US: Warnaco Q1 profit drops on weaker sales
- Q1 profit down 18.4% to US$35.9m
- Sales declined 7% to $615.5m
- Gross margin fell 110 basis points to 43%
Apparel company The Warnaco Group recorded a drop in first-quarter net income, hurt by the weak economy in Europe and higher markdowns in the US.
Profit for the quarter ended 31 March was down 18.4% to US$35.9m, as sales declined 7% to $615.5m. Gross margin fell 110 basis points to 43% due to product cost inflation and increased customer allowances. Operating income declined 25% to $52.2m.
On the back of the results, the company reduced its full-year forecast and is now expecting net revenue to be flat to up 2%, down on prior forecasts of 4-6% growth.
It is also expecting that earnings from continuing operations will be in the range of $4-4.25 per share, down on the initial forecast of $4.20-4.45 per share.
"We had anticipated 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," said president and CEO Helen McCluskey.
"However, more challenging market conditions in Europe, higher markdowns in US Sportswear and softer than expected comparable store sales in our owned retail stores, particularly in Korea, resulted in net revenues below our plan.
"We anticipate some of these trends to continue and, with better visibility to our forward bookings, we have tempered our growth expectations for the balance of the year and adjusted our guidance accordingly.
She said direct-to-consumer revenue was up 7%, while Latin American and Asian operations continued to post year-on-year growth.
PVH's acquisition of Warnaco will have the obvious benefit of uniting the Calvin Klein brand, but PVH chairman and CEO Emanuel Chirico also emphasised the potential to leverage Warnaco's strong platfo...
The revamp of apparel group Warnaco's operations - in terms of both channels and regions - has been hindered by external factors including one-off charges and currency fluctuations....
Top stories on just-style this week include Sri Lanka feeling the loss of the GSP+ scheme, H&M hitting back at accusations it fails to pay adequate wages to Cambodian workers, and PVH acquiring The Wa...
- Why Inditex is "clear winner" in fast fashion
- Why fast fashion isn't a case of one size fits all
- Brexit blow to global apparel industry confidence
- Sir Philip Green blamed for the collapse of BHS
- TPP tariff phase-out guides Vietnam sourcing plans
- Vietnam mulls wage freeze to boost competitiveness
- US Q2 in brief - Columbia Sportswear, Rocky Brands
- VF Corp cuts guidance as Q2 profit plunges 70%
- Teijin launches polyester hook-and-loop fastener
- LVMH to sell Donna Karan to G-III for US$650m
- Central America strategic sourcing review - a focus on Guatemala, El Salvador and Honduras
- Southeast Asia strategic sourcing review – a focus on Cambodia, Vietnam and Myanmar
- World Textile and Apparel Trade and Production Trends: the EU - June 2016
- Primark Stores Limited: Retailing - Company Profile & SWOT Analysis
- Global market review of lingerie - forecasts to 2020