Warnaco Speedos Ahead

It's been a while since those days in the late '70s and early '80s when certain brands of jeans implied status, and "Calvins" was high on the list. It's also been a while since the provider of Calvin Klein jeans and intimate apparel, Warnaco Group (Nasdaq: WRNC  ) , brought bright news to its investors, considering it emerged from bankruptcy just last year. Today, however, Warnaco reported profit from continuing operations and sharply narrowed its net loss in the fourth quarter, sending its stock on an upward bounce.

Warnaco's net loss came in at $4.1 million, or $0.09 per share, from $59.5 million, or $1.12 per share. The company reported an operating profit of $10.7 million, or $0.23 per share, compared to a loss of $54.8 million, or $1.03 per share, last year. (Last year's figures reflected its continued reorganization efforts as it emerged from bankruptcy.) It indicated lower expenses were also a boost to results. Meanwhile, Warnaco's total sales drooped to $337.4 million from $339.1 million.

In addition to the Calvin Klein array of apparel, Warnaco is also behind the Speedo brand of bathing suits. Other well-known brands in its repertoire include JLO by Jennifer Lopez lingerie, as well as the Warner's and Olga lines of intimate apparel.

According to last year's 10-K, Warnaco's customers run the gamut when it comes to pricing, and include Federated Department Stores (NYSE: FD  ) , J.C. Penney (NYSE: JCP  ) , May Department Stores (NYSE: MAY  ) , Kohl's (NYSE: KSS  ) , Sears (NYSE: S  ) , and Wal-Mart (NYSE: WMT  ) .

Denim's been darn difficult lately; just ask Levi Strauss. Between the loads of competing brands and the range of high- and low-end distributors, jeans manufacturers have a right to be blue. Meanwhile, in the intimate-apparel sector, there's a ton of heavy competition, including one of the strongest names in undergarments: Limited's (NYSE: LTD  ) Victoria's Secret chain.

Today's peak price of $19.39 gave Warnaco shares a new 52-week high to try on. Warnaco said it expects modest revenue growth and slowly improving margins going forward. The company does boast a cadre of well-known brands; however, given Warnaco's previous difficulties, competition and the changing climate of retail still make the stock seem an uncomfortable fit for now.

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Alyce Lomax does not own shares of any companies mentioned.