WPS rebounds slightly with 3Q profit of $3.6M
Don Hogsett -- Home Textiles Today, October 29, 2001
Climbing modestly back on track after three straight quarters of losses, WestPoint Stevens recorded a third-quarter profit of $3.6 million, and said sales climbed higher by 5.2 percent, the first time in more than a year that the mill has managed to eke out an increase in sales.
But even though it managed a small profit — earnings were still way off their earlier form, and dropped off by 81.2 percent from $19.8 million last year.
Earnings per share of 11 cents — the number most closely watched by analysts — was in line with a consensus Wall Street forecast.
Earnings would have been even higher, but were weighed down by $7.5 million in miscellaneous charges, including $1.7 million in ongoing restructuring costs, and a non-cash charge of $7.5 million relating to an unconsolidated limited liability corporation that owned an aircraft used by the company. WestPoint said that by using alternative means of transportation, it expects to save about $5 million a year.
Helping to restore the company to profitability, sales climbed higher by 5.2 percent, to $513.1 million from $487.8 million, lifted by the roll-out of new Disney and Ralph Lauren programs and the buyout of the Chatham blanket business. And even without the impact of the added blanket and mattress pad sales from Chatham, sales advanced by 3 percent, the company said.
Sales advanced in all product categories except towels, the company said, and even then terry sales were down only because they were up against a tough comparison with last year and the launch of a major new program.
Perhaps even more important than the improvement in sales and earnings was the improvement in the company's cash position, which jumped up to $3.3 million from $391,000 last year, providing plenty of headroom even after the payment of interest costs, and ensuring that the company remains in compliance with all of its debt covenants.
"Importantly, we continued to reduce inventories by $35 million, to $397 million at the end of the quarter, and reduce indebtedness under our senior credit facility by $54 million," said Holcombe Green Jr., chairman and ceo.
Looking ahead through a clouded environment for retail sales, WestPoint's fourth-quarter sales are likely to come in at the low end of expectations, at about $480 million — but even at the low end, that's a strong 15 percent over the $418 million in sales recorded during the fourth quarter last year.
|Qtr. 9/30 (x000)||2001||2000||% CHG|
|a-Third-quarter results include miscellaneous expenses of $9.5 million, compared with $784,000 the prior year; earnings in the same period a year included a restructuring and impairment charge of $6.1 million.
b-Nine-month results include a $5.1 million restructuring and impairment charge, compared with a prior-year charge of $102.0 million;$13.8 million in miscellaneous expenses, compared with $7.1 million the previous year; a income-tax benefit of $13.8 million, compared with $30.5 million the prior year.
|Oper. income (EBIT)||53,010||70,208||-24.5|
|Per share (diluted)||0.07||0.40||-82.5|
|Average gross margin||23.0||26.7||—|
|Oper. income (EBIT)||86,550||115,766||-25.2|
|Per share (diluted)||(0.50)||(1.10)||—|
|Average gross margin||21.0%||21.5%||—|