The Warnaco Group Inc. Earnings Cheat Sheet: Second Straight Quarter of Increasing Profit

The Warnaco Group Inc. (NYSE:WRC) reported its results for the third quarter. Warnaco Group designs, sources, markets, licenses and distributes a line of intimate apparel, sportswear and swimwear worldwide.

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The Warnaco Group Earnings Cheat Sheet for the Third Quarter

Results: Net income for The Warnaco Group Inc. rose to $44.6 million ($1.03 per share) vs. $41.5 million (90 cents per share) in the same quarter a year earlier. This marks a rise of 7.5% from the year earlier quarter.

Revenue: Rose 8.1% to $645.1 million from the year earlier quarter.

Actual vs. Wall St. Expectations: WRC reported adjusted net income of $1.07 per share. By that measure, the company fell in line with the mean estimate of $1.07 per share. Analysts were expecting revenue of $657.9 million.

Quoting Management: “Our globally diverse operating model enabled us to deliver another solid quarter of revenue growth and achieve significant progress toward our long-term expansion goals,” said Joe Gromek, Warnaco’s President and CEO. “Disciplined investment in our long-term growth strategies –maximizing our Calvin Klein businesses, expanding globally and growing our direct-to-consumer footprint –drove a 10% increase in our worldwide Calvin Klein net revenues, a 16% increase in our international net revenues and a 31% increase in our direct to consumer net revenues.”

Key Stats:

Gross margin shrank 1.7 percentage points to 43.4%. The contraction appeared to be driven by increased costs, which rose 11.5% from the year earlier quarter while revenue rose 8.1%.

Revenue has risen the past four quarters. Revenue increased 13.9% to $591.4 million in the second quarter. The figure rose 12.6% in the first quarter from the year earlier and climbed 17% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company fell in line with estimates last quarter after beating forecasts in the previous quarter with net income of 82 cents versus a mean estimate of net income of 74 cents per share.

Net income has increased 33.1% year over year on average across the last five quarters. The biggest gain came in the fourth quarter of the last fiscal year, when income climbed 74.1% from the year earlier quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from $1.06 a share to $1 over the last thirty days. Over the past sixty days, the average estimate for the fiscal year has reached $4.02 abs per share, a decline from $4.09.

Competitors to Watch: Polo Ralph Lauren Corp. (NYSE:RL), Hanesbrands Inc. (NYSE:HBI), Phillips-Van Heusen Corp. (NYSE:PVH), Wacoal Hldgs. Corp. (NASDAQ:WACLY), Sears Holdings Corporation (NASDAQ:SHLD), Saks Incorporated (NYSE:SKS), Macy’s, Inc. (NYSE:M), Kohl’s Corporation (NYSE:KSS), Dillard’s, Inc. (NYSE:DDS), Nordstrom, Inc. (NYSE:JWN),, Inc. (NASDAQ:OSTK), Wal-Mart Stores, Inc. (NYSE:WMT), The TJX Companies (NYSE:TJX), Ross Stores (NASDAQ:ROST) and Target Corporation (NYSE:TGT).

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(Source: Xignite Financials)