GREENSBORO, N.C. — Burlington Industries Inc. reported operating profits in its apparel segment skidded 24.3 percent in the second quarter ended April 2 as a pickup in orders in March was unable to offset weakness in January and February.
However, the firming has continued, the company said, and almost all of the company’s businesses are operating nearly at capacity.
Operating profits at the apparel fabrics group fell to $56.1 million, or 16.9 percent of sales, from $73.2 million, or 21.3 percent, a year earlier. Sales dipped 3.4 percent to $331.6 million from $343.3 million.
For the six months, apparel’s operating profits slid 21.9 percent to $98.6 million, or 16 percent of sales, from $126.2 million, or 20 percent, the year before. Sales declined 2.3 percent to $617.1 million from $631.4 million.
Burlington said the apparel division was hurt by sluggish shipments of denim and knitted fabrics in January and February. In addition, a series of severe winter storms and abnormally low temperatures disrupted manufacturing operations at many of the company’s plants.
On the positive side, the company noted that apparel products shipments “increased noticeably” during March as retailers reduced excessive inventories and consumers began buying more apparel.
“We are pleased to note that our apparel products bookings have firmed significantly,” said Frank S. Greenberg, chairman and chief executive officer. “With nearly all our businesses now operating at near capacity, we are very optimistic about our prospects for the second half of the fiscal year.”
Overall, Burlington’s net earnings before a special item rose 8.6 percent in the quarter to $26.5 million, or 39 cents a share, from $24.4 million, or 36 cents, a year earlier. A sharp reduction in interest expense, coupled with a slight earnings increase in home furnishings, helped offset the lower operating profits.
Earnings in the 1993 three months came to $27.1 million after a gain of $2.7 million, or 4 cents a share, from an asset sale.
Sales overall in the quarter dipped 1.6 percent to $525 million from $533.7 million.
In the six months, earnings rose 23.3 percent to $45.5 million, or 67 cents a share, from comparable earnings of $36.9 million, or 54 cents, a year earlier. The year-ago half included a charge of $4.5 million, or 6 cents a share, that reduced net earnings to $32.4 million, or 48 cents a share.
Sales inched ahead 0.4 percent to $996.9 million from $992.9 million.
John S. Pickler, an analyst at Wheat First Securities, based in Richmond, Va., said pervasive market weakness in the knit and denim areas dented Burlington’s apparel fabric operations in the quarter.
“The rationalization of the knit business is costing more than Burlington originally anticipated and inconsistencies in the denim business do not help,” Pickler said.
Pickler said the company expects the knit business, which is being downsized, to start turning a profit at the end of the current quarter ending in June.
He said Burlington’s man-made fiber fabrics have done well despite weakness in this area by focusing on specialty fabrics in the outerwear and activewear areas. He said many mills that rely on the commodity products, such as 100 percent polyester for pants, are being hurt by strong demand for wrinkle resistant pants.
Pickler said Burlington’s wool and worsted fabrics were operating on plan.
He said that despite the pickup in orders, the company in a conference call with analysts said it would be “tough to beat” last year’s apparel results in the third quarter. The company projected greater improvement in the fourth quarter ending September.
Pickler expects pro forma earnings to reach $1.55 a share in the fiscal year ending September, against $1.26 a year earlier, reflecting lower interest costs. For 1995, he’s projecting $1.70 a share.