Warnaco Group's Swimwear Group, which includes Speedo, reported Q1 revenues dipped 4.6% to $95.9 million and eased 1% on a constant currency basis. Operating income slid 14.9% to $12.6 million. Group results were hurt by currency exchange rates and delayed deliveries in its Calvin Klein swim business. Speedo, however, recorded a 1% increase in revenues, a 4% gain in operating income, and a 120 basis point improvement in operating margin, to nearly 19%.
Speedo wholesale revenues grew 2.3% to $83.8 million from $81.9 million as a $3.5 million $3.5 million increase in the U.S. offset decreases of $1.2 million in Canada and $0.4 million in Mexico, Central and South America. The increase in the U.S. primarily reflects an increase in sales to membership clubs due to new programs and a shift in the timing of shipments into Q109, as well as an increase in sales to specialty stores. Those increases were partially offset by decreased sales to the mass, department store, chain and off-price channels.
“Our emphasis at Speedo remains improving profitability, but we are very pleased that our season to date bookings in competitive swim channels are up high-single digits,” said Helen McCluskey, Warnaco's president, intimate Apparel, swimwear, on a conference call. “Demand for the LZR Racer continues to be strong. We have retained a leadership position in goggles, and response to our new footwear has been encouraging.”
Overall swimwear wholesale revenues were down 3.8% to $93.6 million, reflecting a 36.3% drop in Calvin Klein swim. Swimwear retail was down 26.5% to $2.3 million, primarily reflecting volume decreases at the online Speedo store.
McCluskey said production of Calvin Klein Swim is now on schedule, and deliveries should be current in the second quarter. The latest quarter included $1.6 million in restructuring charges versus 969,000 a year ago.
She said the Swimwear Group is on track to achieve its goal of improving operating margins in 2009.
“Our businesses are not completely resistant to the economic challenges, but they are resilient as is our model of diverse geographical and channel distribution. We continue to believe that this will allow us to weather this environment better than most,” said McCluskey.
Overall, Warnaco Group, whose primary business is Calvin Klein jeans and underwear, reported Q1 earnings doubled to $37.6 million, or 82 cents a share, from $17.7 million, or 38 cents, a year earlier. Excluding items in both quarters, earnings from continuing operations rose to $1 a share from 94 cents. Revenues fell 5% to $538.4 million, but increased 6% on a constant currency basis.
