Wednesday August 6 7:19 PM EDT
INTERVIEW - Designer mulls intimate apparel
By Gilles Castonguay
NEW YORK, Aug 6 (Reuter) - Designer Holdings Ltd (DSH), the Calvin Klein jeanswear licensee, is looking to enter the underwear and intimate apparel business in an effort to widen its market base, the company's chief executive said.
Arnold Simon told Reuters the firm was talking with ``various parties'' about potential licenses with other designers or actual acquisitions.
``The intimate apparel business has become a very, very fashionable business,'' he said.
``Our intention is to add brands to the company,'' he added. ``(But) we would concentrate on brands where we would not compete with Calvin Klein.''
Simon said the brands would nevertheless have to be well known. ``We don't want to select a brand, we want to select a great brand.''
He declined to say how soon the company might sign a definitive deal.
Maurice Dickson, the company's chief financial officer, said in an earlier interview that Designer Holdings would not see a rise in revenues until 1998 even if it were to sign a deal this year.
Designer Holdings contracts out the cutting and sewing of the clothes and then sells the finished t-shirts, jeans and sweaters to retailers.
In a statement released on Tuesday, it reported an operating profit of $0.11 per share for the second quarter, compared to $0.15 for the same quarter a year ago.
It also forecast operating earnings in fiscal 1997 to be about 40 percent to 50 percent of current estimates of $0.90 per share to $0.95 per share.
Simon blamed the lower forecast on a softness in the apparel industry in general, as well as the company's own overproduction, primarily in basic denim.
Although it had managed to maintain its overall market share, Designer Holdings had seen growing competition from rivals like Polo Ralph Lauren Corp (RL) and Tommy Hilfiger Corp (TOM), he added.
Simon said the company was shifting its emphasis from jeans to what it called fashion products, which included fancier clothes like embroidered sweaters.
``We are going with the trends,'' he said, referring to a cyclical downturn in denim sales.
Simon said the company was increasing its reliance on fashion products for its revenues by 10 percentage points to 55 percent. Basic products like jeans and t-shirts would make up the other 45 percent, he said.
The company's stock closed 1-7/16 lower at 5-5/16 amid active trading on the New York Stock Exchange.
On Tuesday, it also announced a series of charges in the second half of the year totaling $0.43 per share to $0.56 per share due to a plan to improve efficiency and adjust to a changing market. |
