The Warnaco Group Inc. reported results for the third quarter ended September 29, 2012.
The Company believes it is valuable for users of the Company's financial statements to be made aware of the adjusted financial information; as such measures are used by management to evaluate the operating performance of the Company's continuing businesses on a comparable basis and to make operating and strategic decisions. In addition, the Company uses performance targets based, in part, on non-GAAP income from continuing operations and non-GAAP operating income as a component of the measurement of certain employee incentive compensation.
"Our third quarter results reflect the efforts of our team to efficiently operate our global business," said Helen McCluskey, Warnaco's President and Chief Executive Officer. "Gross margin expansion and expense discipline more than offset a decline in net revenues, driven primarily by the impact of currency and macro challenges. As a result, we delivered an increase in operating margin and adjusted non-GAAP income per share from continuing operations compared to the prior year quarter.
"Internationally, net revenues in constant dollars were up slightly, led by growth in Latin America and Asia offsetting a slight decline in Europe. Our direct-to-consumer net revenues, in constant dollars, were up 5% and comparable store sales for the quarter were relatively flat. We saw some progress in Europe, where direct-to-consumer net revenues rose 6%, in constant dollars, including positive comparable store sales for the quarter.
"Looking forward, our reported 3Q results support our outlook for the balance of the year. As was announced last week, we entered into a merger agreement with PVH Corp. and look forward to the opportunities the transaction with PVH brings to our business. In the meantime, we intend to continue to operate the business effectively for the next several months as we work collaboratively with PVH to ensure a smooth integration," concluded McCluskey.
Fiscal 2012 Outlook
For fiscal 2012, based on recent foreign currency exchange rates, the Company continues to anticipate:
Net revenues, on a reported basis, will be down 2% to flat compared to fiscal 2011; and Adjusted, non-GAAP, diluted income per share from continuing operations (excluding restructuring expense, pension expense the Lejaby impairment charge, and acquisition costs relating to the previously announced transaction with PVH Corp.) in the range of $4.00 - $4.15.
Third Quarter Highlights
Total Company
Net revenues fell 5%, compared to the prior year period, to $611.5 million and were flat in constant currency. An increase in Swimwear Group net revenues, fueled by continued strength from Speedo, was offset by declines in Sportswear and Intimate Apparel net revenues. Challenging macro-economic conditions and the unfavorable effects of fluctuations in currency exchange rates adversely affected the Company's net revenues.
