billion from $1.13 billion.
Joe Gromek, president and chief executive officer, opened the company conference call to Wall Street analysts by highlighting Warnaco's acquisition of the Calvin Klein Jeans business in Europe and Asia.
"The new business is outperforming our expectations," he said. "Significant opportunities exist to expand faster across all geographies through our direct-to-consumer franchise and wholesale channels and to leverage these new brands with our powerful Calvin Klein underwear business. We believe shareholder returns will be enhanced by concentrating our investment capital in our Calvin Klein business."
Gromek said that in the past six months the company has been evaluating its entire portfolio of brands. In addition to its sale of Ocean Pacific to Iconix, which acquired the brand for $54 million, Warnaco will discontinue certain brands, including JLo by Jennifer Lopez lingerie.
Elimination of the non-core brands makes "strategic sense" and enables the company to "focus our attention and resources on businesses and brands that offer us stronger growth and earnings potential," Gromek said.
He emphasized in an interview that Warnaco will "continue to look at all the brands and will take appropriate action with an eye toward maximizing shareholder value. It is not a static activity, but a constant evaluation."
Although the intimate apparel business grew at a double-digit rate during the quarter and the Calvin Klein women's business was up 25 percent, management is anticipating the product and pricing strategies for Chaps to help it reach revenue and profit objectives in the "not too distant future," executives said on the call.
Swimwear, slow in the third quarter, is expected to perform well in the 2007 season. Gromek added that the cruise line, which began shipping in October, is a higher-margin quarter for the swimwear business because of the paucity of markdowns.
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