Warnaco to cut jobs, capital spending
today Nov 19, 2008
* Warnaco to cut 7 pct of corporate staff
* Aims to cut '09 SG&A expenses and capital spending
* Shares fell 13.7 pct; some rivals down more (Adds number of jobs cut; updates shares)
By Martinne Geller
NEW YORK, Nov 19 (Reuters) - Warnaco Group Inc , the maker of Calvin Klein jeans and Speedo swimsuits, announced a cost-cutting plan on Wednesday that includes eliminating about 45 corporate jobs and reducing capital expenditures.
Warnaco shares fell 13.7 percent, but still outperformed rival apparel makers such as Jones Apparel Group Inc , Liz Claiborne Inc and Perry Ellis International Inc , whose shares closed down 21 percent, 32 percent and 19 percent, respectively.
At a conference hosted by Morgan Stanley, Warnaco Chief Executive Joe Gromek said the company's first round of cost reductions included cutting 7 percent of its corporate staff, or about 45 jobs, a spokeswoman said.
The New York-based company, which also operates Calvin Klein retail stores mostly outside the United States, has roughly 5,000 employees in total, she added.
"We are ... taking immediate actions to respond to the macroeconomic environment," Gromek said. "We will control the things that we can control. We will align our costs to reflect current economic conditions."
Brean Murray, Carret & Co retail analyst Eric Beder said Warnaco is doing the right things in this tough environment, in which consumers are pulling back on discretionary spending as a weakening economy stokes fears of a global recession.
"They will be winners when the consumer returns," Beder said in an email. "The Calvin Klein brand remains among the strongest in the department store channel."
Warnaco is aiming to reduce its 2009 selling, general and administrative spending by $40 million and its capital expenditures by 20 percent, Gromek said.
But it still plans to add 100,000 square feet of retail space in 2009, after adding about the same amount this year.
The company also affirmed its full-year earnings and sales targets, which it lowered earlier this month, citing a higher tax rate and the impact from the strengthening U.S. dollar.
Beder said apparel makers were under pressure as poor results from department store operator Saks Inc helped stoke investor fears that suppliers will be hurt even more as orders are canceled.
Warnaco shares closed down $2.11 at $13.29 on the New York Stock Exchange, while Liz Claiborne slipped $1 to $2.13 and Jones Apparel fell $1.29 to $4.83. (Reporting by Martinne Geller; Editing by Brian Moss)
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