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Springs finds a profit as sales contract

Montes Claros, Brazil — Reductions in production costs and operating expenses produced a net profit in the second quarter and first half for Springs Global Participações, even as sales slumped further.

The company reported a quarterly and first half net profit of R$23.7 million compared to a loss of R$14.6 million during Q2 last year and a loss of R$13.3 million during 2008’s first half. That roughly equates to a quarterly net profit of US$11.7 million, based on an average exchange rate of 2.0343 during the quarter.

But sales fell 14.3% during the second quarter, to R$722.8 million (US $355.3 million), compared with R$843.6 million in 2008. For the first six months of the year, sales dropped 14.2%, to R$1.429 billion (US $653.9 million, based on a six-month exchange rate average of 2.1855).

In a letter to shareholders, Springs said the results “do not satisfy us.”

“We recognize that there is still a lot to be done, particularly related to our sales growth in the North American market,” the company said.

The sales declines reflect continued contractions in the North American marketplace, which could not be offset by price increases, depreciation of the Brazilian real and sales growth of 20% in Brazil and Argentina. Although not by name, the company again cited the impact of the liquidation of Linens ’n Things.

Overall, net sales in fashion bedding decreased 18.4%, and in bath by 19.5%.

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