NEW YORK -- The Gitano Group -- which is talking with potential buyers after a flood of bad news -- had some good news Thursday. It said it expects to return to the black in the fourth quarter that ended Dec. 31, its first profitable quarter since...
NEW YORK -- The Gitano Group -- which is talking with potential buyers after a flood of bad news -- had some good news Thursday. It said it expects to return to the black in the fourth quarter that ended Dec. 31, its first profitable quarter since March 1992.
On Jan. 24, Gitano put itself on the block after Wal-Mart Stores, Inc., its largest customer, decided to stop buying from Gitano because of a customs scandal. Earlier that month, Gitano and two members of the founding Dabah family pleaded guilty to U.S. Customs law violations in 1991 and 1992. The current management was not involved in the violations, and the Dabahs are no longer affiliated with the company.
A company spokesman declined to identify any prospective purchasers.
Despite the earnings turnaround, Robert E. Gregory Jr., who joined Gitano as chairman and chief executive officer a year ago, reiterated that he did not expect the sale of the company to realize more than $130 million, the amount Gitano owes its secured creditors.
Gitano said it expects to report operating profit of $9 million and a net profit of $4 million in the fourth quarter ended Dec. 31. The quarter includes gains of $5 million from the recovery of receivables from affiliates written off in 1992, and approximately $1.6 million from restructuring actions.
With the estimates, the 1993 full-year operating loss will come to $6 million and the net loss will be about $45 million.
The firm had an operating loss of $125 million and a net loss of $140 million in the 1992 quarter, which included a $90 million restructuring charge. For all of 1992, Gitano reported that it had an operating loss of $200 million. The company also reported a net loss of $240 million for the same period.
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