Maidenform Brands, Inc. Reports First Quarter 2013 Results and Confirms Guidance for Full Year 2013

ISELIN, N.J., May 8, 2013 /PRNewswire/ -- Maidenform Brands, Inc. (NYSE: MFB), a global intimate apparel company, today reported first quarter 2013 net sales of $131.2 million and a loss per share of $(0.05)

"First quarter results were as expected.  We remain focused on growing our business and our outlook for the year remains on track," stated Maurice Reznik, Chief Executive Officer.  

"During the quarter we made progress on our transition strategies.  Our new products are performing very well in the marketplace and I am excited about the opportunities we are creating in our full figure, Donna Karan, international and shapewear businesses.   The Maidenform team is building momentum in 2013 and I am confident that our execution will return us to sustained top and bottom line growth," concluded Mr. Reznik.

Financial Results for First Quarter 2013 versus First Quarter 2012

Net sales for the first quarter of 2013 decreased $26.3 million, or 16.7%, to $131.2 million.  The sales decline in the quarter is attributed to a non-recurring warehouse club program, declines from discontinued businesses and in private label, and current competitive pressures in shapewear.  Wholesale segment net sales for the first quarter of 2013 decreased $26.1 million, or 18.0%, to $118.7 million. Retail segment net sales decreased $0.2 million, or 1.6%, to $12.5 million.  

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 decreased $4.9 million, or 8.4%, to $53.7 million for the first quarter of 2013, primarily attributable to increased shapewear competition at a chain customer.

Mass Merchants

Mass merchant channel net sales decreased $15.5 million, or 26.3%, to $43.5 million for the first quarter of 2013 from decreased shipments in the bra and shapewear categories, including lower sales to a global warehouse club as a shapewear event in the first quarter of 2012 did not repeat in the first quarter of 2013.   

Other

Net sales in the other channel decreased $5.7 million, or 21.0%, to $21.5 million for the first quarter of 2013 primarily from sales declines to a specialty retailer and from decreased program sales to off-price retailers, which were somewhat offset by higher liquidation sales.       

Total international net sales, which are included in the wholesale segment, decreased $1.0 million, or 6.1%, to $15.5 million.  This sales decline was driven by the elimination of the aforementioned warehouse club program and a decline in the United Kingdom, which were partially offset by sales increases in Mexico and South Korea.   

Retail Segment

Total retail segment net sales decreased $0.2 million, or 1.6%, to $12.5 million.  Same store sales, defined as outlet stores that have been open for more than one year, increased 4.3%.  Internet sales decreased $0.2 million, or 8.7%, to $2.1 million for the first quarter of 2013, resulting from lower promotional activity when compared to the prior year.  The retail segment operated 69 outlet stores as of the end of first quarter 2013 and 75 outlet stores as of the end of first quarter 2012.   

Consolidated gross profit decreased $12.3 million, or 28.7%, to $30.6 million for the first quarter of 2013.  As a percentage of net sales, consolidated gross margins were 23.3% for the first quarter of 2013 versus 27.2% for the first quarter of 2012, driven by higher liquidation sales and negative product mix on higher sales in the panties category with declines in the higher margin shapewear and bra categories for the reasons mentioned above.             

Consolidated selling, general and administrative expenses (SG&A) decreased $0.6 million, or 1.8%, to $32.5 million for the first quarter of 2013.  This decrease is a result of the Company managing its expenses along with decreased payroll and related benefits, including lower incentive compensation, and a reduction in variable store operating expenses as the Company executed the planned store closings in the first quarter of 2013.  During the first quarter, the Company recognized a lower benefit from foreign currency exchange when compared to the same quarter of 2012, which partially offset these expense decreases.  As a percentage of net sales, SG&A increased to 24.7% for the first quarter of 2013 compared to 21.0% for the first quarter of 2012.

Due to all the factors described above, operating loss for the first quarter of 2013 was $(1.9) million, or 1.4% of net sales, compared to operating income of $9.8 million, or 6.2% of net sales, for the first quarter of 2012.

Net interest expense for the first quarter of 2013 was unchanged at $0.3 million.

The Company recorded an income tax benefit of $0.9 million and income tax expense of $3.7 million for the three months ended March 30, 2013 and March 31, 2012, respectively.  The Company's effective income tax rate for the first quarter of 2013 was 43.0% compared to 39.0% for the first quarter of 2012.        

Net (loss) income for the first quarter of 2013 and 2012 was $(1.2) million and $5.8 million, respectively, and EPS for the same periods was a loss per share of $(0.05) and earnings of $0.25, respectively.           

Total cash and cash equivalents as of March 30, 2013 were $47.0 million compared to $29.8 million as of March 31, 2012.  The Company's outstanding debt was $67.7 million as of March 30, 2013 versus $68.8 million as of March 31, 2012.          

Financial Performance Guidance for 2013: 

2013 Full Year Outlook:

  • Total Company net sales in a range of $575 million to $595 million.
  • Full year EPS in a range of $1.20 to $1.30 per share.

Conference Call Information

Maidenform will host a conference call and webcast on Wednesday, May 8, 2013 at 8:30 am ET to discuss its first quarter 2013 results, in addition to providing an update on its business.  The conference call telephone number is (877) 280-4959 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 May 29, 2013 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 31358427.

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.  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®, 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 be harmed by a global economic downturn, the 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.

MAIDENFORM BRANDS, INC. AND SUBSIDIARIES




CONDENSED CONSOLIDATED BALANCE SHEETS




(in thousands, except share and per share amounts)




(unaudited)







March 30, 


December 29,




2013


2012

Assets




Current assets




      Cash and cash equivalents

$           47,013


$           83,747

      Accounts receivable, net

91,414


72,538

      Inventories

130,187


119,015

      Deferred income taxes

15,081


15,081

      Prepaid expenses and other current assets

19,668


15,089

Total current assets

303,363


305,470

Property and equipment, net

31,174


31,347

Goodwill 

7,162


7,162

Intangible assets, net

91,512


91,789

Other non-current assets

198


183

Total assets

$         433,409


$         435,951







Liabilities and stockholders' equity




Current liabilities




      Current portion of long-term debt

$             1,100


$            1,100

      Accounts payable

49,391


53,050

      Accrued expenses and other current liabilities

24,023


21,882

Total current liabilities

74,514


76,032

Long-term debt 

66,575


67,125

Deferred income taxes

28,288


26,927

Other non-current liabilities

11,321


11,583

Total liabilities

180,698


181,667



















Stockholders' equity




Preferred stock -  $0.01 par value; 10,000,000 shares authorized




and none issued and outstanding

-


-

Common stock - $0.01 par value; 100,000,000 shares authorized;




24,399,732 shares issued and 22,896,891 outstanding at March 30, 2013




and 24,399,732 shares issued and 22,754,212 outstanding at December 29, 2012

244


244

Additional paid-in capital                         

78,975


80,628

Retained earnings

210,890


213,423

Accumulated other comprehensive loss

(8,819)


(8,647)

Treasury stock, at cost (1,502,841 shares at March 30, 2013 and




1,645,520 shares at December 29, 2012)

(28,579)


(31,364)

Total stockholders' equity

252,711


254,284

Total liabilities and stockholders' equity

$         433,409


$         435,951













MAIDENFORM BRANDS, INC. AND SUBSIDIARIES



CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)



(unaudited)












Three Months Ended



March 30,


March 31,



2013


2012






Net sales


$         131,156


$         157,546

Cost of sales


100,594


114,639

          Gross profit


30,562


42,907

Selling, general and





administrative expenses


32,455


33,068

          Operating (loss) income


(1,893)


9,839






Interest expense, net


271


253

          (Loss) income before provision 





for income taxes


(2,164)


9,586

Income tax (benefit) expense


(930)


3,741

         Net (loss) income


$           (1,234)


$            5,845

Basic (loss) earnings per common share


$             (0.05)


$              0.25

Diluted (loss) earnings per common share 


$             (0.05)


$              0.25

Basic weighted average number of





      shares outstanding


22,782,800


22,938,649

Diluted weighted average number of 





      shares outstanding


22,782,800


23,380,022











 

MAIDENFORM BRANDS, INC. AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(in thousands)





(unaudited)












Three Months Ended



March 30,


March 31,



2013


2012






Net (loss) income


$            (1,234)


$             5,845

Other comprehensive (loss) income, before tax:





Foreign currency translation adjustments


(266)


505

Adjustments to benefit plans


158


137

Other comprehensive (loss) income, before tax


(108)


642

Income tax expense related to items of 





other comprehensive (loss) income (1)


64


55

Other comprehensive (loss) income, net of tax


(172)


587

Comprehensive (loss) income


$            (1,406)


$             6,432






(1) Tax expense provided relates to benefit plan deferrals.



 

MAIDENFORM BRANDS, INC. AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS




(in thousands)




(unaudited)












Three Months Ended








March 30,


March 31,








2013


2012

Cash flows from operating activities




Net (loss) income

$            (1,234)


$             5,845

Adjustments to reconcile net (loss) income to net cash  





used in operating activities






Depreciation and amortization

1,482


1,295



Amortization of intangible assets

277


272



Amortization of deferred financing costs

44


27



Stock-based compensation

1,000


1,126



Deferred income taxes

1,304


1,140



Excess tax benefits related to stock-based compensation

(492)


(811)



Bad debt expense

70


343



Other non-cash items

(37)


206



Net changes in operating assets and liabilities







Accounts receivable

(18,864)


(53,103)




Inventories

(11,190)


(2,324)




Prepaid expenses and other current and








 non-current assets

(1,621)


(1,031)




Accounts payable

(3,658)


5,360




Accrued expenses and other current and








non-current liabilities

2,022


4,145




Income taxes payable

(2,586)


1,928






Net cash used in operating activities

(33,483)


(35,582)

Cash flows from investing activities




Capital expenditures

(1,322)


(817)






Net cash used in investing activities

(1,322)


(817)

Cash flows from financing activities




Term loan repayments

(550)


(275)

Proceeds from stock options exercised

56


41

Excess tax benefits related to stock-based compensation

492


811

Payments of employee withholding taxes related to equity awards

(1,564)


(1,516)

Payments of capital lease obligations

(59)


(75)

Financing fees paid

-


(149)






Net cash used in financing activities

(1,625)


(1,163)

Effects of exchange rate changes on cash and cash equivalents

(304)


(633)






Net decrease in cash and cash equivalents

(36,734)


(38,195)

Cash and cash equivalents




Beginning of period

83,747


68,041

End of period


$           47,013


$           29,846











Supplementary disclosure of cash flow information




Cash paid during the period




Interest




$                342


$                256

Income taxes


$                226


$                608











Supplemental schedule of non-cash financing activities




Treasury stock issued related to equity award activity

$            4,349


$            3,479
















































Exhibit 1

MAIDENFORM BRANDS, INC. AND SUBSIDIARIES



SALES BY CHANNEL OF DISTRIBUTION AND PRODUCT MIX

(in millions)








(unaudited)

















Three months ended 


March 30,


March 31,


$


%


2013


2012


change


change


(in millions)

Department stores and








national chain stores 

$             53.7


$              58.6


$              (4.9)


(8.4%)

Mass merchants

43.5


59.0


(15.5)


(26.3)

Other

21.5


27.2


(5.7)


(21.0)

Total wholesale

118.7


144.8


(26.1)


(18.0)









Retail

12.5


12.7


(0.2)


(1.6)









Total net sales

$           131.2


$            157.5


$            (26.3)


(16.7%)


















Three months ended




March 30,


March 31,






2013


2012





Bras

60%


55%





Shapewear

31


38





Panties

9


7






100%


100%





























































 

 

SOURCE Maidenform Brands, Inc.



RELATED LINKS
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