WPS profits jammed
August 19, 2003,
West Point, GA — WestPoint Stevens Inc., which last month sought Chapter 11 shelter from its creditors, recorded a second-quarter loss last week of $72.0 million, compared with a small year-before profit of $2.0 million.
Its sales, most notably in towels, were in virtual freefall, tumbling almost 19 percent; its margins were under crushing pressure. And WPS was hammered by a fistful of one-time restructuring and bankruptcy costs.
WestPoint's sales, like those of virtually every other American textiles producer, slumped badly in a persistently weak retail environment as stores pulled the plug on orders and re-orders, preferring empty shelves to laying out cash and building stockpiles of product which may not sell, except on a markdown table. Sales dropped off by 18.7 percent, to $365.7 million from $449.6 million last year, a daunting shortfall of $83.9 million.
Hardest hit were terry sales, which slumped by 22.5 percent, to $116.6 million from $150.5 million last year, a drop of $33.9 million. Bedding sales were somewhat less hard hit, sliding by 16.0 percent, to $211.1 million from $251.3 million, a decline of $40.2 million.
WestPoint recorded a handful of bankruptcy and restructuring charges, including a $46.3 million non-cash goodwill impairment charge; restructuring costs of $11.9 million; and bankruptcy costs of $6.2 million.
With its sales slowing down and its plants running slow, margins thinned out painfully, narrowing by 730 basis points, or 7.3 percentage points, to 15.8 percent from 23.1 percent a year ago.
On the upside, the company continued to hack away at costs, reducing its overhead by 7.1 percent, or $4.7 million during the period. Interest expense was pared by 6.5 percent, saving WestPoint another $2.2 million.
Related Content By Author
Live From New York: Fashion Comes Across the Pond
Home & Textiles Today eDaily
Most Viewed Articles
See the September 2017 issue of Home & Textiles Today. In this issue, we look at the Attack of the Killer Third Tier: Monster off-pricers are climbing to the top of the food chain, plus New Products: 40 pages of new products debuting at the New York Home Fashions Market; Home Stores: TJX unveils first U.S. HomeSense store; Clicks to Bricks: Boll & Branch moves from digital to physical retailing; and much more...