The Warnaco Group Inc. saw earnings rise 41 percent in the second quarter, driven by international growth in its Calvin Klein business and prompting the company to raise guidance for the second time this year.
This story first appeared in the August 8, 2008 issue of WWD. Subscribe Today.
For the three months ended July 5, net income climbed to $19.4 million, or 41 cents a diluted share, from $13.8 million, or 31 cents, in the second quarter last year.
Sales in the quarter grew 22 percent to $503.8 million from $412.5 million, driven by a strong performance in Calvin Klein abroad.
“Our second-quarter results included broad-based strength with all operating segments and geographies recording increased revenue and profitability,” said Joe Gromek, Warnaco’s president and chief executive officer. “Our key expansion initiatives, including international, direct-to-consumer and our Calvin Klein businesses, continued to fuel our growth. During the quarter, international revenues accounted for 50 percent of the company’s total, led by 51 percent growth in Europe.”
Warnaco revised its 2008 outlook, projecting sales would grow 13 to 15 percent over 2007, with adjusted diluted earnings per share from continuing operations expected to range from $2.80 to $2.90. When the company revised its outlook after the first quarter, Warnaco said it expected revenues to grow 10 to 12 percent and diluted earnings per share growth of $2.65 to $2.75.
During the second quarter, sportswear sales increased 29 percent to $249.4 million, led by the Calvin Klein Jeans business, which grew in all regions — from 57 percent increases in Europe to 14 percent in the U.S. Chaps sales were flat, but operating margins improved to 19 percent from 11 percent.
For the first half, net income fell 28 percent to $37.1 million, or 80 cents a diluted share, from $51.8 million, or $1.11, due to restructuring costs and exits from the swim business in the first quarter. Sales so far this year increased 22 percent to $1.07 billion from $881.7 million.