Crown posts 3Q $5.9M loss

Don Hogsett, Staff Staff, February 20, 2001

ATLANTA — Weighed down by a $4.4 million pre-tax restructuring charge for shutting down manufacturing operations at its Roxboro, NC, facility, Crown Crafts Inc. posted a $5.9 million loss in its third fiscal quarter, compared with a prior-year deficit of $1.7 million.

But steering toward a turnaround after a radical restructuring and downsizing, the company posted a small operating profit of $194,000 as it shut down one business, sold off another, boosted margins, cut costs and paid down debt.

As it shut or sold off most of its manufacturing base to focus on the marketing of sourced products, Crown Crafts sales declined by 26.3 percent as part of a planned downsizing, to $67.1 million from $91.0 million last year. Triggering the shortfall in sales, Crown closed down manufacturing at its Roxboro, NC, cut-and-sew plant and sold off its $85 million woven products business to Mohawk Industries.

And steadily improving its operations, Crown Crafts boosted margins even given the big decline in sales and continued to hack away at costs. Average gross margin improved by 150 basis points, climbing to 17.5 percent from 16.0 percent a year ago.

Still cutting costs aggressively, Crown reduced its overhead a steep 16.4 percent during the quarter, to $11.5 million from $13.8 million last year, a cash savings of $2.3 million. For the nine months year to date, Crown has generated $4.9 million in cost savings.

Sounding bullish as he looks ahead, Michael Bernstein, ceo, said: "We expect that results in the coming quarters will continue to show improvement. With the actions taken, including significant cost reductions, outsourcing of manufacturing, sale of the wovens division and reduction of debt, Crown is now positioned to be profitable in two attractive segment of home fashions: infant products, including bedding, bath and bibs; and luxury adult bedding with the Calvin Klein and Royal Sateen brands."

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