TAX-ADJUSTED NET OFF 45.5% AT AUTHENTIC FITNESS
NEW YORK — Authentic Fitness Corp., slowed by a flood at a warehouse, reported tax-adjusted earnings fell 45.5 percent in the second quarter ended January 1.
However, the swimwear and activewear firm noted strong backlog orders going forward. It also announced several new hirings, including Christopher Staff who returns to the company in the new post of president and chief operating officer.
In the quarter, Authentic Fitness earned $3 million, or 13 cents a share, down from $5.5 million, or 25 cents a share, a year ago, before last year’s special charges but adjusted for tax-loss carryforwards.
These earnings topped Wall Street’s average estimate of 10 cents a share. On the New York Stock Exchange, the firm’s stock closed at 13, up 1/2.
Earnings were adjusted to reflect the accrual of a 36 percent tax rate for each quarter. On an as-reported basis, Authentic Fitness earned $4.6 million, or 21 cents a share, in the latest period, versus a loss of $1.2 million a year ago.
Sales in the quarter fell 8.9 percent to $70.4 million from $77.3 million.
Of this decline, $8.6 million stemmed from inability to ship orders at the quarter’s end due to the previously reported flood at its Sparks, Nev., warehouse, while $2.8 million of the drop reflected the discontinuance of the skiwear and outlet divisions.
Officials told Wall Street analysts Tuesday in a conference call that sales of its Speedo brand climbed 9.5 percent in the quarter, excluding the impact of the closing of the outlet stores and the liquidation of Herman’s Sporting Goods.
Backlog for Speedo, which accounts for about 54 percent of sales, was up 25 percent.
Sales of the designer swimwear group — which includes Cole/Anne Cole, Catalina and Oscar de la Renta swim brands — fell to $17 million from $20 million. A spokesman said this largely reflected a shift in shipping the Catalina swimwear to Wal-Mart Stores to January this year from December a year earlier. The designer group’s backlog was up 26 percent.
Sales at its Authentic Fitness retail division rose 25 percent, but same-store sales fell 7.7 percent as a result of the cannibalization of new stores in existing markets. Thirty stores were opened in the quarter, bringing the total count to 144.
Operating margins at the stores were a solid 13.5 percent, with EBITDA (earnings before interest, taxes, depreciation and amortization) increasing to $1.7 million from $900,000. The stores achieved $425 in sales per square foot.
Prompted by the results, Margaret B. Whitfield, an analyst at Tucker Anthony, raised her estimate by 3 cents to 83 cents a share for Authentic Fitness’s year ended June 1997. That compares with earnings of 10 cents a year ago.
“We were a little disappointed by the comp-store growth at the retail stores, but we are pleased by growth in their backlog as well as the appointments,” said Whitfield.
Staff, the new president and chief operating officer, had been with Authentic Fitness as chief operating officer and president of the Speedo division from 1992 to 1995, when he joined Vans Inc. as president. He reports to Linda J. Wachner, chairman and chief executive officer of Authentic Fitness.
James Robins, formerly vice president and general merchandising manager at Sports & Recreation, sporting goods and active apparel retailer, has become president of Authentic Fitness Retail Stores division. Robins succeeds Sergio Moroni, who has resigned from the firm.
In addition, Wallis Brooks, controller, has become senior vice president and chief financial officer, replacing Nicolette Sohl, who also left the company.
The firm also told analysts it reached an exclusive agreement with Kentucky Textiles Inc., through which Kentucky, based in Paris, Ky., would run Authentic Fitness’s five domestic plants. The plants have 950 employees.
An Authentic Fitness spokesman said this move will stabilize manufacturing for the Speedo line, and reduce costs in the long-term.
In the half, Authentic Fitness lost $4.4 million against income of $7.7 million, adjusted for tax-loss carryforwards. On an as-reported basis, Authentic Fitness lost $6.9 million against earnings of $7.7 million, or 35 cents, a year ago. Sales fell 9.2 percent to $109.1 million from $120.2 million.