P'tex sales softening results in $25M loss
September 3, 2001,
KANNAPOLIS, NC — Wounded by sharply falling sales —specifically, the loss of a big Kmart program and a continued drop-off in blanket sales — then hit by bankruptcy and restructuring costs, Pillowtex Corp. recorded a second-quarter loss of $25.7 million, compared with a year-before profit of $16.9 million.
With margins approaching the vanishing point in bed and bath products, and non-existent in blankets, the company generated a negative gross margin of 2.0 percent, compared with a prior-year margin of 11.6 percent. Helping somewhat to offset eroding margins, the company kept hacking away at costs, slashing its overhead by 8.6 percent, to $20.7 million from $22.6 million last year — a cash savings of $2 million.
In a major drag on the bottom line, the company paid $4.9 million in restructuring costs and another $13.5 million in bankruptcy costs.
Breaking its sales out by product segment, Pillowtex said bed and bath sales declined by 29.2 percent, to $176.3 million from $248.9 million last year, a drop of $72.5 million. Worse, the business recorded a gross margin of just 2.7 percent, compared with 16.6 percent a year ago.
Pillow and pad sales declined by 17.4 percent, to $55.8 million from $67.5 million, a decline of $11.7 million. Average gross margin here narrowed to 11.6 percent, from 17.3 percent the prior year.
The step-child blanket business — in the process of being sold to a private investor and a group of managers — continued its long slide, with sales falling off by 42.7 percent, to $10.4 million from $18.1 million last year.
Sales in the company's retail stores was off by almost a third, falling by 32.4 percent, to $5.1 million from $7.5 million.
Through the first six months of the year, Pillowtex posted a loss of $136.3 million, compared with a prior-year deficit of $19.8 million. First-half sales were off by 21.8 percent, to $537.3 million from $687.1 million.
|Qtr. 6/30 (x000)||2001||2000||%CHG|
|(loss) a-Second-quarter results include a $20.1 million one-time charge for the impairment of long-lived assets; a $4.9 million restructuring charge; $13.5 million in bankruptcy costs; and $3.7 million in preferred stock dividends and accretion, compared with $2.0 million the prior year. The year before, the company recorded an income-tax benefit of $3.0 million. b-Six-month results include a $20.1 million charge for the impairment of long-lived assets; a $6.9 million restructuring charge; $7.4 million in preferred dividends and accretion. The year before, the company recorded an income-tax benefit of $8.9 million.|
|Oper. income (EBIT)||(25,710)||16,899||—|
|Per share (diluted)||(5.92)||(0.57)||—|
|Average gross margin||(2.0%)||11.6%||—|
|Oper. income (EBIT)||(45,413)||29,055||—|
|Per share (diluted)||(9.56)||(1.39)||—|
|Average gross margin||(0.1%)||11.4%||—|