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WestPoint slashes loss in August

Building margins and cutting costs, the company narrowed its loss by more than 20 percent in August.

Bulking up margins and whittling down costs, WestPoint Stevens slashed its August loss by more than 20 percent, to $1.4 million from $1.8 million in July, despite a lower level of sales.

Sales, measured on a monthly basis, are subject to abrupt and wide fluctuations, and declined by 13.2 percent during August, to $146.3 million from $168.6 million in July, giving up some of the big 23.6 percent increase recorded the prior month.

Even after the recent dip, August sales are still 7.5 percent ahead of the June total of $136.1 million, as the company recovers from a first-half slide in sales that affected virtually every major home fashions supplier as retailers slowed down their reorder rate in a move to keep a lid on stockpiles.

Even given the August decline in sales, the major mill managed to beef up its margins while hacking away at costs. Average gross margin improved by 20 basis points, or two-tenths of a percentage point, to 17.2 percent from 17.0 percent in June.

Costs were cut at an even faster pace, slashed by 17.6 percent, to $17.6 million from $21.4 million in June, generating a cash savings of $3.8 million. Measured as a percentage of sales, costs were pared by 60 basis points, or six-tenths of a percentage point, to 12.1 percent from 12.7 percent.

Helped by the deep cost cuts and stronger margins, the major mill posted an operating profit of $7.5 million, up 2.9 percent from $7.3 million last month, despite the decline in sales.

Further helping to cut the major mill's loss, net interest expense was cut by 20.2 percent, to $5.5 million from $6.9 million the month before, a savings of $1.4 million.

WestPoint Stevens Inc.
August 2003 results (x000)

Sales $146,331
Cost of goods sold 121,165
Gross profit 25,166
SG&A expenses 17,642
Net interest expense 5,509
Net miscellaneous expense 1,371
Chapter 11 expenses 2,588
Income tax benefit 503
NET LOSS 1,441
Average gross margin 17.2%
SG&A expenses 12.1%

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