Maidenform Brands Inc. Earnings: Margins Keep Shrinking

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Maidenform Brands Inc. (NYSE:MFB) reported a drop to a loss in the fourth quarter driven by higher costs. Maidenform Brands is a global intimate apparel company.

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Maidenform Brands Earnings Cheat Sheet for the Fourth Quarter

Results: Reported a loss of $3.1 million (13 cents per diluted share) in the quarter. Maidenform Brands Inc. had a net income of $6.7 million or 29 cents per share in the year-earlier quarter.

Revenue: Rose 5% to $124.5 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Maidenform Brands Inc. reported adjusted net income of 0 cents per share. By that measure, the company fell short of mean estimate of one cent per share. It beat the average revenue estimate of $116.2 million.

Quoting Management: “We achieved solid top line results in total for the third year in a row, with strength across our major strategic priorities, including shapewear, international, mass merchants, Donna Karan International and direct to consumer” stated Maurice S. Reznik, Chief Executive Officer. “Near term gross margin pressures yielded depressed results for 2011 overall. We have taken actions to address these issues, including cost reductions and improvements to our supply chain that we expect will yield meaningful acceleration in margins and profits, particularly in the back half of 2012 and beyond.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 11.6 percentage points to 23.5% from the year-earlier quarter. In that span, margins have contracted an average of four percentage points per quarter on a year-over-year basis.

Revenue has increased for four consecutive quarters. Revenue increased 1.7% to $148.2 million in the third quarter. The figure rose 13.8% in the second quarter from the year earlier and climbed 14.4% in the first quarter from the year-ago quarter.

After three consecutive quarters of profits, the company declared a loss in the latest quarter. The company reported a profit of $10.2 million in the third quarter, a profit of $11.6 million in the second quarter and $14.5 million in the first.

For two quarters in a row, the company has come in under analyst estimates. In the third quarter, it missed expectations by 11 cents with net income of 44 cents versus a mean estimate of net income of 55 cents per share.

Looking Forward: Over the past ninety days, the average estimate for the first quarter of the next fiscal year has fallen from 46 cents per share to 41 cents, indicating that analysts are growing pessisimistic about the company’s performance next quarter. The average estimate for the fiscal year has remained at $1.75 per share.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com

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