Warnaco Group Swimwear Group net revenues declined 9.1% to $74.2 million for the second quarter and were down 6% on a constant currency basis.  The company pointed to timing shifts of certain sales and a challenging economic environment as the primary factors affecting Swimwear Group net revenues.

Speedo revenue was down 9.6% to $61.7 million for the period, but management said results for the quarter were “as expected.”  They said a continued focus on operational improvement is yielding positive results.  The $6.5 million decrease in net revenues for the Speedo wholesale business was said to be due primarily to decreases of $5.4 million in the U.S., $0.5 million in Canada and $0.6 million in Mexico, Central and South America.


The decrease in the U.S. primarily reflects a decrease in sales to membership clubs and specialty stores — primarily due to the timing of shipments, which occurred late in the first quarter of Fiscal 2009 when comparable shipments occurred in the second quarter of Fiscal 2008 — decreases in sales to department stores and the mass merchandise channel — which the company said is related primarily to the downturn in the economy — and decreases in sales to the chain store and off- price channels of distribution. The decrease in Mexico, Central and South America primarily reflects a decline in sales to specialty stores, partially offset by an increase in sales to membership clubs. The decrease in Canada reflects a decline in sales to department stores.
Speedo shipments were down in most channels for the quarter, but retail sales for the swim season were said to be ahead of plan.

Total Swimwear wholesale revenues declined 8.9% to $68.0 million, with the Speedo decline offset a bit by the 2.2% decline in Calvin Klein revenues to $6.2 million for the period.  Swimwear Group owned-retail revenues were down 11.1% to $6.3 million from $7.1 million Q2 last year, reflecting a $0.9 million decrease in the U.S., partially offset by an increase of $0.1 million in Asia.  Net revenues in Europe were unchanged. The company reported that the decrease in net revenues in the U.S. primarily reflects volume and price decreases at the online Speedo store. In Europe, the increase in sales was offset by a decrease due to fluctuations in foreign currency.

Swimwear Group gross margin declined 110 basis points to 35.4% of sales.  The GM decline was offset by a 270 basis point decline in SG&A expenses.
Swimwear Group operating income increased 6.7% to $8.2 million, reflecting a 58.1% increase in Speedo wholesale operating income to $8.9 million, offset by a $2.1 million operating loss in Calvin Klein wholesale operating profit and a 32.1% decline in Swimwear retail operating income to $1.4 million.