Warnaco reported that its Swimwear Group, which includes Speedo, Ocean Pacific, and a number of designer brands, held back total company consolidated growth for the first quarter as sales in the Group slipped 0.8% for the period to $111.3 million, compared to $112.1 million in the year-ago quarter. WRNC said that the Swimwear group declines were primarily due to declines in Speedo and certain Designer lines, partially offset by revenues of Ocean Pacific and Calvin Klein swimwear in Europe, and to unfavorable weather conditions which resulted in a decline in shipments.
Speedo brand sales declined 5.7% for the quarter to $68.1 million, compared to $72.1 million in Q2 last year. Ocean Pacific, which was acquired in August of last year, contributed $2.2 million in sales for the quarter. The designer business was up 1.8% to $39.2 million. Excluding revenues from the OP acquisition, total Swimwear Group sales would have declined 2.8% for the quarter.
Swimwear Group gross margin decreased 380 basis points, which the company attributed to an increase in manufacturing and design and development costs related to the development of new lines. As a result of the dropping margins and revenues, operating income for the Swimwear group dropped 61.7% to $5.8 million from $15.2 million during last years second quarter.
Total Warnaco net revenues increased 12.8% to $374.7 million in Q2, with approximately $4.1 million of the gain related to FX rate benefits. Net income jumped 42.5% to $6.3 million, or 14 cents per diluted share, versus $4.4 million, or 10 cents per diluted share.