Warnaco Group said Speedo’s revenues decreased $1.5 million in the quarter, but operating income at Speedo was up significantly to $6.9 million, or 10% of Speedo net revenues. On a conference call, Warnaco’s CEO Joseph Gromek said that although the competitive swim segment is down overall season to date, the Speedo brand is gaining market share in nearly every category due to the extensive for its new LZR Racer swimsuit. The suit has broken 48 world records since being introduced earlier this year.
“LZR racer has dominated sports new stories, giving Speedo an estimated $100 million worth of publicity,” said Gromek. “Were anxiously awaiting the start of the Olympics and pleased to be part of what we anticipate will be history-making performances.”
Gromek said the division is working to translate the success and technology of LZR racer to more mainstream swim categories. The swim division is also working to improve its inventory management and product-development processes to improve profitability.
“We expect a modest increase this year and more significant improvement in the next to few years,” said Gromek.
Overall revenues in the swimwear rose 1.9% in the second quarter, to $81.7 million from $80.2 million, helped by gains in Calvin Klein swimwear. Operating earnings reached $7.7 million, well above earnings of $937,000 a year earlier. Bottom line results were helped by a reduction in restructuring charges to $144,000 in the latest period versus $3.2 million a year ago, as well as reduction in SG&A expense, as compared to the prior year period. Excluding restructuring charges, operating earnings were ahead 27% in the period.
Overall, net revenues at Warnaco Group rose 22% to $503.8 million compared to $412.5 million in the prior year period and gross margin increased to 45% compared to 42% in the prior year quarter. Net income was $26.3 million, or 56 cents per diluted share, compared to $13.6 million, or 29 cents per diluted share, in the prior year quarter
