Dan River Narrows Loss in July
September 13, 2004-- Home Textiles Today,
Working its way through a sweeping restructuring and overhaul of operations, Dan River Inc. recorded a $5.1 million loss for the month of July, a substantial improvement over a loss of $18.6 million during June, when the company was hit by deep losses from its share of a Mexican subsidiary and almost $5 million in bankruptcy costs.
In a further lift to July's bottom line, the diversified textiles producer swung to a positive gross margin during the month, recovering from weakness in June. Average gross margin improved to 5 percent, compared with a negative gross margin of 2.6 percent during June, when the cost of making its products exceeded its sales.
Sales for the month of July totaled $40.99 million, a 22.1 percent improvement over June. In a highly computerized era, sales of home fashions companies are subject to wide monthly swings as their retail customers adjust inventories, sometimes stepping up the flow of goods, at other times postponing their shipment in response to weekly sales trends.
However, offsetting stronger margins, selling, general and administrative expense totaled 12.1 percent of sales, up from 9.1 percent in June.
Sharply skewing the month-over-month results, Dan River reduced the loss from its stake in a Mexican subsidiary to $92,000 from $4.8 million during June, when the company began to wind down operations there.
In another big skewing effect, Dan River pared its restructuring costs to $1 million from $4.6 million during June, when the company paid $1.2 million in bankruptcy fees; paid $696,000 in retention bonuses to key employees; and recorded a $2.8 million charge in connection with debt refinancing.
During July, the company took in $950,000 from the sale of assets, and another $542,333 from the sale of looms.
July Results (x000)
|Cost of sales||38,923|
|Loss from stake in a subsidiary||92|
|Average gross margin||5.0%|
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