August 8, 2012 / 3:37 PM / 5 years ago

UPDATE 1-Maidenform cuts forecast on weak demand

* Second-quarter adj earnings $0.67/share vs est $0.48/share

* Sees third-quarter earnings $0.40-$0.45/share vs est $0.64/share

* Sees FY earnings $1.50-$1.60/share vs est $1.78/share

* Shares down as much as 10 pct

Aug 8 (Reuters) - Lingerie maker Maidenform Brands Inc cut its full-year forecast as demand remained weak in Europe and the United States and increasing raw material costs ate into margins.

Shares of Maidenform, which also forecast third-quarter results below analysts’ expectations, fell as much as 10 percent to $20.01 on the New York Stock Exchange on Wednesday.

Weak demand in European markets such as the United Kingdom and the Benelux countries offset increases across Canada and Mexico, Maidenform said.

The company also said it anticipates further slowdown in the pace of stock replenishment at departmental stores in its domestic market.

Efforts to pass on higher raw material costs to customers have not succeeded, prompting retailers to discount more.

Rival Hanesbrands Inc reported lower second-quarter earnings last month as higher cotton costs eroded its margins. The company has trimmed its operations by exiting or selling some of its divisions to boost margins.

Maidenform forecast current-quarter gross margins to decline over the second quarter.

April-June gross margins fell to 34 percent from 34.8 percent a year earlier as the company spent more on promotions and increased discounting.

The company forecast earnings of between 40 and 45 cents per share for the quarter ending Sept. 30. Analysts on average were expecting 64 cents per share in earnings, according to Thomson Reuters I/B/E/S.

Maidenform now expects full-year earnings of between $1.50 and $1.60 per share, below its previous outlook of $1.75 to $1.85 per share. Analysts were expecting $1.78 per share.

Maidenform, which also competes with Limited Brands Inc’s Victoria’s Secret, reported second-quarter earnings of $11.4 million, or 49 cents per share, compared with $11.6 million, or 50 cents per share, a year earlier.

Excluding items, Maidenform earned 67 cents per share.

Sales dropped 7 percent to $157.5 million.

Analysts were expecting Maidenform to post earnings of 48 cents on a revenue of $154 million.

The Iselin, New Jersey-based company’s shares were down 7.4 percent at $20.69. They closed at $22.34 on Tuesday.

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