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Guilford sales down close to $17M in 2Q

GREENSBORO, NC — Hobbled by falling sales, thinning margins and plant restructuring costs, most notably in its big apparel fabrics business, Guilford Mills recorded a second-quarter loss of $16.9 million, compared with a prior-year profit of $2.8 million.

Despite an uptick in sales of home fashions products to retail accounts, sales at the diversified textiles producer tumbled by 21.2 percent, to $166.3 million from $211.1 million, weighed down by big declines in its apparel fabrics and automotive units.

Buoyed by the strong showing of the new Jockey Home program, home fashions sales to retail accounts moved up during the second quarter. But with sales of fabrics still acting as a drag, overall sales in the home division slipped by 2.4 percent, to $22.7 million from $23.2 million last year.

But the real damage to the top line stemmed from apparel fabrics, where sales fell by 30.7 percent, to $49.8 million from $71.9 million, in part due to business segments the company has since quit. Excluding discontinued operations, apparel segment sales fell about 23 percent, the company reported.

Taking another big hit, Guilford said sales of automotive upholstery tumbled by 21.1 percent, to $81.6 million from $103.5 million, as the worldwide auto industry works off excess inventory and copes with a slowdown in auto sales.

Given the lower level of sales, and slowdowns in its plants, average gross margin was throttled to 5.2 percent from 155 percent a year ago. Gross margin dollars contracted by 55.7 percent, to $28.2 million from $63.6 million.

Given the drop-off in sales, operating costs climbed higher by 70 basis points, to 13 percent of sales from 12.3 percent a year ago. But when measured in absolute dollars, costs actually declined by 16.4 percent, to $21.6 million from $25.9 million, a cash savings of $4.2 million stemming from continued cost cutting.

Interest expense increased by 30.9 percent, to $12 million from $9.2 million last year. Inventories were pared by 10.8 percent, to $113.8 million from $127.6 million a year ago.

Counting on picking up steam in the back half as worldwide markets improve and inventory corrections subside, Guilford said it expects sales for all of this year will fall beneath last-year levels by 10 percent to 15 percent.

Guilford Mills Inc.

Qtr. 4/1 (x000) 2001 2000 % CHG
(loss)
a- Second-quarter results include a $4.3 million pre-tax plant restructuring charge; miscellaneous income of $381,000, compared with $2.5 million last year; and an income-tax benefit of $6.1 million vs. a tax liability of $1.9 million the prior year.
b- Six-month results include a pre-tax plant restructuring charge of $8.1 million; miscellaneous income of $471,000, compared with $6.6 million the preceding year; and an income-tax benefit of $8.5 million, compared with a prior-year tax liability of $3.6 million.
Sales $166,343 $211,089 -21.2
Oper. income (EBIT) (13,027) 6,828
Net income (16,901)a 2,774a
Per share (diluted) (0.89) 0.15
Average gross margin 5.2% 15.5%
SG&A expenses 13.0% 12.3%
Six months
Sales 339,901 417,591 -18.6
Oper. income (EBIT) (14,345) 11,959
Net income (24,553)b 5,801
Per share (diluted) (1.29) 0.31
Average gross margin 8.3% 15.2%
SG&A expenses 12.5% 12.4%


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