Maidenform Brands Inc. posted better-than-expected third-quarter earnings on higher sales across several divisions, but the intimate apparel maker cut its 2008 outlook as retailing struggles.
This story first appeared in the November 6, 2008 issue of WWD. Subscribe Today.
Net income for the quarter ended Sept. 27 increased 8.6 percent to $8.4 million, or 36 cents a diluted share, from $7.8 million, or 32 cents a share. The results included 4 cents a share in start-up costs related to the licensing agreement for intimate apparel with Donna Karan and DKNY brands. Sales jumped 12.4 percent to $112.6 million, from $100.2 million. Analysts polled by Yahoo Finance estimated earnings per share of 35 cents on net sales of $109.3 million.
International sales increased 17.2 percent to $11.6 million, sales at mass merchants rose 39.2 percent to $28.4 million, and sales from department stores and national chain stores grew 10.6 percent to $57.3 million. Sales at Maidenform’s retail segment were flat at $17.7 million, with same-store sales sliding 3.3 percent at the company’s retail outlet stores mostly because of lower customer traffic.
For the nine months, profit fell 20 percent to $22.3 million, or 95 cents a diluted share, from $27.9 million, or $1.15, last year. Sales shrunk 2.3 percent to $318.8 million, from $326.4 million.
“We posted solid gains in sales and profits, and our investments in channel diversification and in our market-leading shapewear franchises and new brands are working,” said chief executive officer Maurice S. Reznik. “Our differentiated brands, disciplined expense control and solid cash flow are driving profitable growth and we’re well positioned for the future despite very challenging retail conditions.”
The department store “category is relatively promotional already, with the exception of shapewear, which is not as promotional, so in our assumptions we see that pressure continuing into the fourth quarter and into next year,” Reznik said.
For 2008, Maidenform is forecasting full-year earnings per share of $1.17 to $1.21. The Iselin, N.J.-based company originally estimated full-year EPS of $1.22 to $1.30, and sales to range between a 1 percent decrease and a 1 percent gain, reflecting the elimination of sales resulting from the bankruptcies of Mervyns and Boscov’s.