Market Commentary and Intraday News
Warnaco shares rebound after 2Q report
288 days ago
(AP:NEW YORK) Warnaco Group Inc. shares climbed Tuesday as Wall Street found the clothing maker's second-quarter results encouraging even though Warnaco trimmed its annual profit and revenue estimates.
THE SPARK: Warnaco, which sells brands like Calvin Klein, Speedo, and Warner's, reported its quarterly results after the markets closed on Monday. The company said its adjusted income from continuing operations fell to 72 cents per share. That was still better than the 64 cents per share analysts had expected.
Warnaco reported better sales in Latin America and Asia, but revenue from the U.S. and Europe declined. Its total revenue fell 5 percent to $563.9 million, about $6 million less than Wall Street anticipated.
THE BIG PICTURE: Citing weak economic conditions in Europe and the U.S., Warnaco said it expects to earn $4 to $4.15 per share, down from its previous estimate of $4 to $4.25 a share. The company reported $2.51 billion in revenue in 2011, and says revenue will be no better than equal to that number and could decline as much as 2 percent. Previously Warnaco said its revenue in 2012 would be no worse than equal to 2011, and could grow as much as 2 percent.
FactSet says analysts expected Warnaco to report adjusted income of $4.01 per share on $2.49 billion in revenue.
THE ANALYSIS: Brean Murray Carret & Co. analyst Eric Beder said Warnaco posted "impressive" income because it kept its costs in check.
"There were more than enough positive signs, in terms of Europe, inventories, increased cost savings and a return of prominence for Calvin Klein denim, for us to become even more enthused about the name," said Beder.
He kept a "Buy" rating on Warnaco shares and maintained a price target of $55 per share, saying he thinks Warnaco stock will do better in late 2012 and early 2013.
SHARE ACTION: Shares of Warnaco jumped $4.19, or 9.8 percent, to $46.75 in afternoon trading. The stock had fallen 28 percent since the beginning of April, and shares are down about 17 percent since Warnaco reported its first-quarter results on May 3.
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