Maidenform Brands, Inc. Reports Fourth Quarter and Full Year 2009 Results and Guidance for 2010
- Net sales increased 15.3% and 12.8% in fourth quarter and full year, respectively
- Reported earnings per share (EPS) of $0.32 and $1.56 for fourth quarter and full year, respectively
- Mass merchant channel net sales increased 14.8% year over year
- Shapewear net sales increased 12.2% over 2008
- Provides guidance for 2010 EPS to increase in the mid-teens percentage range
- Announces $50.0 million share repurchase authorization
ISELIN, N.J., March 3 /PRNewswire-FirstCall/ -- Maidenform Brands, Inc. (NYSE: MFB), a global branded marketer of intimate apparel, today reported fourth quarter 2009 net sales of $109.2 million, an increase of 15.3% over the fourth quarter of 2008. Full year 2009 net sales were $466.3 million, a 12.8% increase over the same period last year. Reported EPS of $0.32 for the fourth quarter of 2009 and $1.56 for the full year 2009 were up from EPS of $0.10 and $1.05 in the fourth quarter and full year 2008, respectively.
Before the special items listed in Exhibit 2 of this press release, adjusted fourth quarter EPS more than doubled to $0.32 and full year EPS increased 18% to $1.30.
Total cash and cash equivalents at the end of the fourth quarter of 2009 were $89.2 million compared to $43.5 million at the end of the fourth quarter of 2008. The Company's outstanding debt was $87.3 million as of January 2, 2010 versus $88.4 million as of January 3, 2009.
Maurice S. Reznik, Chief Executive Officer, stated, "We are pleased with our 2009 performance and expect this momentum to continue in 2010. Our company is winning in the marketplace with innovative products, taking share across categories and channels, and thoughtfully executing our strategies to drive long term shareholder value."
Financial Results for Fourth Quarter 2009 versus Fourth Quarter 2008
Net sales for the fourth quarter of 2009 increased $14.5 million, or 15.3%, to $109.2 million. Wholesale segment net sales in the fourth quarter of 2009 increased $15.7 million, or 19.6%, to $95.6 million. Retail segment net sales decreased $1.2 million, or 8.1%, to $13.6 million in the fourth quarter of 2009.
Retail segment sales included a 53rd week in fiscal 2008 that contributed $1.4 million in incremental sales versus 52 weeks of sales in fiscal 2009. In our wholesale segment, fiscal 2008 contained four additional shipping days that were immaterial to our results.
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 $2.1 million, or 4.5%, to $44.5 million in the fourth quarter of 2009. Solid performance in the Company's shapewear business and increased sales from the Company's licensed brands Donna Karan(R) and DKNY(R) that the Company launched in the first quarter of 2009, partially offset the impact of the Company's customer's focus on tight inventory management.
Mass Merchants
Mass merchant channel net sales increased $3.7 million, or 17.6%, to $24.7 million in the fourth quarter of 2009. This increase was primarily a result of strong sales growth in the shapewear and bra categories.
Other
Net sales in the other channel increased $14.1 million, or 114.6%, to $26.4 million in the fourth quarter of 2009 primarily from the introduction of new products with a specialty retailer and higher sales to off-price retailers.
Total international net sales, which are included in the wholesale segment, increased $1.2 million, or 13.2%, to $10.3 million. This increase was driven by increased sales in the Benelux countries, Germany and favorable currency exchange rates, which were partially offset by decreased sales in Russia.
Retail Segment
Total retail segment net sales decreased $1.2 million, or 8.1%, to $13.6 million in the fourth quarter of 2009 with same store sales, defined as stores that have been open for more than one year, down 12.0% at Maidenform's retail outlet stores. Excluding the impact of the 53rd week in the fourth quarter 2008, our retail segment net sales would have increased $0.2 million, or 1.5%, and same store sales would have been down 2.1%. Internet sales increased $0.1 million to $1.2 million in the fourth quarter of 2009. The retail segment operated 73 and 78 outlet stores as of the end of 2009 and 2008, respectively.
Consolidated gross profit increased $5.8 million, or 17.6%, to $38.7 million in the fourth quarter of 2009. As a percentage of net sales, consolidated gross margins were 35.4% in the fourth quarter of 2009 versus 34.7% in the fourth quarter of 2008. The majority of the increase was a result of the benefit from product cost reduction efforts, which was partially offset by the mix of customers and products.
Consolidated selling, general and administrative expenses (SG&A) decreased $2.5 million, or 8.8%, to $25.8 million in the fourth quarter of 2009 largely due to decreased bad debt expense associated with customer bankruptcies, decreased foreign currency expense resulting from fluctuations in currency exchange rates, decreased severance expense associated with the workforce reductions in 2008, and other cost reductions as the Company continues to manage its expenses. Partially offsetting these decreases was an increase in incentive compensation. As a percentage of net sales, SG&A declined 620 basis points to 23.6% in the fourth quarter of 2009 compared to 29.8% in the fourth quarter of 2008 due to the decreases mentioned above, along with sales leveraging.
Due to all of the factors described above, operating income in the fourth quarter of 2009 was $12.9 million, or 11.8% of net sales, compared to $4.6 million, or 4.9% of net sales, in the fourth quarter of 2008.
Net interest expense in the fourth quarter of 2009 was $0.4 million compared to $1.2 million in the fourth quarter of 2008 as the Company benefited primarily from a lower average interest rate for the fourth quarter of 2009 as compared to the same period in 2008.
The Company's effective income tax rate for the fourth quarter of 2009 was 38.2% compared to 29.5% in the fourth quarter of 2008. The lower effective income tax rate in the fourth quarter of 2008 was a result of non-recurring state tax benefits recorded.
Net income for the fourth quarter of 2009 and 2008 was $7.7 million and $2.4 million, respectively, and EPS was $0.32 and $0.10, respectively.
Financial Results for Fiscal 2009 versus Fiscal 2008
Net sales for 2009 increased $52.8 million, or 12.8%, to $466.3 million as increased sales in the mass merchant and other channels more than offset lower sales in the department stores and national chain stores channel. Wholesale segment net sales increased $55.5 million, or 15.6%, to $410.5 million.
Net sales for the department stores and national chain stores channel decreased $8.0 million, or 3.8%, to $201.7 million for 2009. This decrease reflected the weakness in this channel as a result of the global economic slowdown, along with promotional activities with retail partners to increase inventory productivity and lost sales associated with customer bankruptcies filed in the third quarter of 2008. Partially offsetting this decrease were sales from the Company's licensed brands Donna Karan(R) and DKNY(R) that the Company launched in the first quarter of 2009 and the continued strength of its shapewear business.
Net sales for the mass merchant channel increased $16.0 million, or 14.8%, to $124.2 million for 2009. Key drivers of this increase included the expansion of Maidenform's Sweet Nothings(R) brand in the bra and shapewear categories and ongoing replenishment of the Company's Inspirations(R) brand which launched in the second quarter of 2008.
Net sales in the other channel increased $47.5 million, or 128.0%, to $84.6 million for 2009. This increase is a result of the same drivers sighted above for the fourth quarter 2009.
Total international net sales, which are included in the wholesale segment, decreased $3.6 million, or 9.2%, to $35.7 million. $2.1 million of the decline was attributable to unfavorable currency exchange rates, with the balance from lower sales in Russia and Canada, which were partially offset by increased sales in the Benelux countries.
Retail segment net sales for 2009 decreased $2.7 million, or 4.6%, to $55.8 million. Same store sales for Maidenform's retail outlet stores decreased 7.3%. Excluding the impact of the 53rd week in 2008, our retail segment net sales would have decreased $1.3 million, or 2.3%, and same store sales would have decreased 4.7%. Internet sales increased $0.1 million, or 2.0%, to $5.1 million.
The Company's net sales performance by channel of distribution is highlighted in Exhibit 1 to this press release.
Consolidated gross profit increased $5.3 million, or 3.4%, to $161.0 million for 2009. However, as a percentage of net sales, consolidated gross margins for 2009 were 34.5% versus 37.7% for 2008. The majority of this rate decrease was a result of increased promotional activity to drive inventory productivity, and the mix of customers and products, including a higher percentage of net sales from the Company's lower margin other and mass merchant channels and lower net sales from its retail segment.
Consolidated SG&A decreased $2.0 million, or 1.8%, to $107.8 million in 2009. This decrease was driven by the same factors described above for the fourth quarter of 2009 along with lower advertising expense, somewhat offset by higher professional fees. As a percentage of net sales, SG&A declined 350 basis points to 23.1% in 2009 compared to 26.6% in 2008.
For the foregoing reasons, operating income for 2009 was $53.2 million, or 11.4% of net sales, versus $45.9 million, or 11.1% of net sales, for 2008.
Maidenform's effective income tax rate for 2009 was 27.4% compared to 40.3% for 2008. The lower effective income tax rate resulted from the recognition of additional net deferred tax assets, principally related to net operating losses that were recorded after the conclusion of an Internal Revenue Service audit during the period. The Company's effective income tax rate, excluding this non-cash, one-time benefit of $6.1 million, was 39.3%.
Net income for 2009 was $37.0 million and EPS was $1.56. Net income for 2008 was $24.7 million and EPS was $1.05.
Maidenform's share repurchase authorization has been increased by $37.5 million; the amount now available under the plan totals $50.0 million.
Financial Performance Guidance for 2010:
First Quarter Outlook:
-- Net sales for the first quarter are expected to increase in the
upper teens percentage range and include initial stocking for new
shapewear programs and improving business in the department stores
and chains channel
-- Gross margin rates are anticipated to be in the mid 30's percent range
-- EPS is expected to be in the range of $0.38 to $0.41 versus $0.26
in the first quarter of 2009
Full Year Trend:
-- Net sales are expected to increase in the upper single digit
percentage range for the year, with low single digit sales increases
in the second half that include an estimated $15.0 million
reduction in sales in the other channel
-- Gross margin rates are anticipated to be in the mid-30's
percentage range
-- EPS is expected to increase in the mid-teens percentage range
over 2009 (excluding the one-time tax benefit recorded in the
third quarter of 2009)
Conference Call Information
Maidenform will host a conference call and webcast on Wednesday, March 3, 2010 at 8:30 am ET to discuss its fourth quarter and full year 2009 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 March 17, 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 86158270.
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(R), Flexees(R), Lilyette(R), Control It!(R), Luleh(R), Sweet Nothings(R), Rendezvous(R), Subtract(R), Bodymates(R), Self Expressions(R) and Inspirations(R). 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; 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)
January 2, January 3,
2010 2009
---- ----
Assets
Current assets
Cash and cash equivalents $89,159 $43,463
Accounts receivable, net 42,951 38,974
Inventories 77,605 65,039
Deferred income taxes 14,790 11,837
Prepaid expenses and other current assets 7,878 13,852
----- ------
Total current assets 232,383 173,165
Property, plant and equipment, net 22,228 19,577
Goodwill 7,162 7,162
Intangible assets, net 96,198 97,358
Other non-current assets 771 982
--- ---
Total assets $358,742 $298,244
======== ========
Liabilities and stockholders' equity
Current liabilities
Current portion of long-term debt $1,100 $1,100
Accounts payable 43,473 31,667
Accrued expenses and other current
liabilities 28,366 19,476
------ ------
Total current liabilities 72,939 52,243
Long-term debt 86,150 87,250
Deferred income taxes 22,934 24,252
Other non-current liabilities 9,888 14,841
----- ------
Total liabilities 191,911 178,586
------- -------
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;
23,981,108 shares issued and 23,341,444
outstanding at January 2, 2010 and 23,488,357
issued and 22,496,003 outstanding at
January 3, 2009 240 235
Additional paid-in capital 66,574 60,567
Retained earnings 112,419 78,246
Accumulated other comprehensive loss (3,385) (5,408)
Treasury stock, at cost (639,664 shares at
January 2, 2010 and 992,354 shares at
January 3, 2009) (9,017) (13,982)
------ -------
Total stockholders' equity 166,831 119,658
------- -------
Total liabilities and
stockholders' equity $358,742 $298,244
======== ========
MAIDENFORM BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended For the Years Ended
------------------ -------------------
January 2, January 3, January 2, January 3,
2010 2009 2010 2009
---- ---- ---- ----
Net sales $109,132 $94,787 $466,255 $413,542
Cost of sales 70,427 61,942 305,272 257,848
------ ------ ------- -------
Gross profit 38,705 32,845 160,983 155,694
Selling, general and
administrative expenses 25,866 28,206 107,810 109,781
------ ------ ------- -------
Operating income 12,839 4,639 53,173 45,913
Interest expense, net 402 1,195 2,196 4,521
--- ----- ----- -----
Income before provision
for income taxes 12,437 3,444 50,977 41,392
Income tax expense 4,751 1,015 13,984 16,672
----- ----- ------ ------
Net income $7,686 $2,429 $36,993 $24,720
====== ====== ======= =======
Basic earnings per common
share $0.33 $0.11 $1.62 $1.10
===== ===== ===== =====
Diluted earnings per common
share $0.32 $0.10 $1.56 $1.05
===== ===== ===== =====
Basic weighted average number
of shares outstanding 23,203,671 22,446,304 22,781,363 22,402,342
========== ========== ========== ==========
Diluted weighted average
number of shares
outstanding 24,041,390 23,398,582 23,705,836 23,433,107
========== ========== ========== ==========
MAIDENFORM BRANDS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Years Ended
-------------------
January 2, January 3,
2010 2009
---- ----
Cash flows from operating activities
Net income $36,993 $24,720
Adjustments to reconcile net income to net
cash from operating activities
Depreciation and amortization 3,278 3,612
Amortization of intangible assets 1,160 1,160
Amortization of deferred financing costs 185 189
Stock-based compensation 2,389 1,398
Deferred income taxes (5,615) 3,876
Excess tax benefits related to
stock-based compensation (3,296) (278)
Bad debt expense (134) 2,218
Other non-cash items (2,168) -
Net changes in operating assets
and liabilities
Accounts receivable (3,700) 4,583
Inventories (12,410) 4,002
Prepaid expenses and other
current and non-current assets (404) (2,135)
Accounts payable 11,799 (4,355)
Accrued expenses and other
current and non-current liabilities 7,843 (2,731)
Income taxes payable 9,273 (3,286)
----- ------
Net cash from operating activities 45,193 32,973
------ ------
Cash flows from investing activities
Capital expenditures (5,894) (3,197)
Proceeds from sale of assets 1,817 -
----- -
Net cash from investing activities (4,077) (3,197)
------ ------
Cash flows from financing activities
Term loan repayments (1,100) (1,375)
Proceeds from stock options exercised 2,759 235
Excess tax benefits related to stock-based
compensation 3,296 278
Payments of capital lease obligations (193) (186)
Payments of employee withholding taxes
related to equity awards (204) (215)
---- ----
Net cash from financing activities 4,558 (1,263)
Effects of exchange rate changes on cash 22 (1,652)
-- ------
Net increase in cash 45,696 26,861
Cash and cash equivalents
Beginning of period 43,463 16,602
------ ------
End of period $89,159 $43,463
======= =======
Supplementary disclosure of cash flow
information
Cash paid during the period
Interest $2,460 $5,221
====== ======
Income taxes $12,301 $15,642
======= =======
Exhibit 1
MAIDENFORM BRANDS, INC. AND SUBSIDIARIES
SALES BY CHANNEL OF DISTRIBUTION AND PRODUCT MIX
(in millions)
(unaudited)
Three Months Ended
-------------------
January 2, January 3, $ %
2010 2009 change change
---- ---- ------ ------
Department stores and
national chain stores $44.5 $46.6 $(2.1) -4.5%
Mass merchants 24.7 21.0 3.7 17.6
Other 26.4 12.3 14.1 114.6
---- ---- ---- -----
Total wholesale 95.6 79.9 15.7 19.6
---- ---- ---- ----
Retail 13.6 14.8 (1.2) (8.1)
---- ---- ---- ----
Total consolidated
net sales $109.2 $94.7 $14.5 15.3%
====== ===== ===== ====
For the Years Ended
-------------------
January 2, January 3, $ %
2010 2009 change change
---- ---- ------ ------
Department stores and
national chain
stores $201.7 $209.7 $(8.0) -3.8%
Mass merchants 124.2 108.2 16.0 14.8
Other 84.6 37.1 47.5 128.0
---- ---- ---- -----
Total wholesale 410.5 355.0 55.5 15.6
----- ----- ---- ----
Retail 55.8 58.5 (2.7) (4.6)
---- ---- ---- ----
Total consolidated
net sales $466.3 $413.5 $52.8 12.8%
====== ====== ===== ====
Three Months Ended For the Years Ended
------------------ -------------------
January 2, January 3, January 2, January 3,
2010 2009 (1) 2010 2009 (1)
---- -------- ---- --------
Bras 60% 55% 63% 60%
Shapewear 33 37 31 32
Panties 7 8 6 8
- - - -
100% 100% 100% 100%
=== === === ===
(1) Prior period amounts in this table have been reclassified to
conform to the current year presentation.
Exhibit 2
MAIDENFORM BRANDS, INC. AND SUBSIDIARIES
DILUTED EARNINGS PER SHARE GAAP TO NON-GAAP RECONCILIATION SCHEDULE
(unaudited)
The Company believes that this non-GAAP financial measure, when taken into
consideration with the corresponding GAAP financial measure is important
in gaining an understanding of the Company's ongoing business and provides
for comparative results from period to period. In addition, the Company
uses this non-GAAP measure internally to assist in evaluating and managing
the Company's operations.
Three Months Ended For the Years Ended
------------------- -------------------
January 2, January 3, January 2, January 3,
2010 2009 2010 2009
---- ---- ---- ----
Reported diluted earnings
per share $0.32 $0.10 $1.56 $1.05
Adjustments:
One time tax benefit (i) - - (0.26) -
Restructuring - 0.03 - 0.03
Chief Executive Officer
retirement - 0.02 - 0.02
- ---- - ----
Non-GAAP diluted earnings
per share $0.32 $0.15 $1.30 $1.10
===== ===== ===== =====
(i) Non-cash one-time tax benefit associated with the recognition of
additional net deferred taxes assets, principally related to net operating
losses that were recorded after the conclusion of an Internal Revenue
Service audit.
SOURCE Maidenform Brands, Inc.
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