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WestPoint narrows monthly loss

Shucking most of the one-time restructuring costs that tugged at the bottom line in June after it sought the shelter of the bankruptcy court, WestPoint Stevens Inc. recorded a sharply narrowed July loss of $1.8 million, recovering from a prior-month deficit of $30.0 million.

Helping it to slash its July loss by almost 94 percent, the major mill turned its back on $39.6 million in restructuring and good will impairment charges that dogged the bottom line in June as the company entered Chapter 11.

And with sales gaining strength and margins improving substantially, the major mill recorded an operating profit of $7.3 million, nearly doubling the smaller June operating profit of $3.4 million.

Coming out of a sales tailspin that staggered virtually every other player in the home fashions industry as retailers turned off the flow of orders, WestPoint said in a monthly report with a U.S. Bankruptcy Court and the Securities and Exchange Commission that sales in July shot up by 23.6 percent, to $168.3 million from $136.1 million the month before.

Giving a lift to operating profits, in addition to the stronger sales, average gross margin widened substantially, by 230 basis points, or 2.3 percentage points, to 17.1 percent from 14.8 percent in June.

Measured as a percentage of substantially improved sales, operating costs rose by 40 basis points, or four-tenths of a percentage point, to 12.7 percent from 12.3 percent the preceding month. Measured in absolute dollars, selling, general and administrative expense increased by 27.7 percent, to $21.4 million from $16.8 million in June.

Helping to fuel the July improvement, the WestPoint Stores division leveraged stronger sales into a modest $65,000 profit, compared with a loss the month before of $374,000. Sales in the company's retail outlets shot up by 42.3 percent, to $11.7 million from $8.2 million in June.

WestPoint Stevens Inc.
July 2003 results (x000)

Sales $168,589
Cost of goods sold 139,589
Gross profit 28,726
SG&A expenses 21,416
OPERATING PROFIT (EBIT) 7,310
Net interest expense 6,906
Net miscellaneous expense 1,186
Chapter 11 expenses 1,186
Income Tax benefit 574
NET LOSS 1,821


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