Maidenform Brands, Inc., a global intimate apparel company, reported first quarter 2013 net sales of $131.2 million and a loss per share of $(0.05).
"First quarter results were as expected. We remain focused on growing our business and our outlook for the year remains on track," stated Maurice Reznik, Chief Executive Officer.
"During the quarter we made progress on our transition strategies. Our new products are performing very well in the marketplace and I am excited about the opportunities we are creating in our full figure, Donna Karan, international and shapewear businesses. The Maidenform team is building momentum in 2013 and I am confident that our execution will return us to sustained top and bottom line growth," concluded Mr. Reznik.
Financial Results for First Quarter 2013 versus First Quarter 2012
Net sales for the first quarter of 2013 decreased $26.3 million, or 16.7%, to $131.2 million. The sales decline in the quarter is attributed to a non-recurring warehouse club program, declines from discontinued businesses and in private label, and current competitive pressures in shapewear. Wholesale segment net sales for the first quarter of 2013 decreased $26.1 million, or 18.0%, to $118.7 million. Retail segment net sales decreased $0.2 million, or 1.6%, to $12.5 million.
The Company's net sales performance by channel of distribution is highlighted in Exhibit 1 to this press release.
Wholesale Segment
Department Stores and National Chain Stores
Net sales for the department stores and national chain stores channel decreased $4.9 million, or 8.4%, to $53.7 million for the first quarter of 2013, primarily attributable to increased shapewear competition at a chain customer.
Mass Merchants
Mass merchant channel net sales decreased $15.5 million, or 26.3%, to $43.5 million for the first quarter of 2013 from decreased shipments in the bra and shapewear categories, including lower sales to a global warehouse club as a shapewear event in the first quarter of 2012 did not repeat in the first quarter of 2013.
Other
Net sales in the other channel decreased $5.7 million, or 21.0%, to $21.5 million for the first quarter of 2013 primarily from sales declines to a specialty retailer and from decreased program sales to off-price retailers, which were somewhat offset by higher liquidation sales.
Total international net sales, which are included in the wholesale segment, decreased $1.0 million, or 6.1%, to $15.5 million. This sales decline was driven by the elimination of the aforementioned warehouse club program and a decline in the United Kingdom, which were partially offset by sales increases in Mexico and South Korea.
Retail Segment
Total retail segment net sales decreased $0.2 million, or 1.6%, to $12.5 million. Same store sales, defined as outlet stores that have been open for more than one year, increased 4.3%. Internet sales decreased $0.2 million, or 8.7%, to $2.1 million for the first quarter of 2013, resulting from lower promotional activity when compared to the prior year. The retail segment operated 69 outlet stores as of the end of first quarter 2013 and 75 outlet stores as of the end of first quarter 2012.
Consolidated gross profit decreased $12.3 million, or 28.7%, to $30.6 million for the first quarter of 2013. As a percentage of net sales, consolidated gross margins were 23.3% for the first quarter of 2013 versus 27.2% for the first quarter of 2012, driven by higher liquidation sales and negative product mix on higher sales in the panties category with declines in the higher margin shapewear and bra categories for the reasons mentioned above.
Consolidated selling, general and administrative expenses (SG&A) decreased $0.6 million, or 1.8%, to $32.5 million for the first quarter of 2013. This decrease is a result of the Company managing its expenses along with decreased payroll and related benefits, including lower incentive compensation, and a reduction in variable store operating expenses as the Company executed the planned store closings in the first quarter of 2013.
During the first quarter, the Company recognized a lower benefit from foreign currency exchange when compared to the same quarter of 2012, which partially offset these expense decreases. As a percentage of net sales, SG&A increased to 24.7% for the first quarter of 2013 compared to 21.0% for the first quarter of 2012.
Due to all the factors described above, operating loss for the first quarter of 2013 was $(1.9) million, or 1.4% of net sales, compared to operating income of $9.8 million, or 6.2% of net sales, for the first quarter of 2012.
Net interest expense for the first quarter of 2013 was unchanged at $0.3 million.
The Company recorded an income tax benefit of $0.9 million and income tax expense of $3.7 million for the three months ended March 30, 2013 and March 31, 2012, respectively. The Company's effective income tax rate for the first quarter of 2013 was 43.0% compared to 39.0% for the first quarter of 2012.
Net (loss) income for the first quarter of 2013 and 2012 was $(1.2) million and $5.8 million, respectively, and EPS for the same periods was a loss per share of $(0.05) and earnings of $0.25, respectively.
Total cash and cash equivalents as of March 30, 2013 were $47.0 million compared to $29.8 million as of March 31, 2012. The Company's outstanding debt was $67.7 million as of March 30, 2013 versus $68.8 million as of March 31, 2012.
