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Pennacchio Departs WestPoint as Sales Fall, Losses Trimmed

James Mammarella, Staff Staff -- Home Textiles Today, May 19, 2008

WestPoint Home named former Sara Lee exec John Piazza president and ceo last Friday, May 16, noting the immediate departure of Joseph Pennacchio, who had served in the top post at the company since October 2005.

Piazza intends to relocate to New York, but assumed his new duties as ceo at both WestPoint Home and its parent, WestPoint International, on Friday. He will also serve on the board of directors of both companies.

With 32 years in consumer products, much of it in apparel, Piazza was a senior corporate officer, vp marketing, and ceo at Sara Lee Corp.

The news came three days after WestPoint Home reported a 42% decline in sales for the first quarter, driven in part by "the discontinuation of unprofitable bed and bath" programs, said Peter Shea, president of parent company Icahn Enterprises, on the earnings call.

WestPoint net revenues fell to $113.9 million from $196.6 million one year ago, and operating losses narrowed to $23.9 million – about one third less than last year's $36.7 million. The manufacturer, which posted a full-year 2007 operating loss of $158.5 million on sales of $683.7 million, is on track in reducing overhead to compete with low-cost suppliers, Shea noted.

"We are 85% to 90% of the way" toward targeted reduction of SG&A and logistics costs, he said. "We should have realized the majority of those savings by end of year."

In response to an analyst question, Shea said the company had minimized its business with Linens 'n Things, such that $55,000 was the "final amount exposed" when the retailer declared bankruptcy on May 2.

As for its own liquidity, WestPoint currently has $135 million in cash, plus $74 million in borrowing capacity. Costs are shifting downward as production moves overseas. "As of March," said Shea, "our principal towels and bedding are 100% and 70% produced" offshore, with only some value-added and specialty goods still made or finished domestically.

For the quarter, WestPoint contributed 24.0% of overall Icahn Enterprises corporate revenues of $476.9 million, the company reported.

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