Burlington Operating Net Off at Apparel Fabrics Unit
NEW YORK -- Although Burlington Industries Equity's bottom line showed substantial improvement in the first quarter ended Jan. 1, operating profits at its apparel fabrics segment dropped 24.5 percent as a result of a soft apparel...
NEW YORK -- Although Burlington Industries Equity's bottom line showed substantial improvement in the first quarter ended Jan. 1, operating profits at its apparel fabrics segment dropped 24.5 percent as a result of a soft apparel market.
Operating earnings from apparel fabrics fell to $30.2 million from $40 million. Sales slipped 0.9 percent, to $285.5 million from $288 million.
"The level of apparel sales reflected the effect of a softer apparel retail climate and current preference for durable goods and home-related products, which has been stimulated by lower interest costs," Burlington said in a statement.
A Burlington spokesman also noted that Burlington's apparel fabrics business had been "extremely strong" over the last few years, making comparisons in the segment difficult to beat.
"This is still a good performance; it's just not at the level of last year," he said.
George W. Henderson 3rd, Burlington's president and chief operating officer, added, "It wasn't one product category that was down, it was pretty much across the board. It's all related to apparel sales at retail being much slower.
"Looking forward, activity will pick up in all categories, better than it's been in the last six or seven months," said Henderson. "We are encouraged."
The textile giant's net earnings were $19 million, or 28 cents a share, in the quarter, doubling a comparable profit of $9.5 million, or 14 cents, before a special charge a year earlier. The year-ago quarter included a special charge of $4.5 million to cover a change in accounting for retirement benefits that reduced bottom-line results to $5.3 million, or 8 cents.
The bottom-line improvement in the latest quarter stemmed from a 46.7 percent decline in interest costs, to $13.1 million from $24.6 million.
Since going public in March 1992, Burlington has refinanced or repaid much of its high-cost debt.
The first quarter also included a $3.8 million gain, or 4 cents, from the sale an asset held for investment.
Total operating earnings in the quarter slid 7.5 percent, to $42.6 million from $46.1 million, reflecting the lower results in apparel.
Total sales rose 2.8 percent, to $471.9 million from $459.2 million. The slight decline in apparel sales was offset by an 8.9 percent gain in interior furnishings.Analyst Edward F. Johnson of Johnson Redbook Service said he expects Burlington's apparel segment to continue to be soft in the March quarter, but looks for improvement in the June quarter.
Johnson is looking for per-share earnings of $1.70 in the full year against 93 cents from continuing operations.
Kay Norwood, analyst at Interstate Johnson Lane, in Charlotte, N.C., said apparel fabrics were weaker than she expected, reflecting a sluggish retail climate for apparel.
"The consumer's really not buying anything except if it's wrinkle-free cotton. If you're involved in the wrinkle-free business, it's been a good quarter; if not, it's been less than good," said Norwood.
She said knit fabrics have been weak and denim manufacturing schedules were cut back as a result of high inventories at retail.
At its annual meeting in Greensboro today, Burlington's shareholders will vote on changing the firm's name from Burlington Industries Equity Inc. to Burlington Industries Inc.
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