Warnaco Inc. reported that its Swimwear division posted an 11.8% decline in revenues for the second quarter, tallying $111.8 million in sales versus $126.7 million in the year-ago period. Speedo brand sales were down 9.7% to $70.3 million for the period from $77.9 million in Q2 last year. Management said the decline in Speedo revenue could be traced to “reduced volume” of Speedo shoes and womens swim “across most channels.”
The decrease in Speedo wholesale revenues reflects a $7.5 million decrease in the U.S. and a $0.4 million decrease in Canada, partially offset by a $0.3 million increase in Mexico. The decrease in net revenues in the U.S. reflects a $3.4 million decrease in sales to chain stores, a $3.2 million decrease in sales to membership clubs and a $1.1 million decrease in sales to the mass channel (primarily Target, Inc.), partially offset by a $0.2 million net increase in all other channels of distribution. The decreases in all U.S. channels of distribution primarily reflect lower than expected sell-through at retail. Designer swimwear sales were down 18.0% to $38.5 for the quarter. The swimwear retail business was up nearly 60% to $2.9 million, which was attributed to an increase in sales attributable to the Speedo Internet retail website.
Management said that the Speedo business was profitable, but the designer business “remains a challenge.” Operating income for Speedo was said to be affected by restructuring charges associated with closure of a goggle factory. Swimwear Group posted a $5.5 million operating loss for the quarter, reflecting a 68% decrease in Speedo operating profit to $4.3 million.
The $5.9 million decrease in Speedo wholesale profits and a $3.9 million decrease in Designer wholesale was partially offset by a $0.5 million increase in Swimwear retail.