ATLANTA — Russell Corp.’s acquisitions are starting to pay off.
In the second quarter ended July 6, the sportswear and sporting goods firm reported net income of $6.7 million, or 20 cents a diluted share, beating the First Call consensus estimate of 17 cents and reversing a year-ago loss of $6.1 million, or 19 cents. Sales for the quarter rose 5.9 percent to $267.9 million from $253.1 million last year.
Net sales in the U.S. increased 4 percent, or $8.4 million, driven by Russell’s acquisitions of Spalding, Bike and Moving Comfort plus higher retail sales of Russell Athletic, Mossy Oak and Jerzees branded products. The increase was partially offset by lower net sales in the Artwear/Careerwear channel, reflecting continued industry-wide price deflation, primarily in the promotional T-shirt market, and by reduced corporate purchasing of higher-priced products, such as sport shirts, denims and wovens.
International net sales rose 31 percent, or $6.4 million, reflecting strong sales growth and the positive effects of foreign currency translation.
“Overall, during the first half of 2003, we had solid financial results in a challenging global economic environment,” said Jack Ward, chairman and chief executive officer. “We continue to maintain a strong balance sheet, which positions Russell for additional growth.”
Russell projects net sales for the current year to be in a range of $1.25 billion to $1.28 billion. The company also continues to forecast earnings per share for fiscal 2003 of between $1.60 and $1.75, which anticipates additional marketing and advertising expenses, higher raw material costs, continued pricing pressure in the distributor market of the Artwear channel, and the impact of expensing stock-based compensation. Russell also said it expects third-quarter earnings to range between 75 and 83 cents per share, and fourth-quarter EPS to range between 53 and 60 cents.
For the six months, net income reached $10.1 million, or 31 cents, versus a year-ago loss of $3.5 million, or 11 cents. Excluding one-time charges and gains, year-ago income would have been $7.5 million, or 23 cents. Sales for the half grew 5.8 percent to $495.9 million from $468.9 million.
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