WARNACO PROFITS UP 38.6% IN 4TH PERIOD
NEW YORK — Fueled by strong growth in its Warner’s, Olga and Calvin Klein brands, profits at The Warnaco Group Inc. rose 38.6 percent in the fourth quarter.
In the quarter ended Jan. 4, earnings rose to $26.2 million, or 49 cents a share, from $18.9 million, or 36 cents, before nonrecurring items a year ago. Results were slightly ahead of Wall Street estimates of 48 cents a share. Operating income rose 41.1 percent to $51.6 million.
After $10 million in charges for accounting changes and debt write-offs, bottom-line earnings a year earlier were $8.5 million.
Sales in the quarter gained 26.4 percent to $342.5 million from $271.1 million.
For the full year, earnings excluding special charges climbed to $80.6 million, or $1.51 a share, from $56.9 million, or $1.26, a share a year ago, excluding special charges. Sales were up 16.1 percent to $1.1 billion from $916.2 million.
After special charges, however, Warnaco showed a bottom-line loss of $8.2 million in 1996, versus net earnings of $46.5 million, or $1.03 a share, a year ago.
Results in 1996 include an after-tax charge of $87 million, or $1.62 a share, to realign its intimate apparel division and exit the Hathaway men’s dress shirt business, as well as a $1.8 million charge associated with the company’s terminated merger with Authentic Fitness Corp.
Linda J. Wachner, chairman and chief executive officer, in a telephone interview noted that growth trends are expected to continue and predicted Warnaco would earn around $1.85 a share in 1997, which is in line with Wall Street’s current estimates.
Warnaco stock closed Wednesday at 30 3/8, up 3/8, on the New York Stock Exchange.
In the intimate apparel business, revenues in the quarter increased 27.8 percent to $264.1 million, while sales in the year rose 16.4 percent to $802 million.
The company noted that its performance in the quarter and the year reflects continued growth in its core intimate apparel brands, such as Warner’s, Olga and Calvin Klein, as well as the successful launch of the Marilyn Monroe line and the positive effect of acquisitions of Lejaby, GJM, and Bodyslimmers. In addition, the combined strength of the Chaps by Ralph Lauren line and Calvin Klein men’s accessories helped the men’s wear division.
Warnaco noted that its acquisitions of GJM, Lejaby and Bodyslimmers during 1996 enabled it to expand its presence in growing product areas such as sleepwear and shapewear, while broadening its geographic reach through the addition of a larger European distribution network.
In addition, Warner’s Marilyn Monroe collection of intimate apparel and sleepwear, introduced in December, “has performed exceptionally well,” Warnaco said.
In the men’s wear division, revenues rose 22.5 percent to $65.4 million in the quarter and gained 15.5 percent to $214.4 million in the year.
“Considering what they were up against, it was a good quarter for them,” said Todd D. Slater, analyst at Lazard Freres, calling Warnaco “one of the strongest performers in the entire apparel group.”
Slater said Warnaco’s performance was helped by high gross margins and tightly controlled expenses, and he was impressed that inventories were also low, despite strong growth in its Calvin Klein and Marilyn Monroe businesses.