NEW YORK — Hurt by inventory close-out costs, Russell Corp. reported a steep drop in first-quarter earnings.
The athleticwear giant’s profits fell to $500,000, or 2 cents a share, from $3.4 million, or 11 cents, last year. The company also was hit by charges relating to product cost reductions.
Sales jumped 10.4 percent to $251.8 million from $228 million, although the increase was primarily driven by Spalding Sports Worldwide and Bike Athletic company, both of which were acquired in the last year. Sales in the base business were flat.
Nonetheless, Russell’s chairman and chief executive officer Jack Ward said the company expects improved sales for the full year due to new and expanded programs with stores such as Target and Dollar General.
Full-year sales results for 2004 are projected to be between $1.26 billion and $1.3 billion, while earnings are slated to reach between $1.40 and $1.60 a share. On a positive note, Ward said costs reductions are now expected to be about $60 million, higher than the $50 million that was earlier projected.
The firm’s shares fell 2.39 percent to $17.55 Thursday on the New York Stock Exchange.
In a separate development, Russell said earlier this week it will supply athletic apparel, team uniforms, balls and sports equipment for the Southwestern Athletic Conference and the Southern Intercollegiate Athletic Conference, and will also have exclusive licenses for the logos of the schools in both conferences.