WestPoint Home slashes quarterly loss
Staff Staff -- Home Textiles Today, November 9, 2006
New York – WestPoint Home today reported a bigger third-quarter operating loss than one year ago -- $24.1 million, up from $5.1 million -- but the big home textiles resource also managed to slash its operating loss virtually in half from the even bigger $48.3 million loss put up during the second quarter of this year.
The major mill gained some traction as it steers toward a turnaround, with sales during the third quarter up 1.4% to $240.5 million, from $237.1 million during the second quarter of this year.
Through the first nine months of the year, WestPoint Home recorded an operating loss of $62.9 million, compared with an operating profit of $46.1 million a year ago – the prior period mainly under the previous ownership.
Going forward, the company said in a conference call, its previously announced buyout of a Bahrain bedding facility will close during the fourth quarter. Once completed, the plant will account for about 20% of WestPoint's bedding needs for its existing customer base. In September, WestPoint's new Pakistan operation, Indus Home, completed a $35 million financing package, purchased a newly built towel plant and is now expanding capacity. The operation should be running at full capacity by mid 2007, replacing 35 to 40% of WestPoint's U.S. terry production at a more favorable cost.
The company said patience will be required to realize the full value of the WestPoint investment, and said moving some production out of the United States could result in savings of as much as 20%.
The partial results for WestPoint were made public today by American Real Estate Partners (AREP), which purchased the home fashions company in August 2005 as it emerged from Chapter 11 and a massive overhaul of operations. Controlled by investor Carl Icahn, American Real Estate Partners earned $103.1 million during the third quarter, reversing a year-before loss of $126.1 million. Helped by WestPoint Home, revenues for the parent jumped up by 29.0% to $373.3 million from $289.4 million.
That makes WestPoint Home by far the largest of American Real Estate Partners' holdings, accounting for almost two-thirds of sales. In addition to WestPoint, AREP has interests in gaming casinos and real estate.
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