NEW YORK -- The red ink continued to flow at The Leslie Fay Cos. in the fourth quarter ended Jan. 1 while the company moved to shut all its domestic manufacturing operations to cut costs.
Leslie Fay, which was rocked into Chapter 11 last April 5 amid an accounting scandal that overstated profits by $81 million over three years through 1992, said poor market conditions and restructuring charges led to an operating loss of $18.9 million in the fourth quarter on $123.3 million in sales.
Reorganization charges of $21.4 million, interest and financing costs of $9.9 million and a tax benefit of $1.2 million increased the net loss in the most recent quarter to $49 million. At the same time, the net loss for the total year climbed to $95.2 million.
While the news for the fourth quarter and all of 1993 was decidedly bad, the company said it turned a corner in 1994 and that operations were on target with its internal three-year plan.
The move to end nearly half a century of domestic production, which would eliminate the jobs of about 1,200 workers, had the ILGWU enraged.
"The proposal is a stab in the back to the workers who have built the company," said Jay Mazur, president of the ILGWU. "The solution to Leslie Fay's problems is not 32-cents-an-hour labor in Guatemala. The solution is a company that meets the challenge of the today's market and bargains in good faith with its workers."
The union, which has been fighting with Leslie Fay over proposed cutbacks at the firm's plants in Pennsylvania, would not say what its next step will be, Michael J. Babcock, president and chief operating officer, in a statement, however, pointed out that the company's domestic manufacturing facilities simply cannot compete in a global economy, even if the union were to agree to major concessions. Domestic production represents about half of the company's overall manufacturing.
"The only companies that will survive and prosper into the next century are those that accept reality now and plan accordingly. If we ignore this reality, the inevitable result will be that Leslie Fay will not survive and all 2,500 of our employees will be out of a job," Babcock said.
Issa Rae stopped by WWD's NYC headquarters to talk about season two of "Insecure," which premieres this Sunday on HBO. Click link in bio for all the details. #wwdeye (📷: @jgreenery; Styled by @mayteallende)
A Stella McCartney sketch of a custom dress made from protein-based silk in partnership with biotech lab Bolt Threads. The dress will be displayed at The Museum of Modern Art's upcoming design exhibition, "Items: Is Fashion Modern?"