Warnaco Rating Upgraded; Shares Gain More Than 5%

Gaining more than 5 percent on Wednesday in the U.S. stock market, Warnaco’s rating has been upgraded from “underweight” to “equal-weight,” with fourth-quarter margins likely to be better than expected.

Morgan Stanley’s Joseph Parkhill said that Warnaco, which designs, sources, markets, licenses and distributes a wide range of intimate apparel, sportswear and swimwear worldwide including Calvin Klein, Speedo and Chaps, fell short of third-quarter gross margin estimates but due to sales and administration cost-cuts, was able to meet expectations.

Parkhill said fewer promotions could help margins in the fourth quarter; he also raised his quarterly earnings per share estimate for Warnaco from 92 cents to $1. Saying Warnaco is likely to see better margins as product costs decline and facing easy European margin comparisons, Parkhill also lifted the company’s full-year earnings forecast from $4.35 to $4.57 per share.

Last month Warnaco announced that Chief Operating Officer Helen McCluskey would replace President Joe Gromek in February.

Source: CBS Money Watch
Image: Warnaco

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