Apparel Sourcing Intelligence - Worldwide

Major branded suppliers hit hard times.

Liz Claiborne falls on restructuring and closes Mexx US. Liz Claiborne’s Q4 profit fell to $73.2mn from $78 in 2005 as a result of restructuring charges, though sales were up 11% at $1.33bn. For the full year, profit fell 20% percent to $254.7 mn from $317.4 mn in 2005. Sales grew 3% to $4.99 bn from $4.85 bn in 2005. A Claiborne employee announced on February 27 the closure of the remaining US Mexx branches, though European and Canadian Mexx operations apparently remain unaffected.

Hanesbrands Q2 profits dip 77.6% Buffeted by poor underwear sales and an array of charges due to its September spin-off from Sara Lee, Hanesbrands watched its profits drop by more than three-quarters during the three months ended 30 December. The Winston-Salem, North Carolina-based marketer of brands including Hanes Champion and Playtex reported the quarter in tandem with those of the six-month period and compared them with those of the same units during their inclusion with of Sara Lee. Henceforth, Hanesbrands’ fiscal year will end in December. Net income for the quarter dropped 77.6% to $23.8m, or 25 cents a diluted share, from $106m, or $1.10, during the prior year. Plant closings cost the company $18.8m in charges and the spin-off exacted a $9m effect, but these were offset by a $28.6m gain from the curtailment of post-retirement benefits. Net sales declined 4.3% to $1.13bn from $1.18bn during the quarter. The company’s underwear business, by far its largest component, declined 5.9% to $644.7m from $685.2m. Gross profit as a percentage of sales declined to 31.3% from 33.3% a year ago.

VF profit falls in Q4 VF Corp profits in Q4 2006 fell to $108.6 mn from $127.5 million. On sales unchanged at $1.6bn. The profit fall was partly the result of a write off caused by the sale of its underwear division to Fruit of the Loom: full year sales grew 10% to $6.2 bn, with profits from continuing operations increasing 11% to $535.1mn

Jones Apparel goes into loss after major write off Jones Apparel Group showed $144mn loss in 2006, after a $296mn loss in the fourth quarter. The loss was triggered by write off for underperforming acquisitions – but sales fell 7% during the year, with the company blaming the loss of Polo Jeans business.
The write off relates mostly to the 2001 acquisition of McNaughton Apparel Group and the 2002 purchase of RSV Sport, makers of l.e.i. jeans. “Many of our moderate brands are performing very well,” said Peter Boneparth, Jones’ chief executive officer. “However, declining revenues and profitability with respect to Norton McNaughton, l.e.i. and certain of our other moderate price-point brands, along with changes in business strategy with respect to the Norton McNaughton brand, necessitate the recognition of a goodwill and trademark impairment.” He pointed out that, as previously announced, Jones is “closing unproductive manufacturing facilities and repositioning the brands for 2007.” Boneparth was CEO of McNaughton when it was sold to Jones.

Warnaco divisional president resigns. Warnaco announced the resignation of Roger Williams as Group President, Swimwear, citing personal reasons. Until a replacement is appointed, Sherry Waterson, President of Speedo, and Paula Schneider, President of Designer Swimwear, will report directly to Joe Gromek, Warnaco's President and CEO.
However, Warnaco – unlike its peer US apparel wholesalers – reported a reasonably healthy 2006, with a sudden sales spurt in the fourth quarter leading to a 2% increase in full year profits on sales 24% ahead

Oxford Industries discloses Setola exit package Michael Setola, whose resignation as president and chief operating officer of Oxford Industries took effect 31 January, will remain on the company’s payroll for a full year. Oxford said that the company will pay Setola his base salary of $795,000: he will also be eligible for a pro-rated bonus based on the firm’s performance during the year. On January 9, the company lowered its sales forecast for the year to May 2007 to $1.15bn, compared to $1.11 in 2006
Setola resigned from Oxford in December after a three-year tenure as president He had previously been chairman and chief executive officer of Salant Corp, the assets of which were sold to Perry Ellis International.