(Filed Under Financial and General Interest News). Maidenform reported net sales for the third quarter of $150.2 million, up $2 million over the same period last year. According to a company statement, "Net income for the third quarter of 2012 and 2011 was $10.8 million and $10.2 million, respectively, and EPS was $0.46 and $0.44, respectively.

"Our third quarter results met our EPS expectations as favorable expenses and higher gross profit more than offset lower than planned revenues. Looking forward, we anticipate global economic challenges and increased competition; we are addressing these concerns with a continued focus on product innovation, such as Comfort Devotion, amplified emphasis on leveraging the equity of the Maidenform brand and operational improvements," declared CEO Maurice Reznik.

In comparing the third quarter 2012 with last year, the company reported a sales increase in the "wholesale segment of Maidenform’s business" of $1.3 million "to a total of $131.5 million." The firm’s retail segment generated $18.7 million in sales, a four percent increase over last year.

In analyzing its wholesale business, Maidenform reported "Net sales for the department stores and national chain stores channel increased $4.3 million, or 7.2%, to $64.2 million for the third quarter of 2012. This increase was led by growth in the bra and pant categories, resulting from replenishment orders and new product launches." However, in the "mass merchant channel net sales decreased $0.3 million, or 0.7%, to $44.8 million for the third quarter of 2012, resulting from a decline in shipments to a mass customer that was nearly offset by program shipments to a warehouse club."

In addition, net sales in the remainder of the firm’s U.S. business "decreased $2.7 million, or 10.7%, to $22.5 million for the third quarter of 2012 from lower sales to a specialty retailer that was partially offset by increased sales to off-price retailers." One area of good news was in the international arena where "net sales, which are included in the wholesale segment, increased $2.5 million, or 17.7%, to $16.6 million. This increase was driven by sales in Canada and Mexico that more than offset lower sales in most European countries," the company reported in a release on the investor relations area of its website.

The increase in Maidenform’s retail segment sales was "largely driven by e-commerce growth. Same store sales, defined as outlet stores that have been open for more than one year, increased 0.7%. Internet sales increased $0.6 million, or 35.3%, to $2.3 million for the third quarter of 2012. The retail segment operated 76 outlet stores as of the end of the third quarter of 2012 and 75 outlet stores as of the end of the third quarter of 2011."

According to the company, "consolidated gross profit increased $1.3 million, or 2.7%, to $48.7 million for the third quarter of 2012. As a percentage of net sales, consolidated gross margins were 32.4% for the third quarter of 2012 versus 32.0% for the third quarter of 2011. The increase in gross margin was primarily a result of favorable product mix during the quarter. Partially offsetting this increase was a higher mix of sales to off-price retailers."

For the first three quarters of 2012 combined, net sales have fallen. "Net sales for the first nine months of 2012 decreased $16.6 million, or 3.4%, to $465.2 million. Wholesale segment net sales, on a year-to-date basis, decreased $18.3 million, or 4.2%, to $417.7 million."

In seeking to explain the decline in sales, the company offered "Department stores and national chain stores were relatively flat when compared to the prior year. In addition to the reasons mentioned for the third quarter, the Company experienced an assortment expansion in 2011 at one of the Company’s chain store customers that did not repeat in 2012, and sales declines at a mid-tier department store as it transitions to a new pricing and merchandising strategy. These decreases were partially offset by sales of the Jennifer Lopez brand that shipped for the first time to a chain store customer in the second quarter of 2012."

The Maidenform statement added that the "company’s mass merchant channel decreased $7.9 million, or 4.9%, resulting from the changes mentioned in the third quarter, along with mixed results with other mass merchant customers. The other channel decreased $10.3 million, or 12.4%, resulting from the reasons mentioned in the third quarter, along with fewer program sales to off-price retailers."

On the international front so far this year, "Total international net sales increased $3.8 million, or 8.6%, to $47.9 million, driven by growth in major markets, such as Canada, the United Kingdom and Mexico. Partially offsetting these increases were sales decreases in other major markets, such as the Benelux countries and Sweden."

On the retail front, "net sales for the first nine months of 2012 increased $1.7 million, or 3.7%, to $47.5 million. Same store sales for Maidenform’s retail outlet stores increased 0.3%. Internet sales increased $1.9 million, or 38.0%, to $6.9 million, resulting from promotional events which increased sales."

Finally, Maidenform revealed that "Consolidated gross margins on a year-to-date basis were 31.2% versus 33.7% for the same period in 2011. The decrease in gross margin was a result of increased off-price retailer activity to drive inventory productivity and inventory related clearing costs."

Profits for the first nine months of 2012 are down sharply. "Net income for the first nine months of 2012 and 2011 was $28.0 million and $36.3 million, respectively, and EPS was $1.19 and $1.55, respectively. Excluding the litigation settlement of $4.1 million after tax, or $0.17 EPS, net income was $40.4 million, or EPS of $1.72 for the first nine months of 2011.

The Maidenform statement summarized the outlook for the full year as follows:

"Fourth quarter sales in a range of $130 to $135 million, including the impact of a weaker than expected European economy, suppressed sales due to Hurricane Sandy and increased shapewear competition."

"Fourth quarter EPS in a range of 20 to 25 cents per share."

"Full year EPS in a range of $1.39 to $1.44 per share."

Maidenform is a 90-year-old producer of intimate apparel, including bras, panties and shapewear, sold under such labels as Maidenform, Control It!, Fat Free Dressing, Flexees, Lilyette, Maidenform’s Charmed, Bodymates, Inspirations, Self Expressions and Sweet Nothings. Maidenform products are currently distributed in approximately 63 countries and territories outside the United States according to the company’s latest figures.

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Published 11-11-2012 by -