Net revenue of Warnaco declined 7% in Q1

The Warnaco Group reported results for the first quarter ended

March 31, 2012. For the first quarter net revenues were $615.5 million, a decline of 7% compared to the prior year period. Income per diluted share from continuing operations was $0.78 compared to $0.98 in the prior year period. Income per diluted share from continuing operations on an adjusted, non-GAAP, basis was $0.90 compared to $1.10 in the prior year quarter.

Gross profit decreased 9% compared to the prior year quarter to $267.5 million, while SG&A expense was down 4%, compared to the prior year quarter, to $212.6 million. Growth in the company’s intimate apparel segment was more than offset by declines in the sportswear and swimwear segments. The company had expected a year-over-year decline in net revenues in the quarter due to planned reductions to value retailers and the impact of fluctuations in foreign currency exchange rates. However, more challenging market conditions in Europe, higher markdowns in U.S. sportswear and softer than expected comparable store sales in their owned retail stores, particularly in Korea, resulted in net revenues below the plan.

“First quarter adjusted earnings were in line with our plan. However, revenue results were below our expectations. Our team very effectively managed expenses in a difficult environment to deliver the earnings results we are reporting today,” commented Helen McCluskey, Warnaco’s President and Chief Executive Officer.

Gross margin decreased 110 basis points to 43% of net revenues, due primarily to product cost inflation and increased customer allowances. Further, direct-to-consumer net revenues, representing 29% of total company revenues, were up 7% with new stores, including 39,000 feet added in the quarter, more than offsetting a 2% decline in comparable store sales. International net revenues represented 60% of total company net revenues and Latin America and Asia continued to post year-over-year growth. For fiscal 2012, based on recent foreign currency exchange rates, the company now anticipates net revenues will be flat to up 2% compared to fiscal 2011.

The Warnaco Group, headquartered in New York, is a global apparel company engaged in the business of designing, sourcing, marketing and selling men’s, women’s and children’s sportswear and accessories, swimwear and intimate apparel. The brands under owned licensed by them are Calvin Klein, Speedo, Chaps, Warner's and Olga.