Check out Warnaco Inc’s Olympic dreams.

Clothing company Warnaco got to boast about the strength of its Calvin Klein jeans and underwear business last week when it reported much better-than-expected earnings and raised its full-year outlook.

Now the company, whose stock rose 6 percent yesterday to a new 52-week high, says it is feeling “the Phelps factor” as U.S. Olympian swimmer Michael Phelps racks up the gold medals in Beijing, at times while wearing the company’s new Speedo LZR suit.

“Michael’s been a spokesperson for us, he’s been a model in catalogs for us. He’s a spokesperson of the brand,” said Warnaco CEO Joe Gromek in an interview on Tuesday on the business news cable television channel CNBC.  

The benefits of wearing a LZR, which can cost up to $550, has sparked controversy in the international swimming community. CNBC cited murmurs of “technological doping” as experts question whether it can actually boost swimmers’ performances.

In the interview, Gromek dismissed any unfair advantage the suit may bring a particular swimmer or team, saying that every athlete has the opportunity to wear one, since the company shipped 3,000 suits to Beijing for the Olympics.

Speedo currently represents less than 15 percent of Warnaco’s business, while Calvin Klein accounts for more than 65 percent, Gromek told CNBC.

But he hopes the LZR’s prominent role at the Olympics will translate to success on store racks.

“We obviously have spent a lot of time on this one (the new swimsuit),” Gromek told CNBC, with “lots of discussion about how we can take this success story and take it into the mainstream.”

Gromek told CNBC that Speedo is already taking pre-orders for the suit and hopes to make it available to shoppers as early as September.

“I would be disappointed if we didn’t go through 10,000 or 15,000 pre-Christmas,” Gromek said. “It would be 50 percent better than the last suit that we introduced 4 years ago.”

The low end of Gromek’s forecast could bring in as much as $5.5 million in sales in one quarter, which is still a drop in the bucket compared to the $503.8 million in sales the company had in the most recent quarter.

But those drops can add up, and Warnaco sure knows how to move through water.

 Also in the basket:

Tesco enters India with cash-and-carry, Tata deal 

Beijing sees little retail lift from Olympics (WWD: subscription required)

TJX 2nd-quarter profit jumps

Fossil Q2 profit tops view; boosts FY earnings outlook

(Photo of Michael Phelps after winning men’s 200m freestyle final in Beijing: Reuters)

(Due to a tabulation error in the research, STORES Magazine has issued a corrected list. This is being corrected to remove Coldwater Creek from the Top 10 list and replace it with Citi Trends at No. 10) 

Though the retail industry cooled last year to its slowest growth since 2002, a number of retail companies experienced fiery growth, according to the National Retail Federation. The hottest retailers, in general, grew through acquisitions, according to the trade group’s STORES Magazine.

NRF’s 2008 Hot 100 Retailers list, which will be included in STORES’ August issue, ranks the nation’s fastest-growing retailers that are publicly traded and have more than $100 million in annual sales.

Topping the list this year is CVS Caremark, which grew 2007 revenue by 74 percent because of its acquisition of Caremark. The No. 2 spot also went to a drugstore chain — Rite Aid, which purchased Brooks Pharmacy units in New England and Eckerd on the East Coast, saw revenue grow narly 40 percent. IHOP, which recently changed its name to DineEquity Inc, was No. 3 with last year’s purchase of Applebee’s.

WalMart, the world’s largest retailer, clocked in at No. 80, with 8.6 percent growth. Its mass market rival Target Corp, brought up the rear at No. 100, with 6.5 percent revenue growth.

Here is a list of the top 10 retailers, according to STORES Magazine: 

          1. CVS Caremark

          2. Rite Aid

          3. IHOP

          4. Amazon.com

          5. American Apparel

          6. GameStop

          7. BJ’s Restaurants

          8. Chipotle Mexican Grill

          9. FTD

          10. Citi Trends

     (Photo: Reuters)

J. Crew is getting personal with an emailed mea culpa apologizing to customers who may have had “issues” while shopping online in recent weeks.

While the email’s introduction sounds like a missing line from Sinatra’s “My Way“, it goes on to plead for patience. Humility is in fashion!

The apology also appears at the bottom of the company’s home page.

Here is the full text of the email (lowercases included):  

we’ve made some mistakes….

(too many in our mind).

we want to say that we’re sorry for any issues you have experienced while shopping J.Crew online or over the phone over the last few weeks — we know we’ve let you down.

we are in the midst of making some enhancements to our web site and call center (and, unfortunately, encountered some bumps along the way). please bear with us as we work through these issues — we know it’s not perfect.

we appreciate your patience.

millard drexler, chairman and ceo

tracy gardner, president

(Photo: CNN/Money)

Check out the majority owner of Talbots exerting more control.

The women’s apparel retailer, which has endured hardships in recent months including falling sales, job cuts, an executive departure and a credit problem, said on Thursday that Tsutomu Kajita would become chairman of its board.

Kajita is senior vice president of international operations for Japan’s Aeon Co, Talbots’ majority owner.

“The appointment of Mr. Kajita as non-executive chairman further signifies Aeon and its management’s commitment and confidence in our continued success and ability to execute our long range strategic plan,” said Talbots Chief Executive Trudy Sullivan in a statement.

Talbots is working hard to turn itself around after a string of fashion and merchandising missteps hurt sales of its classic fashions that target women over 35. The weak U.S. economy hasn’t helped either.

There is a new design team, and early reviews are positive.

Lazard Capital Markets analyst Todd Slater said the company’s new fall and holiday assortments were more “design driven” versus a “more traditional formulaic product development process.”

“While we weren’t able to preview entire floorsets, what we did see was more iconic, with the brand returning to its heritage, utilizing bold color (red), patterns (hounds tooth, plaid), directional fabrications (tweed), and iconic styles (the great white shirt, shift dresses, pea coats, totes, scarves and pearls),” Slater wrote in a research note on Thursday.

Jennifer Black, of Jennifer Black and Associates, waxed even more poetic.

“The collection in its entirety was everything we had envisioned and more.  The fabrics exuded quality.  The colors radiated the classic Talbots styling, the lines were clean and simple, and the styling was timeless.  The fall/holiday collection flows well together … The fits have been modified for today’s fashion style, but not changed as far as the fit specifications.  The waists on pants no longer cover the woman’s ribcage; gone are the days of the ugly, baggy, boxy fits,” Black wrote last week.

But Slater did have a warning for Kajita, whose company operates Japan’s Jusco chain of general merchandise stores.

“Current expectations (are) likely too high. Management is focused on reducing
inventory, which should continue to lead to improved merchandise margins. However, we believe current trends remain below plan, and near-term expectations appear to be getting too high,” Slater said.

Also in the basket:

GDP gets stimulus checks boost

Target offering Web customers installation services

CVS second-quarter profit rises

Check out Linens ‘n Things giving some of its stores a reprieve.

As part of the Chapter 11 bankruptcy petition filed in May, home goods retailer Linens ‘n Things said it would close underperforming stores.  

The chain — which sells home goods ranging from furniture and window treatments to kitchen gadgets and bedding – said on Monday it only plans to close 57 underperforming stores, instead of 87 as it had previously disclosed.

“The reduced number of store closings is the result of improvements in the outlook for these stores throughout the remainder of 2008 into 2009,” said Michael Gries, the company’s chief restructuring officer and interim chief executive.

Of the stores that are still slated for closure, many of them are in areas hit hard by the U.S. housing market decline. California will see 13 closures, with Florida seeing 10 and Arizona seeing 6.

For a full list of store closures, click here.

 Also in the basket:

Kraft Foods 2nd-quarter profit beats estimates

Alberto-Culver profit tops Wall St view

(Photo: Reuters)

Is it Last Call for Wall Street at Anheuser-Busch?

On Anheuser-Busch’s conference call Wednesday to discuss second-quarter earnings, the tone was more like a wake than the tailgate parties of old.

Well, previous calls never really had galloping Clydesdales, singing frogs or a hard-partying Bull Terrier. But quarter after quarter, investors and analysts from both the ”buy” and ”sell” sides would still dial in after the close of New York trading for the latest color on beer sales.

Wednesday’s get-together — likely the second-to-last one before the brewer gets swallowed by Belgian brewer InBev – was different. 

First, the earnings were released at 11:12 a.m. ET, (instead of the usual 2:30 p.m.), just as Wall Street’s beverage analysts were listening to PepsiCo CEO Indra Nooyi , on her conference call, discuss ways the company is changing its business to cope with the current economic uncertainty.

The Bud call started at noon, immediately following the Pepsi call.

While Chief Financial Officer W. Randy Baker said the teleconference was “earlier to accommodate the increased interest of European investors and analysts,” one U.S.-based analyst, who agreed to speak on the condition of anonymity, guessed that the near overlap with Pepsi’s presentation was no coincidence.

“Structurally, they set it up so that they wouldn’t really have to talk. I understand why they did that,” said the analyst, adding that the context and timing of the call kept off a lot of analysts, who were likely tied up with Pepsi.

Gone was the typically long Q&A session with analysts including Morgan Stanley’s Bill Pecoriello, Stifel Nicolaus’s Mark Swartzberg, UBS’s Kaumil Gajrawala, Deutsche Bank’s Marc Greenberg, JP Morgan’s John Faucher and Goldman Sachs’ Judy Hong. Bryan Spillane from Banc of America and Anthony Bucalo from Credit Suisse lobbed the only questions from the usual suspects.

In their places were London-based analysts who cover InBev, such as Chris Pitcher of Redburn Partners and Philip Morrisey of Citigroup.  

“It was partially timing and partially like, ‘Hey guys, if you’re not going to make our lives easy, we’re going to go out and try to talk to our clients about a stock that matters now,” the analyst said. 

Edward Jones analyst Jack Russo, who said he was on the conference call but did not ask a question, told Reuters that timing wasn’t the only issue.

“I think a lot of people are pretty much assuming this deal is done, that the company is going to no longer be an independent company by the end of the year, so I think interest kind of trails off as a result of that.”

He noted that some people might have tuned in for an update on the status of the deal, but that they’ll probably have to listen to an InBev call for that.

InBev, or the soon-to-be-called Anheuser-Busch InBev, will release earnings on August 14. Let’s hope InBev CEO Carlos Brito changes its call time to make it more convenient for the U.S. investors.

(Photo: Reuters)     

Anheuser-Busch’s “Cuba defense” against a takeover by Belgium-based InBev may have gone flat after the Budweiser folks agreed to be bought out, but don’t expect to see America’s top-selling beers in Havana bars any time soon.  

InBev brews and sells Beck’s, Bucanero, Cristal and Mayabe beers in Cuba through a 50/50 joint venture with the Cuban government. Could Cubans now be one mambo step closer to cracking open a cold Bud on a hot Havana night? 

Not so fast, says Uncle Sam.

According to a U.S. embargo against Cuba “no products, technology, or services may be exported from the United States to Cuba, either directly or through third countries. This prohibition includes dealing in or assisting the sale of goods or commodities to or from Cuba, even if done entirely offshore.” 

Exceptions include things like medicine, food, agricultural products, works of art or publications. 

“There will not be any Bud in Cuba. That’s a business that doesn’t exist now and it will not exist in the future until the regime changes,” said Todd Malan, president and chief executive of the Organization for International Investment, a lobbying group that represents U.S. subsidiaries of foreign companies.

But talk to enough people in Cuba and someone will remember when Budweiser was sold there. A waiter at Havana’s landmark Hotel Nacional recently said the last time he saw it was in the early 1990s –  right about the time the Soviet Union collapsed and Cuba’s economy, heavily subsidized by Moscow, went south.  

But Corona, whose brewer Grupo Modelo is half-owned by Anheuser, is generally sold in hotels, restaurants and some stores that cater to foreigners.

Average Cubans tend to know Corona’s name and some say they have seen it occassionally, but it is not their everyday choice. That would be one of InBev’s beers.

A can of Cristal or Bucanero at stores costs at least 1 CUC - the Cuban hard currency worth slightly less than a dollar. Given that the average Cuban makes about $18/month, beer is a luxury.

Bottles of Cuban rum — which include Pernod Ricard’s Havana Club — start at around $3 and go up from there. 
     
A DEAL OBSTACLE? 

Before a higher bid lured Anheuser into negotiations, the Budweiser maker sued InBev, saying the maker of Stella Artois and Becks may be lying when it promised to manage the combined company’s North American business from its hometown of St. Louis, since its Cuban business would make that impossible.

But InBev could take a cue from France-based Pernod, which also owns Wild Turkey bourbon, made in the United States. It does not sell Havana Club in the U.S. or Wild Turkey in Cuba. Its business in Cuba is completely separate from the U.S., according to Mark Orr, Pernod Ricard USA’s vice president for North American affairs.

He guessed that if regulators hassled InBev over its Cuban ties, the maker of Stella Artois and Beck’s could save itself by making sure that the Cuban venture was managed separately from anything going on in the U.S.

“I have no personal knowledge about how their business is currently structured, but I think they could do it fairly easily because everybody else has managed to do it in the appropriate way,” Orr said. “They are smart people and I’m certain they’ll do the necessary thing to comply with the law.”

InBev sells less than half a percent of its total beer volume in Cuba, according to a spokeswoman. Therefore, lawyers have said, it’s likely that InBev would swiftly sell it rather than have it impede its $52 billion takeover of Anheuser-Busch.   

And if the Castro dynasty were to end? Expect the “King of Beers” to be paraded through the streets of Havana, Clydesdales and all. 

(Additional reporting by Jeff Franks in Havana) 
     
(Photos: Reuters)   

Despite the credit crunch and weak U.S. economy VF Corp went shopping again.

The company, once known for functional brands like Wrangler, Lee, Eastpak and JanSport, said on Wednesday it acquired a one-third interest in Mo Industries, owner of the Splendid and Ella Moss brands.

Terms of the deal were not disclosed, beyond saying that it valued the brands at close to 7.5 times expected 2008 earnings before interest, taxes, depreciation and amortization.

Splendid and Ella Moss clothes are sold at high-end retailers such as Bloomingdale’s and Nordstrom and together brought in over $80 million in revenue last year.

Mike Egeck, president of VF’s contemporary brands segment, said the acquisition allows the company to broaden its offering of knit tops and provide synergies with its 7 For All Mankind and lucy brands, which respectively sell designer jeans and yoga clothes.

(Photo: www.splendid.com)

M-A-R-C-H S-A-M-E-S-T-O-R-E S-A-L-E-S.

The overwhelmingly dreary news today from U.S. retailers reporting March sales results was enough for Lazard Capital Markets analyst Todd Slater to utter the “R” word with gusto.

Referring to a recession in consumer discretionary spending, Slater said: “The numbers on consumer discretionary spending this month indicate that a recession is in full swing.”

According to the Free Dictionary , that means a recession is already “at the highest level of activity or operation.” Therefore, Slater reasoned, it may be time to start buying some retail stocks.

Slater was not alone. The Standard & Poor’s retail index was up more than 2 percent on Thursday afternoon.

According to Slater’s “Beat-O-Meter” only 30 percent of retailers posted March same-store sales that exceeded Wall Street estimates, well below the average of 50 percent. 

“While the first half of March was very strong, owing to early school vacations and the Easter shift, sales fell off precipitously at the end of the month, suggesting a bigger giveback than expected.”

But if you believe that things can only get better from here, Slater says investors should focus on companies that:

1) have strong top-line growth visibility, driven by increasing brand cachet and/or global exposure, such as American Apparel, Deckers Outdoor, Iconix Brand Group, Warnaco, Wolverine World Wide and VF Corp.

2) have already suffered through a self-imposed recession, have lowered expenses and inventory liability significantly and can meet/beat earnings estimates through margin expansion, even in a weak top-line environment, such as Limited Brands.

Case in point: Limited Brands said on Thursday that same-store sales at its Bath & Body Works chain fell 13 percent but that merchandise margins were up “significantly”.

Enchanted orchid or pineapple mango body cream anyone?

Coach Inc is testing out a new larger store format, meant to enhance its mall-based flagship stores.

The U.S. handbag maker will be testing its new Gallery stores in four upscale malls, according to Mike Tucci, president of Coach’s North American retail division.

The first upgrade will occur in June at the Coach store in New Jersey’s Mall at Short Hills, followed by the store in King of Prussia, Pennsylvania before the December holidays.

The King of Prussia store will soon cover 5,100 square feet, Tucci said.

Coach divides its stores into three types. Its highest-end stores are called “flagship” stores, followed by “fashion” stores and “factory” stores, where items are discounted.

In addition to enhancing the flagship stores, Tucci said the new store formats would help the process of moving its whole store base up the value chain. He noted that 86 percent of sales now come from fashion and flagship stores, up from 39 percent in 2004.

Coach said it plans to open as many as 40 new stores this year in North America, bringing the total to about 300 stores by year-end.

The company has previously said it believes North America can support about 500 Coach stores.