NEW YORK — With its bankruptcy behind it, The Warnaco Group is focusing on making some lower-profile internal repairs.
In a presentation to analysts and investors, Joseph Gromek, president and chief executive, included the Calvin Klein sportswear business and the Olga and Warner’s intimate apparel businesses as among segments of Warnaco’s business in need of first aid.
He listed the three after noting that Warnaco’s sportswear operation, which generates 35 percent of sales but just 24 percent of EBITDA (earnings before interest, taxes, depreciation and amortization), has “some businesses that we actually have to fix.”
He subsequently referred to Calvin Klein sportswear, Olga and Warner’s as “margin opportunities.”
Gromek highlighted Calvin Klein underwear, Lejaby, Speedo and Chaps by Ralph Lauren as prime areas for growth, but declined to specify plans for A.B.S. by Allen Schwartz, noting that it isn’t a core business in the sportswear segment and that the company “continues to evaluate” it.
Intimate apparel accounts for 40 percent of both revenue and EBITDA at Warnaco, while the swimwear group generates 25 percent of sales and 36 percent of earnings.
Gromek said swimwear benefits from high margins and the fact that the business is “positioned appropriately.”
As a whole, he noted, the company has also developed the operating discipline to base its sales to retailers on consumer demand.
“We no longer do channel stuffing, if you will,” Gromek said, pointing out that this has reduced the firm’s dilution rate to about 10 percent from levels that sometimes were triple that level.
Tom Wyatt, head of intimate apparel, noted that one of the division’s problems was the lost identity of Olga when it was put under the Warner design team. One of the key changes Warnaco has made was to have separate teams for the two brands.
Separately on Thursday, Warnaco said that Jeanette Cantone will later this month join the firm in the new post of vice president of the Olga and Christina by Olga division, reporting to Wyatt.
Wyatt said, “As we continue to develop a new structure at the company by focusing on specific brands and specific distribution, Cantone will be instrumental in filling a new area that will be totally dedicated to department store channels.”Wyatt said Cantone will be responsible for the product development and execution of the core Olga business, as well as “new brands to be developed” and the newly created Christina by Olga bra brand, which will feature embellishments on natural fibers.
At the presentation, Wyatt said Olga is working on the reintroduction of its petites and full-figure lines. He termed a turnaround in the Olga business this year unlikely, although the second half appears to be stronger than the first.
Lejaby, Wyatt noted, is the division’s “crown jewel.” The business is still relatively small in the U.S., and the company will be launching Lejaby Rose to major U.S. department stores and specialty stores in spring 2004.
Roger Williams, president of swimwear, said that Speedo continues to be a key focus of the division, and new ventures will include Calvin Klein and Nautica swimwear lines, both under license.
The executives said that in the full year ended July 5, it had revenues of $1.5 billion. About 96 percent of revenues were derived from wholesale sales and 4 percent from direct retail customers. Slightly over three-quarters of sales, or 76 percent, were from domestic sales, with the balance from international sales.
Cantone was formerly senior vice president of merchandising and design at Natori Co. for 18 years. Before that, she was a buyer for several years at Bonwit Teller.
Cantone could not be reached for comment, but Josie Natori, ceo of Natori, said, “Of course, we’re sad but we understand. Jeanette is going to a totally different setup. She wants the challenge of a public company.”
Jessica Mitchell, senior vice president of sales and marketing at the Natori firm, will absorb Cantone’s merchandising and design responsibilities, said Natori.
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