BURLINGTON APPAREL FABRICS TAKES A POUNDING IN QUARTER

Byline: Jennifer L. Brady

NEW YORK--Stung by rising raw material costs and soft sales, Burlington Industries Inc. said operating profits at its apparel fabrics segment tumbled 41 percent in the third quarter ended July 1.
Apparel fabrics operating earnings fell to $30.4 million, representing 8.3 percent of sales, from $51.5 million, or 13.7 percent, a year earlier. Sales for apparel fabrics slid 1.7 percent to $368.2 million from $374.6 million. Burlington, based in Greensboro, N.C., said in its 10Q filing that the apparel fabric sales decline reflected "what the company believes to be a backing up of inventories in many of its products pipelines."
A decrease in unit volume was partially offset by higher selling prices and improved mix.
Overall, Burlington's net earnings - including its interior furnishings segment - fell 48.3 percent to $19.5 million, or 30 cents a share, from $37.7 million, or 56 cents, a year earlier. The year-ago quarter included a $3.6 million charge for the early extinguishment of debt. Sales dipped 0.2 percent to $582 million from $583.4 million.
Burlington said margins continue to be pressured by significantly higher raw material costs and difficulty obtaining price increases. In the latest quarter, gross margins fell to 16.9 percent of sales from 19.4 percent.
"As we expected, we experienced slower sales on most of our products in the June quarter as a result of a weaker economy," said George Henderson, president and chief executive officer. Henderson added, "We are continuing our efforts to improve our margins by increasing selling prices and lowering our costs, along with a concerted emphasis on new product introductions."
The earnings in the quarter also included a provision for doubtful accounts of $6.4 million, of which $5.8 million was due to the bankruptcy filing of men's wear manufacturer Plaid Clothing Group Inc.
Knitted fabrics operated at a loss in the quarter. The company said it expects restructuring activities under new management will continue to improve this division's performance and return it to profitability in 1996.
Interest expense in the quarter increased 16.9 percent to $14.5 million, primarily due to higher interest rates.
Kay Norwood, analyst at Interstate Johnson Lane Corp., based in Charlotte, N.C., said Burlington's earnings came in line with her estimates for the quarter. She added that Burlington's apparel fabrics business "continues to experience a squeeze on margins," hurt by a combination of higher costs and lower volume. Norwood noted that while several firms have covered a much of the increased costs, she expects another down quarter for apparel fabric mills and looks to 1996 for some improvement.
In the nine months ended July 1, operating earnings at the apparel fabric segment dropped 30.6 percent to $86.5 million from $124.7 million. Sales for the apparel segment rose 5.2 percent to $1.04 billion from $991.7 million.
Company earnings dropped 34.5 percent to $54.5 million, or 83 cents, from $83.2 million, or $1.22, a year earlier. Sales rose 6.3 percent to $1.7 billion from $1.6 billion.
Burlington stock closed down 1/8 to 12 3/8 Tuesday on The New York Stock Exchange.
--Fairchild News Service

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