• Q2 profit down 30.6% to US$18.4m

• Revenues flat in constant currency

• Ups FY guidance as international growth continues

The Warnaco Group has posted a 30.6% decline in second quarter net profit to US$18.4m, but pointed to the continued international growth of brands like Calvin Klein.

The apparel company's net revenues for the period ended 4 July fell 9% to $455.9m, but edged down just 0.5% on a constant currency basis.

Operating profit fell 16.8% to $40.7m, while earnings per share were $0.40, compared to $0.56 in last year's second quarter. Adjusted EPS was $0.48, compared to $0.70 last year.

Warnaco president and CEO Joe Gromek described the quarter as "solid", pointing to the company's success in growing the Calvin Klein businesses globally, increasing its international presence and expanding its direct-to-consumer channel.

"While overall revenues in constant dollars were flat, international revenues in constant dollars rose 8%, led by double-digit growth in Asia and Latin America," Gromek said.

International revenues now account for 53% of group revenues, he added, while the company remained on track to expand its retail footprint by 24%, or 120,000sq ft, during 2009.

International revenue growth offset widespread declines in the domestic US market, much of it attributed to a shift in timing of sales into the first quarter.

Warnaco now expects full-year revenues to be down 7-9%, or 0-2% on a constant currency basis. Earnings per share are predicted at $2.60-2.75.

Sportswear revenues fell 10% to $223.5m, while intimate apparel was down 8% to $158.1m, and swimwear declined 9% to $74.2m.

Currency exchange rates, the timing shift in membership club sales and the promotional environment were all blamed for the declines.

INSIGHT

Warnaco's clear progress on the international front is providing more than mere consolation as the US market remains difficult - and the global expansion of brands like Calvin Klein is poised to continue.

President and CEO Joe Gromek told analysts that retail expansion of 20% a year for the next three years "seems like it's doable", with Asia, Latin America and selected spots in Western Europe all on the company's radar.

The detailed figures bear out this confidence in the international marketplace: Calvin Klein revenues were up 1% in constant dollars in the second quarter, but rose 9% in the international segment, more than offsetting a 15% domestic decline.

The trend is continuing, with July comps up 3%, but rising 8% in Europe, where 12 out of the company's 13 markets were in growth (Switzerland being the unhappy exception).

The UK showed strong July comps growth of 18%, while China and Australia both posted 10% growth. Even the hard-hit market of Spain registered a 1.5% increase.

These are welcome distractions for a company which still has some challenges, not least Chaps and Speedo, where profitability remains the key focus.

Speedo revenues were down 10% in the quarter, in line with expectations. Intimate apparel remains under pressure in the important US department store segment, although there are signs of an upturn in market share for women's bras - viewed by Warnaco as a key growth driver.

But other areas look more positive, with the reportedly "enthusiastic" response to the company's spring 2010 sportswear collection encouraging confidence that sales there will beat 2009 figures.

Warnaco's strong growth prospects and robust balance sheet has prompted speculation that the company might be on the trail of acquisitions, but Gromek remained coy about the possibilities.

Organic growth was still top priority, he insisted, but added: "We continue to study opportunities. Nothing has popped up that has driven us into action at this point, but we certainly are diligent in looking at the marketplace."