Dan River profits soar in home, but 2Q may be tough
Home & Textiles Today Staff -- Home Textiles Today, April 25, 2003
Danville, VA — With profits more than doubling in its core home fashions business as margins gained strength, Dan River Inc. posted a $2.8 million first-quarter profit, compared with a $25.8 million loss the year before, when the company took a hit on the Kmart bankruptcy and recorded a $21 million non-cash accounting charge.
But the good news was forgotten fast when the company warned that the sales outlook remains clouded. It said it will record a small loss during the second quarter as it adds up all of the costs tied to a recently completed refinancing that will ultimately provide the company with more breathing room.
Earnings improved sharply despite a shortfall in sales in each of the company's operating segments. Home fashions operating profits more than doubled, climbing by 117.9 percent, to $11.5 million from $5.3 million last year. Sales declined by 6.5 percent, to $108.4 million from $116.1 million.
The crystal ball remains clouded, however. "The uncertainties imposed by the soft economy, high unemployment and the war in Iraq have depressed consumer spending," said Joseph Lanier Jr., chairman and ceo. "This is reflected in the negative same-store sales comparisons reported by most retailers. In reaction, our customers are very skittish about placing new business and are very conservative in their order quantities."