AUTHENTIC FITNESS NET GAINS 52.9%
Byline: Thomas J. Ryan
NEW YORK — Propelled by robust swimwear sales, Authentic Fitness Corp. earnings jumped 52.9 percent in the second quarter and 41 percent in the six months ended Dec. 31, excluding extraordinary charges affecting the year-ago periods.
Earnings in the quarter for the Van Nuys, Calif.-based firm rose to $4.5 million, or 21 cents a share, from $2.8 million, or 15 cents, before special charges a year earlier. After-tax charges of $3.6 million related to the Catalina/Cole acquisition and $900,000 to refinance debt resulted in a net loss of $2.4 million in the year-ago quarter.
Sales climbed 52.9 percent to $56.3 million from $36.8 million, largely reflecting the acquisition of the Catalina/Cole swimwear lines in October 1993.
“The business is very strong in all categories,” said Linda J. Wachner, chairman and chief executive officer. “Both Speedo and designer swimwear are outperforming expectations.”
She said order backlog is ahead by more than 20 percent. Labels in what the company designates as its designer swimwear group include Ann Cole, Cole of California, Catalina and Oscar de la Renta. The group had revenues of $14.6 million in the latest quarter against $2.4 million a year earlier. Speedo’s revenues advanced 18.5 percent to $30.6 million from $25.8 million.
Wachner noted that the firm has the exclusive swimwear license for the 1996 Olympics in Atlanta, and its Olympic line will be shown at the upcoming Super Show in Atlanta.
Wachner said the Speedo Authentic Fitness retail concept “continued to show outstanding performance,” with sales of $5.3 million in the quarter, and same-store sales ahead 3 percent with the stores averaging over $450 in sales per square foot.
There were 47 stores open at the end of the calendar year, with 37 new units opened in the year. Plans call for 50 new stores in the current year.
At the White Stag/Skiwear division, sales were approximately even in the quarter due to a sharp reduction of sales of the White Stag skiwear and swimwear to Wal-Mart Stores — to $5.8 million from $7.8 million — caused by a timing issue with shipments. Authentic Fitness expects shipments to Wal-Mart to be made up in the third quarter and looks for overall division sales to be up about 10 percent in the fiscal year ending in June. The division also includes the Edelweiss, Mountain Goat and Skiing Passport skiwear brands.
Wachner also noted that interest expenses declined 6 percent in the quarter, reflecting the repayment of debt and lower interest rates.
Brenda Gall, at Merrill Lynch, said sales and earnings gains exceeded her projections in the quarter, with some lower-than-expected sales at the retail stores more than made up by strength in other areas. Authentic Fitness stock closed Thursday at 13 3/4 up 5/8 on the New York Stock Exchange.
Gall said there’s “a lot of excitement” in Authentic’s designer swimwear business, which should get a boost from the introduction of the Miracle Swimsuit to Victoria’s Secret, where Warnaco Group — another company headed by Wachner — launched the Miracle Bra.
“There’s enough change in fashion in the women’s swimwear category that they should have a fairly good season,” Gall said.
In the half, earnings rose to $6.5 million, or 30 cents a share, from $4.6 million, or 26 cents, a year earlier before extraordinary charges. After the extraordinary charges, Authentic Fitness lost $594,000. Sales climbed 43.5 percent to $93.9 million from $65.4 million. — Fairchild News Service