WestPoint Home: Red ink part of transition
May 10, 2007-- Home Textiles Today,
New York– The sluggish performance of WestPoint Home held back the fortunes of American Real Estate Partners in the first quarter of 2007, the diversified company helmed by mega-investor Carl Icahn said today.
Overall AREP revenue was up 0.4% to $351.4 million for the quarter, while the “transitional” home fashion division – WestPoint – saw revenues dip 13.5% to $210.6 million, leading Keith Meister, vice chairman and principal executive officer, to acknowledge to analysts that AREP is “slightly behind schedule.”
During the quarterly conference call this morning, Andrew Skobe, AREP treasurer, interim cfo and cao, allayed the lagging home fashions segment performance to a “weak retail sales environment and WestPoint’s continuing restructuring efforts.”
Nevertheless, quarterly net earnings at AREP nearly doubled to $96.6 million, compared to $49.7 million for the same period one year ago. At WestPoint, however, as revenue dropped, the operating loss widened by 2.6% to $39.0 million. The company said WestPoint SG&A costs of $39.4 million were 9% below last year’s quarter, and projected a $15 million to $20 million year-to-year drop in SG&A for the full-year 2007 results.
With assets of $4.6 billion, including $1.4 billion in cash and liquid investments net of debt, AREP is quite liquid and ready for more acquisitions, the company said. Liquidity in the WestPoint unit also remains strong, with $148.9 million in cash and access to a $250 million working capital facility.
“WestPoint did launch key bed and bath programs at Linens ’n Things, Wal-Mart, Target, and Kohl’s during the first quarter that will drive sales in the balance of 2007,” said AREP president Peter Shea.
Shea also said the recently acquired Bahrain bedding plant will reach full capacity this quarter, and it is running at or below cost estimates. Expansion of the company’s new towel operation in Pakistan is on schedule, he said, with products already reaching U.S. customers. It should be fully operational in the fourth quarter.
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