Recession or not, The Warnaco Group Inc. is putting its Calvin Klein jeans and underwear retail businesses on the offensive.
The company, which has a long-standing licensing arrangement with Calvin Klein, said its first-quarter results, which included net income that more than doubled, were strong enough to warrant adding 120,000 square feet in stores and shop-in-shops this year. That’s an increase from the 100,000 previously planned, but a slowdown from 2008 when the company added 140,000 square feet and ended the year with 500,000 square feet in international retail space.
“We have an opportunity to take some market share from some of the competition and move forward more aggressively,” Joe Gromek, president and chief executive officer of Warnaco, told WWD. He said the company was using its financial position to expand in markets such as Germany and China.
“There’s an aspirational customer out there,” Gromek said. “They know Calvin Klein. They want the brand, and underwear and jeans are affordable.”
The ceo said business conditions were more predictable than they had been, but still not improving. “It’s not getting any worse,” he said. “There’s a stability.”
At the end of the first quarter on April 4, Warnaco had 960 stores in its direct-to-consumer channel, a unit that saw a 5 percent comparable-store sales boost. Eighteen percent of Warnaco’s revenues came from the retail business in the first quarter. The firm also produces an array of goods under the Calvin Klein name and other brands for wholesale distribution.
Net income for the quarter rose to $37.6 million, or 81 cents a diluted share, from $17.7 million, or 38 cents, a year earlier. Adjusting for restructuring and other charges, earnings fell 17.4 percent to $45.1 million, or 98 cents a share, well ahead of the 73 cents Wall Street analysts projected. Revenues for the three months fell 5.1 percent to $538.4 million from $567.7 million.
Sales of Calvin Klein — which account for about 75 percent of the firm’s top line — fell 5 percent for the quarter, but were up by a double-digit percentage on a constant currency basis.
Jason Asaeda, equity analyst at Standard & Poor’s, raised his rating on the firm’s stock to “buy” from “hold.”
“We see [Warnaco] gaining share in the global sportswear and intimate apparel markets based on Calvin Klein’s positioning as an affordable luxury brand, plus on continued retail expansion,” Asaeda said.
Eric Beder, an analyst with Brean Murray, Carret & Co., raised his target price on Warnaco to $40 from $28 and said the firm has “material expansion opportunities.”
Warnaco narrowed its financial guidance for the year and is now looking for adjusted earnings of $2.50 to $2.66 a diluted share, instead of $2.40 to $2.66.
Shares of the company fell 1.1 percent to $28.51 Tuesday.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast