Warnaco’s (WRC) performance since CEO Joe Gromek arrived in 2003 has been spectacular. He inherited a company that was just coming out of bankruptcy, and had suffered a bottom line loss of almost $900 million in 2001 on sales of $1.6 billion and a loss of almost a billion dollars on sales of $1.4 billion in 2002. Starting with his first year, and every year thereafter, except for a negligible dip in income in 2008 and revenue in 2009, Warnaco enjoyed double digit growth on all key metrics. The company sailed through the Great Recession as though it didn’t happen. Sales now stand at about $2.3 billion, operating margin at 11.4%, and operating income at $262.7 million.
Q. Joe, can you give us some background on the turnaround efforts put in place before the recession, and highlights of how you were able to get through the recession with only minor hiccups and outperform the majority of players in this industry? Was there something about your business that “insulated” Warnaco from the full impact of the recession?