Springs Global Returned to Profitability in ’09
April 12, 2010-- Home Textiles Today,
Springs Global rebounded into a profit last year thanks in part to cost-cutting, improved margins and expanded share in a buoyant domestic market here.
Net income was 36.8 million Reais, or about $20.5 million U.S., compared to a net loss last year of R329.4 million. (Note: HTT is using a simple conversion rate under which $1 equals about 1.8 Reais. U.S. dollars figures here do not account for value fluctuations across the year.)
“Sales in Brazil grew substantially (24%), but were not enough to offset the significant sales decline in the U.S. market,” the company reported late last month.
Springs Global does not break out its results by country, but the company said the North American market represented 56% of sales in 2009, down from 69% in 2008. The rebalancing of its portfolio is something Springs expects to continue.
“The expectations for the Brazilian economy are excellent and the company’s growth levels will surpass the market growth, so that domestic sales will represent an increasingly higher share of Springs Global’s overall sales,” the filing noted.
Sales in 2009 fell 16.5% to R$2.4 billion, or approximately $1.34 billion.
“Despite volume decrease, average selling price increased 7.8% in 2009, reflecting the depreciation of the Brazilian Real on the conversion of our U.S. dollar-denominated sales into Reais,” according to the company.
With the U.S. economy sputtering throughout the year and with the disappearance in 2008 of Linens ’n Things – a major account for Springs Global – fashion bedding sales fell 21.8 and sales dropped 23.8%. Utility bedding sales dropped 13.7%, while sales of yarn and fabric increased 2.1%.
Looking ahead, Springs Global pointed to the April launch of its Springmaid brand in 1,600 Target stores, the upcoming launch of Diane Von Furstenberg in home and the response to Cindy Crawford bedding and bath at JCPenney, which launched last fall.
“We will be able to grow in the Brazilian domestic market, improving the utilization of our installed production capacity, as well as redirecting products that are currently being exported,” the company stated. “In the United States, our current team and our infrastructure will sustain the sales growth of our branded and licensed products, thus diluting fixed costs and boosting the profitability of our operations.”
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