• Q3 profit up 12% to $29.7m
  • Sales down 5% to $520.9m
  • Lifts FY sales and earnings outlook

Apparel maker The Warnaco Group Inc today lifted its full-year guidance after third quarter profit rose 12%, helped by growth in its Calvin Klein business and tight control of inventories and costs.

Net income for the three months to 3 October was $29.7m or $0.63 per share, compared to $26.5m or $0.56 per share, a year earlier.

Net revenues were down 5% to $520.9m thanks to adverse currency exchange rates, the company said, but fell less than 1% on a constant currency basis.

Gross margin, meanwhile, was down 260 basis points to 44% of net revenues.

By group, sportswear revenues fell 1% to $312.9m, intimate apparel net revenues dropped 11% to $177.8m, and swimwear revenues were down 5% to $30.2m - including a $3.6m charge to write-down inventory related to racing suits such as the Speedo LZR Racer that has been banned from use in competition.

"Our strong third quarter results, in the midst of a challenging environment, reflect the continuing positive contribution of our long-term growth initiatives," said Joe Gromek, Warnaco's president and CEO.

"We are off to a strong start to the fourth quarter and are encouraged and optimistic about the prospects for growth as we end 2009 and move into 2010" he continued.

As a result, Warnaco has raised its annual guidance, saying it now expects net revenues to fall by 3-5%, beating earlier forecasts for a drop of 7-9%.
Diluted earnings per share for the year are seen in the range of $2.70 - $2.80, bettering the $2.60 - $2.75 per share expected previously.

Click here for editorial insight into Warnaco's third-quarter results.