The Warnaco Group reported that third quarter net revenues increased 38.5% to $452.0 million for the third quarter of fiscal 2006, compared to $326.3 million for the third quarter of fiscal 2005, thanks in part to improvements in Swimwear Group revenues. The company also saw upside from improved margins in the Swimwear Group business, but seasonal losses in swim also cut into operating income for the period.

Swimwear Group net revenues were up 23.7% to $44.7 million for the third quarter, compared to $36.1 million in the year-ago period. Speedo net revenues increased 17%, primarily due to sales to teen dealers, internet sales, and merchandise clubs, while designer revenues increased 46%, primarily due to sales in Europe. Group gross margins rose 230 basis points to 23.9%, while SG&A expenses declined 390 basis points to 45%.

Despite expenses of $1.3 million related to the discontinuance of the Speedo Axcelerate line and continued investments in Speedo marketing, the seasonal operating loss was $9.3 million, a slight improvement over last year's loss of $9.8 million. When including the allocation of shared services expenses, the Swimwear Group saw its operating loss for Q3 expand to nearly $14.0 million, compared to $13.1 million in the year-ago period.