SIRENA PROFITS DROP SHARPLY IN QUARTER
LOS ANGELES — Plagued by weakness in the swimwear market and closer-to-selling season purchasing by retailers, Sirena Apparel Group reported a steep drop in earnings for the second quarter ended Dec. 31 and a wider loss for the six months.
In the quarter, earnings before taxes dropped 61.2 percent to $223,000 from $580,000. After taxes, net income declined 43.2 percent to $214,000, or 5 cents a share (at a 4 percent tax rate), against $377,000, or 9 cents (at a 35 percent tax rate). The difference in tax rates reflects the application of operating loss carryforwards, the company said, adding that its overall tax rate in fiscal 1997 will be nominal as a result of carryforwards.
Sales in the quarter dropped 28.2 percent to $7 million from $9.8 million.
Nevertheless, the results were better than the Wall Street consensus forecast, which had looked for a loss of 3 cents a share, and in over-the-counter trading Thursday, Sirena’s stock jumped 1 to close at 3 1/2.
Bookings in the quarter were soft, running about 15 percent behind the year-earlier period, Douglas Arbetman, president and chief executive officer, said in a statement. However, he noted that bookings and sell-throughs have picked up recently. Nevertheless, the company expects weakness in third-quarter sales.
However, with the beginning of a positive trend in bookings and the cost-cutting efforts, “we are not uncomfortable with the existing consensus earnings projections for the year ending June 30, 1997,” Arbetman said.
Analysts’ projections range from a loss of 7 cents a share to a profit of 2 cents. A year earlier, the company lost $1.05 a share.
In the six months, the company’s pretax loss widened to $2.02 million from $829,000. The net loss after taxes was $2,011,000 against a loss of $539,000. Sales slumped 28.5 percent to $9.2 million from $12.9 million.
Arbetman said the declines in the quarter and half “is a direct result of reduced initial orders and shipments of merchandise as major retailers continue last year’s trend to shifting deliveries closer to consumer demand in the spring.”
He added that after two disappointing swimwear seasons, retailers are tightening inventories and have cut back initial buys.