Maidenform Brands, Inc. Reports Fourth Quarter and Full Year 2010 Results and Affirms Guidance for 2011

Mar 02, 2011, 07:35 ET from Maidenform Brands, Inc.

ISELIN, N.J., March 2, 2011 /PRNewswire/ --

  • Net sales increased 8.6% and 19.4% for the fourth quarter and full year, respectively
  • Earnings per share (EPS) of $0.29 and $1.94 for the fourth quarter and full year, respectively
  • Shapewear net sales increased 21.7% and 29.2% for the fourth quarter and full year, respectively
  • Department stores and national chain stores channel net sales increased 14.2% and 17.6% for the fourth quarter and full year, respectively
  • Mass merchant channel net sales increased 26.6% and 27.0% for the fourth quarter and full year, respectively
  • International net sales increased 12.6% and 33.6% for the fourth quarter and full year, respectively

Maidenform Brands, Inc. (NYSE: MFB), a global branded marketer of intimate apparel, today reported fourth quarter 2010 net sales of $118.6 million, an increase of 8.6% over the fourth quarter of 2009.  Full year 2010 net sales were $556.7 million, a 19.4% increase over the same period last year.  

Reported EPS was $0.29 for the fourth quarter of 2010 compared to EPS of $0.32 for the fourth quarter of 2009.  Full year 2010 reported EPS was $1.94 compared to EPS of $1.56 for the same period last year. In 2009, the Company recorded a non-cash, one-time benefit of $6.1 million, or $0.26 per share, primarily associated with the recognition of additional net deferred tax assets. EPS of $1.94 for the full year 2010 was up 49% from EPS of $1.30 for 2009, excluding the one-time tax benefit.    

"We have significantly exceeded our long range plan goals for the second year in a row. I am so proud of the Maidenform team's commitment and execution. Our people, our brands and our products position our company for meaningful growth in 2011 and beyond," stated Maurice S. Reznik, Chief Executive Officer.

Financial Results for Fourth Quarter 2010 versus Fourth Quarter 2009

Net sales for the fourth quarter of 2010 increased $9.4 million, or 8.6%, to $118.6 million.  Wholesale segment net sales for the fourth quarter of 2010 increased $9.6 million, or 10.0%, to $105.2 million. Retail segment net sales decreased $0.2 million, or 1.5%, to $13.4 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 increased $6.1 million, or 14.2%, to $49.1 million for the fourth quarter of 2010.  This increase was due to the solid performance across the shapewear and bra businesses resulting from replenishment orders to support consumer spending and new product introductions.

Mass Merchants

Mass merchant channel net sales increased $6.6 million, or 26.6%, to $31.4 million for the fourth quarter of 2010.  This increase is a result of increased sales, particularly in shapewear at all of the Company's major mass customers, including a warehouse club.  

Other

Net sales in the other channel decreased $3.1 million, or 11.2%, to $24.7 million for the fourth quarter of 2010 primarily from decreased sales to a specialty retailer, partially offset by higher sales to off-price retailers.    

Total international net sales, which are included in the wholesale segment, increased $1.3 million, or 12.6%, to $11.6 million resulting from increases primarily in Mexico, Spain and Russia, partially offset by a decrease in Canadian sales.  

Retail Segment

Total retail segment net sales decreased $0.2 million, or 1.5%, to $13.4 million.  Same store sales, defined as outlet stores that have been open for more than one year, decreased 2.5%.  Internet sales were unchanged at $1.2 million for the fourth quarter of 2010.  The retail segment operated 73 outlet stores and eight shapewear kiosks and carts as of the end of the fourth quarter of 2010 and 73 outlet stores and one kiosk as of the end of the fourth quarter of 2009.  

Consolidated gross profit increased $2.8 million, or 7.2%, to $41.5 million for the fourth quarter of 2010.  As a percentage of net sales, consolidated gross margins were 35.0% for the fourth quarter of 2010 versus 35.4% for the fourth quarter of 2009.

Consolidated selling, general and administrative expenses (SG&A) increased $4.1 million, or 15.9%, to $29.9 million for the fourth quarter of 2010 to support the Company's strategic initiatives and sales growth.  This increase was a result of increased variable distribution costs, increased payroll and related benefits as we invest in our design, merchandising and international teams, increased marketing expenditures to promote our brands, and increased professional fees.  In addition, the Company increased its retail operating expenses, including kiosks and carts expenditures and store lease renewals.  As a percentage of net sales, SG&A increased to 25.2% for the fourth quarter of 2010 compared to 23.6% for the fourth quarter of 2009.        

Due to all of the factors described above, operating income for the fourth quarter of 2010 was $11.6 million, or 9.8% of net sales, compared to $12.9 million, or 11.8% of net sales, for the fourth quarter of 2009.

Net interest expense for the fourth quarter of 2010 was $0.3 million compared to $0.4 million for the fourth quarter of 2009.        

The Company's effective income tax rate for the fourth quarter of 2010 was 40.8% compared to 38.2% for the fourth quarter of 2009.  

Net income for the fourth quarter of 2010 and 2009 was $6.7 million and $7.7 million, respectively, and EPS was $0.29 and $0.32, respectively.      

Financial Results for Fiscal 2010 versus Fiscal 2009

Net sales for 2010 increased $90.4 million, or 19.4%, to $556.7 million.  Wholesale segment net sales for 2010 increased $89.8 million, or 21.9%, to $500.3 million resulting from improvements in all channels of distribution. Retail segment net sales for 2010 increased $0.6 million, or 1.1%, to $56.4 million.    

Net sales for the department stores and national chain stores channel increased $34.8 million, or 17.6%, to $232.5 million for 2010.  This increase was due to the solid performance across the shapewear, bra, and pants categories, resulting from replenishment orders to support consumer spending and new product introductions, and the continued momentum from the Company's licensed brands DKNY® and Donna Karan®.

Net sales for the mass merchant channel increased $33.7 million, or 27.0%, to $158.5 million for 2010.  This increase was driven by the ongoing expansion of the Company's Sweet Nothings brand, primarily in the shapewear category, continued sales of products under its Self Expressions brand, and ongoing replenishment of its Inspirations brand.      

Net sales in the other channel increased $21.3 million, or 24.2%, to $109.3 million for 2010 primarily from increased program business with off-price retailers and increased sales to a specialty retailer.

Total international net sales, which are included in the wholesale segment, increased $12.0 million, or 33.6%, to $47.7 million for 2010 resulting from increases in all of the Company's major markets, including Northern Europe, Mexico, Spain, Canada and Russia.    

Retail segment net sales for 2010 increased $0.6 million, or 1.1%, to $56.4 million.  Same store sales, defined as outlet stores that have been open for more than one year, increased 1.5%.  Internet sales were unchanged at $5.1 million for 2010.    

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

Consolidated gross profit increased $39.3 million, or 24.4%, to $200.3 million for 2010. As a percentage of net sales, consolidated gross margins, were 36.0% for 2010 versus 34.5% for 2009.  This 150 basis point increase was a result of improved product mix and the benefit of sourcing and product cost reduction efforts.

Consolidated SG&A increased $16.1 million, or 14.9%, to $123.9 million for 2010.  However, as a percentage of net sales, SG&A decreased to 22.3% for 2010 compared to 23.1% for 2009.  The dollar increase was driven by the same factors described above for the fourth quarter of 2010 along with incentive compensation.

Operating income for 2010 was $76.4 million, or 13.7% of net sales, versus $53.2 million, or 11.4% of net sales, for 2009.

Maidenform's effective income tax rate for 2010 was 39.9% compared to 27.4% for 2009.  The lower effective income tax rate in 2009 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 third quarter of 2009.  Excluding the non-cash, one-time benefit of $6.1 million, the effective income tax rate for 2009 was 39.3%.

Net income for 2010 was $45.3 million and EPS was $1.94.  Net income for 2009 was $37.0 million and EPS was $1.56.  Excluding the non-cash, one-time benefit mentioned above, net income for 2009 was $30.9 million and EPS was $1.30.    

Total cash and cash equivalents as of January 1, 2011 were $73.2 million compared to $89.2 million as of January 2, 2010.  The Company's outstanding debt was $70.2 million as of January 1, 2011 versus $87.3 million as of January 2, 2010.        

Financial Performance Guidance for 2011:  

2011 First Quarter Outlook:

  • Total net sales increase in the 8% to 11% range over 2010
  • Gross margin rates of around 35%
  • First quarter EPS is expected to be in a range of 54 to 58 cents per share, versus 51 cents per share in 2010

2011 Full Year Trend:

  • Branded net sales growth in the 10% to 12% range over 2010
  • A decline in the other channel of $15 to $20 million as a bra program with a specialty retailer matures
  • Total Company sales growth in the mid-to-upper single digits percentage range over 2010
  • Gross margin rates consistent with 2010 levels
  • EPS of around $2.15 per share versus $1.94 per share in 2010.  This is consistent with the Company's previous outlook for 2011 EPS of around $2.15 per share

Conference Call Information

Maidenform will host a conference call and webcast on Wednesday, March 2, 2011 at 8:30 am ET to discuss its fourth quarter and full year 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 March 16, 2011 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 41810996.

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 88-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 64 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.

MAIDENFORM BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

(unaudited)

January 1,

January 2,

2011

2010

Assets

Current assets

Cash and cash equivalents

$           73,221

$           89,159

Accounts receivable, net

41,431

42,951

Inventories

89,340

77,605

Deferred income taxes

14,477

14,790

Prepaid expenses and other current assets

7,659

7,878

Total current assets

226,128

232,383

Property, plant and equipment, net

25,898

22,228

Goodwill

7,162

7,162

Intangible assets, net

93,855

96,198

Other non-current assets

540

771

Total assets

$         353,583

$         358,742

Liabilities and stockholders’ equity

Current liabilities

Current portion of long-term debt

$             1,100

$             1,100

Accounts payable

30,714

43,473

Accrued expenses and other current liabilities

26,616

28,366

Total current liabilities

58,430

72,939

Long-term debt

69,050

86,150

Deferred income taxes

24,657

22,934

Other non-current liabilities

10,784

9,888

Total liabilities

162,921

191,911

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;

24,399,746 shares issued and 22,781,740 outstanding at January 1, 2011

  and 23,981,108 issued and 23,341,444 outstanding at January 2, 2010

244

240

Additional paid-in capital  

76,091

66,574

Retained earnings

148,641

112,419

Accumulated other comprehensive loss

(4,218)

(3,385)

Treasury stock, at cost (1,618,006 shares at January 1, 2011 and

639,664 shares at January 2, 2010)

(30,096)

(9,017)

Total stockholders’ equity

190,662

166,831

Total liabilities and stockholders’ equity

$         353,583

$         358,742

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 1,

January 2,

January 1,

January 2,

2011

2010

2011

2010

Net sales

$         118,617

$         109,132

$         556,709

$         466,255

Cost of sales

77,055

70,427

356,364

305,272

         Gross profit

41,562

38,705

200,345

160,983

Selling, general and

administrative expenses

29,946

25,866

123,982

107,810

         Operating income

11,616

12,839

76,363

53,173

Interest expense, net

256

402

1,054

2,196

         Income before provision

for income taxes

11,360

12,437

75,309

50,977

Income tax expense (1)

4,635

4,751

30,029

13,984

        Net income

$            6,725

$            7,686

$          45,280

$          36,993

Basic earnings per common share

$              0.30

$              0.33

$              1.99

$              1.62

Diluted earnings per common share

$              0.29

$              0.32

$              1.94

$              1.56

Basic weighted average number of

     shares outstanding

22,779,240

23,203,671

22,737,207

22,781,363

Diluted weighted average number of

     shares outstanding

23,315,131

24,041,390

23,383,311

23,705,836

(1) Income tax expense for the period ended January 2, 2010, includes a one-time tax benefit of $6,069, or $0.26 per share, resulting from the resolution of an Internal Revenue Service audit for the 2005 tax year, which was concluded in the third quarter of 2009.

MAIDENFORM BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

For the Years Ended

January 1,

January 2,

2011

2010

Cash flows from operating activities

Net income

$           45,280

$           36,993

Adjustments to reconcile net income to net cash  

 from operating activities

   Depreciation and amortization

3,654

3,278

   Amortization of intangible assets

1,111

1,160

   Amortization of deferred financing costs

202

185

   Stock-based compensation

3,033

2,389

   Deferred income taxes

2,604

(5,615)

   Excess tax benefits related to stock-based compensation

(7,719)

(3,296)

   Bad debt expense

(437)

(134)

   Other non-cash items

1,176

(2,168)

   Net changes in operating assets and

     liabilities

       Accounts receivable

1,753

(3,700)

       Inventories

(11,769)

(12,410)

       Prepaid expenses and other current and

         non-current assets

217

(404)

       Accounts payable

(12,751)

11,799

       Accrued expenses and other current and

         non-current liabilities

(280)

7,843

       Income taxes payable

5,242

9,273

            Net cash from operating activities

31,316

45,193

Cash flows from investing activities

Capital expenditures

(6,884)

(5,894)

Proceeds from sale of assets

-

1,817

            Net cash from investing activities

(6,884)

(4,077)

Cash flows from financing activities

Term loan repayments

(17,100)

(1,100)

Proceeds from stock options exercised

2,460

2,759

Excess tax benefits related to stock-based compensation

7,719

3,296

Payments of capital lease obligations

(92)

(193)

Purchase of common stock for treasury

(32,352)

-

Payments of employee withholding taxes related to

 equity awards

(898)

(204)

            Net cash from financing activities

(40,263)

4,558

Effects of exchange rate changes on cash

(107)

22

            Net (decrease) increase in cash

(15,938)

45,696

Cash and cash equivalents

Beginning of period

89,159

43,463

End of period

$           73,221

$           89,159

Supplementary disclosure of cash flow information

Cash paid during the period

Interest

$               988

$            2,460

Income taxes

$          21,965

$          12,301

Supplemental schedule of non-cash investing and financing activities

Treasury stock issued related to equity award activity

$          12,126

$            5,156

Equipment acquired with capital lease obligations

$               603

$                    -

Exhibit 1

MAIDENFORM BRANDS, INC. AND SUBSIDIARIES

SALES BY CHANNEL OF DISTRIBUTION AND PRODUCT MIX

(in millions)

(unaudited)

Three Months Ended

January 1,

January 2,

$

%

2011

2010 (1)

change

change

Department stores and

national chain stores

$              49.1

$              43.0

$                6.1

14.2%

Mass merchants

31.4

24.8

6.6

26.6

Other

24.7

27.8

(3.1)

(11.2)

Total wholesale

105.2

95.6

9.6

10.0

Retail

13.4

13.6

(0.2)

(1.5)

Total consolidated net sales

$            118.6

$            109.2

$                9.4

8.6%

For the Years Ended

January 1,

January 2,

$

%

2011

2010 (1)

change

change

Department stores and

national chain stores

$            232.5

$            197.7

$              34.8

17.6%

Mass merchants

158.5

124.8

33.7

27.0

Other

109.3

88.0

21.3

24.2

Total wholesale

500.3

410.5

89.8

21.9

Retail

56.4

55.8

0.6

1.1

Total consolidated net sales

$            556.7

$            466.3

$              90.4

19.4%

Three Months Ended

For the Years Ended

January 1,

January 2,

January 1,

January 2,

2011

2010

2011

2010

Bras

55%

60%

61%

63%

Shapewear

37

33

33

31

Panties

8

7

6

6

100%

100%

100%

100%

(1) Prior period amounts in this table have been reclassified to conform to the current year presentation.

SOURCE Maidenform Brands, Inc.



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http://www.maidenformbrands.com