Expanding international and retail operations propelled The WarnacoGroup Inc. to a 52 percent boost in second-quarter net income andprompted the company to raise guidance for the remainder of the year.
Netincome for the three months ended July 2 was $45.5 million, or $1.01 adiluted share, versus $29.9 million, or 65 cents, in the 2010 quarter.Adjusting for discontinued operations and special items, earnings pershare was 82 cents, 7 cents above the analyst consensus estimate.
Pacedby a 17.3 percent increase in sales of its sportswear group, to $286.3million, overall revenues were up 13.9 percent to $591.4 million, nearly$10 million above the $581.5 million expected by analysts on average,from $519.3 million a year ago. Sportswear sales were up 10.5 percent ona constant currency basis. Intimate apparel rose 13.7 percent, 8.2percent at constant currency, to $226.4 million, while swimwear rose 3.3percent to $78.7 million and was ahead 1.2 percent excluding currencyfluctuation.
“Our global Calvin Klein business grew 19 percent inthe quarter, benefiting from international and direct-to-consumerexpansion, led once again by Latin America and Asia,” said Joe Gromek,president and chief executive officer of the New York-based company.“Expanded square footage and a 7 percent increase in comparable-storesales contributed to a 38 percent increase in retail net revenues.”
Withoutdisclosing their previous levels, Gromek told WWD that the firm expectsits retail operations to grow to more than one-third of revenues andsurpass 80 percent of operating income in the fourth quarter. “Withgross margins in the high 60s, that’s obviously going to affect thecompany’s gross margin in a positive way,” he said.
He noted thatsensitivity to price increases varied according to each market’seconomic conditions. “In some places, like Brazil and Hong Kong, we’renot feeling it at all,” he said. Comps, he noted, were running at“double digits and above” in Germany, France and the U.K., but were down5 percent and 6 percent, respectively, in Spain and Italy during thequarter.
Gromek cited “a more promotional environment and highercustomer allowances” in certain of its U.S. and European wholesalebusinesses for a decline in corporate gross margin, which fell to 36.4percent of sales from 36.9 percent despite a 12.4 percent boost in grossprofit, to $258.3 million. In the year’s first half, gross margin wasoff 140 basis points to 35.4 percent of sales, but the full-year grossmargin decline is expected to be about 30 basis points, helped by theshift towards retail.
International revenues grew 32 percent inthe quarter but were down 4 percent in the U.S.
The companylifted its fiscal 2011 guidance to growth of 10 to 12 percent inrevenues, compared to earlier guidance of a 9 to 11 percent jump.Guidance for EPS was narrowed to a range of $4 to $4.15 a diluted share,up from projections of $3.95 to $4.15.
First-half net incomerose 14.9 percent to $89.5 million, or $1.97 a diluted share, from $77.9million, or $1.67, as revenues picked up 13.2 percent to $1.25 billionfrom $1.11 billion.
Alberta Ferretti's "Rainbow Week" sweaters are back. The designer closed her #MFW show with a few day-of-the-week sweaters, which first debuted on the catwalk last January as part of the pre-fall 2017 collection. #wwdfashion (📷: @delphineachard)