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WPS charge makes tough 4th quarter

Don Hogsett -- Home Textiles Today, February 23, 2004

Still dogged by more than $47 million in bankruptcy and restructuring costs, WestPoint Stevens recorded a fourth-quarter loss of $31.5 million. That figure compares starkly with last year's deficit of $61,000, recorded before the company entered bankruptcy.

Staging something of a comeback, sales decreased by 2.2 percent, to $455.2 million from $456.1 million, an improvement over sales declines of almost 20 percent. That double-digit loss was recorded during the year after WestPoint's biggest customer, KMart Corp., shuttered hundreds of stores.

Even the 2.2 percent decline, the company said, stemmed less from its business with retailers than its closing of 19 of its own unprofitable retail outlets as part of a larger restructuring designed to cut costs.

Indeed, "The fourth quarter saw continued improvement in the retail environment," said M.L. "Chip" Fontenot, president and CEO.

Working its way through a painful restructuring, including the shutdown of some plants and the consolidation of some manufacturing, WestPoint cut its overhead costs by 19 percent over the past 12 months, to $48.2 million from $59.5 million in the year-ago fourth quarter. The cuts generated a cash savings of more than $11.3 million. Measured as a percentage of sales, costs were whittled down by 220 basis points, or 2.2 percentage points, to 10.6 percent from 12.8 percent a year ago.

Acting as an offset, average gross margin narrowed by 460 basis points, or 4.6 percentage points, to 16 percent from 20.6 percent the prior year.

WestPoint Stevens Inc.

Qtr. 12/31 (x000) 2003 2002 % chg
(loss)
a-Fourth-quarter results include a $35.3 million restructuring and impairment charge, compared with $762,000 last year; miscellaneous expense of $3.4 million, compared with $994,000 a year ago; and Chapter 11 costs of $12.5 million; all partially offset by an income-tax benefit of $13.9 million vs. a $35,000 tax benefit last year.
b-12-month results include a $49.6 million restructuring and impairment charge, compared with $6.6 million in 2002; a goodwill impairment charge of $46.3 million; miscellaneous expense of $17.6 million, compared with $6.6 million last year; and Chapter 11 expense of $31.5 million; all partially offset by an income-tax benefit of $61.3 million vs. $7.1 million in 2002.
Sales $456,084 $466,187 -2.2
Oper. income (EBIT) 24,984 36,686 -31.9
Net income (31,529)a (1,380)a
Per share (diluted) (0.63) 0.00
Average gross margin 16.0% 20.6%
SG&A expenses 10.6% 12.8%
12 months 2003 2002 % chg
Sales 1,646,202 1,811,357 -9.1
Oper. income (EBIT) 52,341 128,923 -59.1
Net income (133,284)b (12,659)b
Per share (diluted) (2.67) (0.25)
Average gross margin 17.2% 21.7%
SG&A expenses 14.1% 14.6%


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