AUTHENTIC FITNESS HAS $11.5M LOSS IN PERIOD
NEW YORK — Authentic Fitness Corp. reported a pre-tax loss of $11.5 million in the first quarter ended Oct. 5, stung by advertising costs for the Olympics and continued fallout from the liquidation of Herman’s Sporting Goods.
The manufacturer of swimwear and activewear, whose brands include Speedo, Oscar de la Renta, Catalina, Cole of California and Anne Cole, said the results were in line with previously announced estimates. Officials told Wall Street analysts in a conference call that the company continues to look for earnings of 90 cents a share in fiscal 1997, which would equal the earnings of fiscal 1995.
Last year, Authentic Fitness lost $2.08 a share after $2.18 in charges to cover the closing of its unprofitable skiwear and outlet operations, bad debt charges from Herman’s bankruptcy, inventory write-offs, and its failed merger with Warnaco Group Inc. Authentic Fitness and Warnaco are both headed by Linda J. Wachner.
After a pro-forma tax credit of $4.2 million, the net loss was reduced to $7.4 million.
Sales fell 9.9 percent to $38.7 million from $42.9 million. Excluding last year’s sales of skiwear and outlet operations, both Speedo and designer swimwear sales were flat in the quarter.
The operating loss in the quarter was $8.8 million against earnings of $5.6 million a year ago.
Warnaco officials told analysts on a conference call that the quarter reflected $5.6 million in additional advertising related to the Olympics. Also, the liquidation of Herman’s this year hurt the firm both by discount sales and the fact that Herman’s is no longer a customer. A cold spring also hurt sales of swimwear.
Furthermore, the discontinued skiwear and outlet operations combined to add $3 million to profits in the 1995 quarter.
Both divisions were unprofitable for the rest of last year, a company spokesman said.
Sales at the 124-unit Speedo Authentic Fitness retail chain increased 33.5 percent to $11.3 million from $8.5 million, with same-store sales ahead 2.6 percent.
Sales per square foot improved to $434 from $430.
The firm remains on track to have 150 stores open by Christmas.
The designer swimwear business is a bright spot, with future orders ahead 33 percent. This was led by a hike in orders for the Catalina brand from Wal-Mart Stores.
Laurence Leeds Jr., managing director at Buckingham Research, said the results came in as expected.
“They’ve certainly been through a rough period,” Leeds remarked “but will start doing a lot better as the year goes on.”