Maidenform Brands (NYSE:MFB) saw its shares plunge more than 24 percent Wednesday as the marketer of intimate apparel said third quarter earnings fell on lower customer traffic and higher costs, leading to a slashed full year outlook.
For the three months , net income was $10.2 million, or 44 cents per share, compared to $12.8 million, or 55 cents per share, a year ago.
Net sales increased 1.6 percent to $148.2 million, as a decrease in department stores and national chain stores channel sales was offset by higher sales in other categories.
"While we increased sales and market share in the third quarter, we are disappointed with our earnings performance, which was below our expectations," said CEO Maurice S. Reznik.
"The quarter was impacted by several factors, including a decline in consumer traffic in our category, that suppressed sales and drove higher costs to promote and liquidate overstocks. We expect these conditions to persist in the fourth quarter and we are taking action to mitigate them."
The company said to this end, it has implemented several new initiatives to increase sales, expand gross margins and control spending.
During the quarter, wholesale segment sales increased 1.2% to $1.6 million, while retail segment sales rose 4.7% to $18.0 million.
Under the wholesale unit, a decrease in the deparment store channel was a result of soft intimate apparel retail trends that hurt the company's bra and pant categories, it said, partially offset by increases in the shapewear category and DKNY business.
In the retail segment, same store sales, defined as outlet stores that have been open for more than one year, increased 2.4 percent. Internet sales jumped 13.3 percent, to $1.7 million.
Consolidated gross margins were 32.0 percent for the third quarter down from 36.2 percent a year earlier, a result of increased promotional activity higher product costs, and changes in channel and product mix, including a higher percentage of sales to the mass channel and off-price retailers.
Looking ahead, the company said for the fourth quarter, it expects total net sales in the $115 to $120 million range, and earnings per share of flat to 4 cents per share, versus 29 cents in the 2010 quarter. Analysts expected 32 cents a share and $127 million in revenues, according to Thomson Reuters.
For the full year, earnings per share are expected in a range of $1.73 to $1.77 per share, with total sales growth of around eight percent over 2010. This compares to a prior outlook of about $2.18 per share for the year, on sales growth of between 10 and 12 percent.
Shares were down more than 24 percent Wednesday late afternoon, trading at $18.17 as of 3:20pm ET.