Warnaco Group Earnings: Revenue Changes Direction, Net Income Drops

The Warnaco Group Inc. (NYSE:WRC) reported its results for the first 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 First Quarter

Results: Net income for The Warnaco Group Inc. fell to $36 million (78 cents per share) vs. $44 million (98 cents per share) a year earlier. This is a decline of 18.3% from the year-earlier quarter.

Revenue: Fell 7% to $615.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: The Warnaco Group Inc. reported adjusted net income of 90 cents per share. By that measure, the company fell short of mean estimate of 92 cents per share. It fell short of the average revenue estimate of $655.6 million.

Quoting Management: “First quarter adjusted earnings were in line with our plan, however, revenue results were below our expectations. Our team very effectively managed expenses in a difficult environment to deliver the earnings results we are reporting today,” commented Helen McCluskey, Warnaco’s President and Chief Executive Officer.

Key Stats:

A year-over-year revenue decrease last quarter breaks a four-quarter streak of revenue increases. The best quarter in that span was the second quarter of the last fiscal year, which saw revenue rise 13.9%.

For two quarters in a row, the company has come in under analyst estimates. In the fourth quarter of the last fiscal year, it missed expectations by one cent with net income of 97 cents versus a mean estimate of net income of 98 cents per share.

After widening in the previous quarter, margins narrowed in the fourth quarter of the last fiscal year. Gross margin dropped to 43.5%, a 1.1 percentage points decline from the year-earlier quarter. In the third quarter of the last fiscal year, the number rose 0.6 percentage point from a year ago to 43.6%.

After sitting in the red the quarter before, the company reported a profit last quarter. In the third quarter of the last fiscal year, the company booked a net loss of $44.6 million, or a loss of $1.03 per share.

Looking Forward: Over the past ninety days, the average estimate for the second quarter has fallen from 84 cents per share to 81 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. The average estimate for the fiscal year is $4.37 per share, down from $4.48 ninety days ago.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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