Losses trimmed as WestPoint sales fall
May 13, 2008-- Home Textiles Today,
New York – A 42% decline in sales for the first quarter was driven in part by “the discontinuation of unprofitable bed and bath” programs by WestPoint Home, the home fashion division of Icahn Enterprises, said Icahn president Peter Shea on the first-quarter earnings call today.
As WestPoint net revenues fell to $113.9 million from $196.6 million for the same period one year ago, the operating loss also narrowed, to $23.9 million – about one third less than last year’s $36.7 million. Each quarter’s loss contained approximately $9 million in charges for restructuring, depreciation and amortization.
The manufacturer, which posted a full-year 2007 operating loss of $158.5 million on sales of $683.7 million, continues to hit its goals of reducing overhead and positioning to compete with low-cost suppliers, Shea noted.
“We are 85% to 90% of the way” toward targeted reduction of SG&A and logistics costs, he said. “We should have realized the majority of those savings by end of year.”
In response to an analyst question, Shea said the company had minimized its business with Linens ’n Things, such that $55,000 was the “final amount exposed” when the retailer declared bankruptcy on May 2.
As for its own liquidity, WestPoint currently has $135 million in cash, plus $74 million in borrowing capacity. Costs are shifting downward as production shifts overseas. “As of March,” said Shea, “our principal towels and bedding are 100% and 70% produced” offshore, with only some value-added and specialty goods still made or finished domestically.
For the quarter, WestPoint contributed 24.0% of overall Icahn Enterprises corporate revenues of $476.9 million.
WestPoint’s $16.0 million loss from continuing operations shared the downside with a $3.3 million loss by the investment management division and a $19.0 million loss by the holding company – but Icahn Ents.’ overall loss for the quarter was held to $19.3 million due to $3.0 million in income from the real estate unit and $16.0 million from the booming metals division.
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