MAIDENFORM TOPS ITS AUGUST FORECAST

Byline: Thomas J. Ryan

NEW YORK — Maidenform Worldwide Inc., which filed for bankruptcy on July 22, beat its internal operating forecasts for the second straight month.
The intimate apparel manufacturer lost $3.3 million in August compared with a projected loss of $6.2 million. Excluding interest, taxes and reorganization costs, the loss was $2.2 million against $3 million planned.
Gross margins at 21.1 percent were buried by operating expenses at 33.2 percent of sales. However, the results beat forecasts calling for margins at 20 percent and operating expenses at 35.2 percent.
The one lagging area was sales, which reached $17.9 million versus $19.1 million under the plan.
In July, Maidenform reported a net loss of $5.8 million versus a forecast deficit of $8.6 million under the plan.
Ted Stenger, Maidenform’s president, said the sales shortfall in August reflects difficulties in getting raw materials due to credit restrictions. He said in a telephone interview that the $50 million debtor-in-possession financing will allow the company to spend the rest of the year “filling that raw material pipeline back up again and getting our product back in business.”
Stenger noted that demand for Maidenform’s core products — Maidenform, Flexees and Lilyette — is stronger than available supply.
“Since the Chapter 11 filing, our wholesale business has been running a little ahead of expectations. Demand for the brands at two levels, consumer and retail, is still very strong,” Stenger said.
He said the improving margins at Maidenform have been helped by increased higher margin product, reduced cycle times, use of fewer resources and streamlining the organization.
“We achieved everything we set out to, plus a little more,” said Stenger.
Stenger declined to comment on the hiring of Bear Stearns Inc. as financial adviser to look into selling the company, saying he planned to concentrate “on making our turnaround complete and turning a profit.”
Maidenform has said it is not on the selling block, but said it has the responsibility as a bankrupt firm to listen to any potential offers and Bear Stearns provided assistance in this area last year.
Creditors have objected to the terms of Bear Stearns’ engagement, but a resolution is expected soon.
Meanwhile, Maidenform is also asking the court to approve the compensation plans for Stenger, a principal at the turnaround firm Jay Alix & Associates, and two other employees at J. Alix, as well as a retention program for 75 key employees.
Stenger, who was hired in May of this year as president to assist in managing Maidenform, receives $85,000 a month, plus a quarterly “success fee” tied to the improvement in earnings, according to court papers.
Maidenform currently employs two J. Alix employees: Peter Fitzsimmons, a senior associate at $325 an hour, and Soren Reynertson, an associate at $260 an hour. Maidenform needs approval from the court to hire additional J. Alix employees.

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