Maidenform Brands, Inc. Reports Second Quarter 2010 Results and Raises Full Year Outlook for 2010

ISELIN, N.J., Aug. 11 /PRNewswire-FirstCall/ --

• Net sales increased 30.8%
• Reported earnings per share (EPS) increased 90% to $0.59
• Shapewear net sales increased 44.0%
• Bra net sales increased 31.6%
• Department stores and national chain stores channel net sales increased 17.5%
• Mass merchant channel net sales increased 61.3%

Maidenform Brands, Inc. (NYSE: MFB), a global branded marketer of intimate apparel, today reported second quarter 2010 net sales of $149.4 million, an increase of 30.8% over the second quarter of 2009, driven by continued strength in its core shapewear and bra businesses across the Company's wholesale channels.  Reported EPS of $0.59 for the second quarter of 2010 was up from EPS of $0.31 in the second quarter of 2009.  

"This marks our sixth consecutive quarter of strong net sales growth, and we believe that we are well positioned for 2010 and beyond," stated Maurice S. Reznik, Chief Executive Officer.  "While sales across all of the Company's wholesale channels increased in the quarter, we are particularly pleased that sales from some of our newer strategic initiatives like Donna Karan and international are beginning to accelerate and have a greater impact on our overall performance."

Financial Results for Second Quarter 2010 versus Second Quarter 2009

Net sales for the second quarter of 2010 increased $35.2 million, or 30.8%, to $149.4 million.  Wholesale segment net sales in the second quarter of 2010 increased $35.2 million, or 35.3%, to $134.9 million. Retail segment net sales were unchanged at $14.5 million in the second quarter of 2010 when compared to the comparable period last year.  

The Company's net sales performance by channel of distribution is highlighted in Exhibit 1 to this press release.

Wholesale Segment

Department Stores and National Chain Stores

Net sales for the department stores and national chain stores channel increased $9.8 million, or 17.5%, to $65.9 million in the second quarter of 2010.  This increase was due to the solid performance of the Company's shapewear and bra businesses resulting from replenishment orders to support consumer spending and new product introductions along with the continued improvement from the Company's licensed brands Donna Karan® and DKNY®.

Mass Merchants

Mass merchant channel net sales increased $16.3 million, or 61.3%, to $42.9 million in the second quarter of 2010.  This increase included strong sales growth in the Sweet Nothings® brand shapewear and bra categories, and continued sales of shapewear products in the Self Expressions® brand which were not in the same period of 2009.  

Other

Net sales in the other channel increased $9.1 million, or 53.5%, to $26.1 million in the second quarter of 2010 primarily from increased sales to a specialty retailer.    

Total international net sales, which are included in the wholesale segment, increased $3.3 million, or 38.8%, to $11.8 million.  This increase was driven by increased sales in most of the Company's international markets, notably Mexico, the United Kingdom and Spain.

Retail Segment

Total retail segment net sales were unchanged at $14.5 million in the second quarter of 2010 with same store sales, defined as stores that have been open for more than one year, increasing 0.8% at Maidenform's retail outlet stores.  Internet sales were unchanged at $1.2 million in the second quarter of 2010.  The retail segment operated 74 outlet stores and 1 shapewear kiosk as of the second quarter of 2010 and 75 outlet stores as of the second quarter of 2009.  

Consolidated gross profit increased $13.0 million, or 31.6%, to $54.1 million in the second quarter of 2010.  As a percentage of net sales, consolidated gross margins were 36.2% in the second quarter of 2010 versus 36.0% in the second quarter of 2009. The modest increase was a result of product mix and the benefit from product cost reduction efforts, which were partially offset by customer mix, including a higher percentage of net sales from the Company's lower margin mass merchants and other channels.

Consolidated selling, general and administrative expenses (SG&A) increased $3.1 million, or 11.1%, to $31.1 million in the second quarter of 2010 primarily as a result of increased payroll and related benefits associated with new positions added to support the Company's initiatives, incentive compensation, temporary help to support our sales growth and 2010 merit increases, which the Company did not incur in 2009.  As a percentage of net sales, SG&A declined 370 basis points to 20.8% in the second quarter of 2010 compared to 24.5% in the second quarter of 2009 due to sales leveraging.      

Due to all of the factors described above, operating income in the second quarter of 2010 was $23.0 million, or 15.4% of net sales, compared to $13.1 million, or 11.5% of net sales, in the second quarter of 2009.

Net interest expense in the second quarter of 2010 was $0.3 million compared to $0.6 million in the second quarter of 2009 as the Company benefited primarily from lower average debt outstanding and a lower interest rate for the second quarter of 2010 as compared to the same period in 2009.    

The Company's effective income tax rate for the second quarter of 2010 was 39.5% compared to 41.9% in the second quarter of 2009.  The lower effective income tax rate in the second quarter of 2010 was largely from a reduction in taxes on income from foreign operations when compared to the second quarter of 2009.

Net income for the second quarter of 2010 and 2009 was $13.7 million and $7.3 million, respectively, and EPS was $0.59 and $0.31, respectively.    

Financial Results for Year-To-Date 2010 versus Year-To-Date 2009

Net sales for the first six months of 2010 increased $63.9 million, or 28.0%, to $292.3 million.  The improvement over the same period in 2009 was driven by all channels of distribution.  Wholesale segment net sales, on a year-to-date basis, increased $63.5 million, or 31.3%, to $266.5 million.  Total international net sales increased $6.7 million, or 43.2%, to $22.2 million resulting from the reasons mentioned above, in addition to sales in Canada and Russia, and favorable currency exchange rates.  Retail segment net sales for the first six months of 2010 increased $0.4 million, or 1.6%, to $25.8 million.  Same store sales for Maidenform's retail outlet stores increased 3.1%.  Internet sales decreased $0.1 million, or 4.0%, to $2.4 million.  The Company's net sales performance by channel of distribution is highlighted in Exhibit 1 to this press release.

Consolidated gross margins, on a year-to-date basis were 36.3% versus 34.0% for the same period in 2009.  This increase was a result of customer and product mix, lower overall promotional activity and the benefit from product cost reduction efforts.

Year-to-date operating income for 2010 was $43.7 million, or 15.0% of net sales, versus $23.7 million, or 10.4% of net sales, for the first six months of 2009.

Net income for the first six months of 2010 was $25.8 million and EPS was $1.10.  Net income for the six months of 2009 was $13.3 million and EPS was $0.57.    

Total cash and cash equivalents at the end of the second quarter of 2010 were $50.4 million compared to $46.5 million at the end of the second quarter of 2009.  The Company's outstanding debt was $70.7 million as of July 3, 2010 versus $87.8 million as of July 4, 2009.  Net debt totaled $20.3 million at the end of the second quarter of 2010, with no material maturities until 2014.      

Financial Performance Guidance for 2010:

Third Quarter Outlook:

• Net sales for the third quarter are expected to increase in the low-to-mid teens percent range as compared to the prior year.
• Gross margin rates are anticipated to be in the mid-30 percent range.
• EPS are expected to be in the range of $0.50 to $0.55.

Full Year Trend:

• Net sales are expected to increase in the upper-teens percentage range for the year.
• Gross margin rates are anticipated to be in the mid-30 percentage range.
• EPS are expected to be in the range of $1.88 - $1.93.

Conference Call Information

Maidenform will host a conference call and webcast on Wednesday, August 11, 2010 at 8:30 am ET to discuss its second quarter 2010 results, in addition to providing an update on its business.  The conference call telephone number is (866) 578-5784 and the passcode is "Maidenform."  The conference call will be simultaneously webcasted and can be accessed via the investor relations page of Maidenform's website at www.maidenformbrands.com.  A dial-in replay of this event will be available through August 26, 2010 and will be hosted on the Company's website for a limited time.  The replay telephone numbers are (888) 286-8010 or (617) 801-6888.  The replay passcode is 86386915.

About Maidenform Brands, Inc.

Maidenform Brands, Inc. is a global intimate apparel company with a portfolio of established, well-known brands, top-selling products and an iconic heritage. Maidenform designs, sources and markets an extensive range of intimate apparel products, including bras, panties and shapewear.  During its 87-year history, Maidenform has built strong equity for its brands and established a platform for growth through a combination of innovative, first-to-market designs and creative advertising campaigns focused on increasing brand awareness with generations of women.  Maidenform sells its products under some of the most recognized brands in the intimate apparel industry, including Maidenform®, Control It!®, Fat Free Dressing®, Flexees®, Lilyette®, Luleh® , Bodymates®, Inspirations®, Self Expressions® and Sweet Nothings®. Maidenform products are currently distributed in approximately 60 countries and territories outside the United States.

Forward Looking Statement: This press release contains forward-looking statements relating to future events and the Company's future performance within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements regarding our expectations, beliefs, intentions or future strategies that are signified by the words "anticipates," "believes," "estimates," "expects," "intends," "plans," "potential," "predicts," "projects" or similar words or phrases, although not all forward-looking statements contain such identifying words.  All forward-looking statements included in this press release are based on information available to the Company on the date hereof.  It is routine for the Company's internal projections and expectations to change as the year or each quarter in the year progress, and therefore it should be clearly understood that the internal projections and beliefs upon which the Company bases its expectations may change prior to the end of each quarter or the year.  Although these expectations may change, we assume no obligation to update or revise publicly any forward-looking statements whether as a result of new information, future events or otherwise. Actual events or results may differ materially from those contained in the projections or forward-looking statements.  

The following factors, among others, could cause the Company's actual results to differ materially from those expressed in any forward-looking statements: the worldwide apparel industry may continue to be harmed by the current global economic downturn, the unprecedented conditions in the financial and credit markets may affect the availability and cost of our funding, the Company's growth cannot be assured and any growth may be unprofitable; potential fluctuations in our results of operations or rate of growth; our dependence on a limited number of customers; the Company has larger competitors with greater resources; retail trends in the intimate apparel industry, including consolidation and continued growth in the development of private brands, resulting in downward pressure on prices, reduced floor space and other harmful changes; failure to anticipate, identify or promptly react to changing trends, styles, or consumer preferences; the Company's credit agreement could limit growth opportunities; external events that disrupt the Company's supply chain, result in increased cost of goods or an inability to deliver its products; events which result in difficulty in procuring or producing products on a cost-effective basis; disputes with third parties for infringement or misappropriation of their proprietary rights; increases in the prices of raw materials; changing international trade regulation, including as it relates to the imposition or elimination of quotas on imports of textiles and apparel; foreign currency exposure; and the sufficiency of cash to fund operations and capital expenditures.

This list is intended to identify only certain of the principal factors that could cause actual results to differ from those discussed in the forward-looking statements.  Readers are referred to the reports and documents filed from time to time by the Company with the Securities and Exchange Commission for a discussion of these and other important risk factors that could cause actual results to differ from those discussed in forward-looking statements.

SOURCE Maidenform Brands, Inc.

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

440k+
Newsrooms &
Influencers

9k+
Digital Media
Outlets

270k+
Journalists
Opted In

GET STARTED