Warnaco Q2 net revenues down by 5 percent

Warnaco Group’s net revenues decreased 5 percent in

the second quarter ended June 30, 2012. Gross margin decreased 130 basis points to 42 percent of net revenues.

In the second quarter the group’s net revenues fell 5 percent to 563.9 million dollars, compared to the prior year period and were flat in constant currency. In the quarter, it achieved a 10 percent increase in net revenues from swimwear, fueled by a powerful performance from its brand Speedo. But these were more than offset by declines in net revenues from sportswear and intimate apparel. Gross margin decreased 130 basis points to 42 percent of net revenues, compared to the prior year period. Gross profit decreased 8 percent compared to the prior year quarter to 238.9 million dollars. Selling, General & Administrative (SG&A) expense was down 2 percent, compared to the prior year quarter, to 199.3 million dollars; however, as a percentage of net revenues, SG&A expense increased 110 basis points to 35 percent of net revenues.

Income from continuing operations decreased to 9.6 million dollars, or 0.23 dollars per diluted share, compared to 45.6 million dollars, or 1.01 dollars per diluted share, in the prior year quarter. On an adjusted, non-GAAP basis, income from continuing operations was 30.2 million dollars, or 0.72 dollars per diluted share, compared to 37.0 million dollars, or 0.82 dollars per diluted share, in the prior year period.

Helen McCluskey, Warnaco’s President and Chief Executive Officer, said, “Our second quarter results were in line with our projections. As expected, a positive performance in Asia and Latin America during the quarter offset softness in Europe and the U.S. In the near term, looking ahead to the second half, with good visibility to forward bookings and more favorable product costs, we expect second half net revenue and gross margin to increase and to meet our projections for the balance of 2012.”

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, intimate apparel, and swimwear under such owned and licensed brands as Calvin Klein, Speedo, Chaps, Warner's and Olga.