Speedo Company Owner Gromek: Swimsuit Will Go Mainstream
"Squawk Box" co-anchor Carl Quintanila and I interviewed Warnaco president and CEO Joseph Gromek today on the show. Gromek had some very interesting things to say, including the fact that he hoped that the company was going to sell $5.5 million worth of those Speedo LZR Racer swimsuits.
As background, Warnaco, which owns Speedo, has seen its stock rise more than 30 percent over the last month. It's not only about Speedo, it's about Calvin Klein, Chaps and their other brands too.
Carl: What do you attribute the stock price movement to?
Gromek: Well, I think that you know that we announced earnings last Thursday and we announced 22 percent revenue increase and I think we had earnings revenue of 52 percent, so I think that was really the catalyst, the driver for share price. Having said that, I think the boost yesterday which took our share price to a 52-week and probably an all-time high was kind of exciting. I think some of the Phelps factor was kicking in now.
Darren: How much of your business in Speedo?
Gromek: Speedo represents slightly under 15 percent of our business and Calvin, the Calvin Klein franchise represents over 65 percent.
Darren: So how do you grow? How do you take this buzz, this PR storm that we might have never seen in the history of sports. How do you take that and grow the $250 million competitive swimsuit market?
Gromek: We obviously have spent a lot of time on this one and how we can take this success story and take it into the mainstream the kind of products that we can deal with. I brought you over one today. Here is a jersey, a speedo jersey, with a big Michael Phelps on it, I hope you can all see it, it's the kinda thing that is selling currently at SpeedoUSA.com on our website and we think that products like this will get into the mainstream and really create quite a buzz.
Darren: Does your marketing deal with Michael Phelps allow you to use his name?
Gromek: On this type of thing, correct.
Darren: So you're going to do shirts and other things.
Gromek: You know Michael has been a spokesperson for us, he's been the model in our catalogues and all of our periodicals and is really terrific young man, as a spokesperson for the brand.
Carl: Do you have a view to critics who say, 'Look at the way this suit is changing the game in unfair ways?'
Gromek: Well, I think we have spent a lot of time and energy developing a product. Its a unique product and a very special product, and you know, it's the LZR Racer, it's water repellent, it's light weight, it has strategically placed pieces of fabric that really make sense and support the body and you know it has all the great characteristics. And the core, the core it actually functions almost like a girdle. It's uplifting, it does all these wonderful things. It was created in conjunction with NASA, the space agency, and it was actually tested in wind tunnels.
Carl: There's no dispute about its effectiveness. But the words technological doping are floating around.
Gromek: Well, you know every athlete has the opportunity to wear this suit. We provided it for anyone who wants it, we had 3,000 suits shipped to Beijing, so any athlete that comes to see us they will have them, for the U.S. trials we had 2,500 suits flown in. So it's out there for all to be had.
Darren: The U.S. Open maybe five or six years ago, Serena Williams comes out in a Puma catsuit. They put it out and it only sells 50. Yeah it was a fashion statement and yeah it got the buzz, but it only sold 50. You guys are taking pre-orders for the Speedo LZR Racer right now. It's going to come out in October.
Gromek: Hopefully early September.
Darren: OK, how many of them do you expect to sell?
Gromek: I would be disappointed if we didn't go through 10 or 15,000 pre-Christmas.
Darren: And how does that compare to other suits that you have sold in terms of numbers?
Gromek: It would be 50 percent better than the last suit that we introduced four years ago, the Fast Skin 2.
Darren: The Million Dollar Bonus (Speedo is giving Phelps if he wins 7 golds in this Olympics). It's going to be a million dollars are you. Do you want to give it away or you don't?
Gromek: That would be -- we would take great pride in writing that check.
Video: A look at Warnaco's Speedo LZR Racer and company outlook, with Joseph Gromek, Warnaco president/CEO.
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