FRUIT OF THE LOOM NET UP 69.6% IN 1ST PERIOD AS VOLUME SLIPS 1%
Byline: Jennifer L. Brady
NEW YORK — With robust sales of underwear, Gitano jeans and Wilson and Pro Player sportswear, first-quarter profits at Fruit of the Loom Inc. rose 69.6 percent to $21.2 million, or 28 cents.
Earnings per share came in slightly ahead of average Wall Street estimates of 27 cents in the quarter, but the stock tumbled 3 1/2 to 34 1/8 on the New York Stock Exchange Wednesday.
One analyst attributed the decline to continued promotions in the company’s screen-printed business and some weakness in fleece at retail that had affected other activewear manufacturers.
In the year-ago quarter, FTL earned $12.5 million, or 16 cents.
Sales dipped 1 percent to $501 million from $506.2 million. Sales for the year-ago quarter included $16 million in sales from its hosiery operations, which were sold to Renfro in November 1996.
Excluding the hosiery division, sales rose 2.2 percent in the latest quarter.
“The company experienced double-digit growth in several product lines, including men’s and boys’ and women’s and girls’ underwear, Wilson sportswear, Gitano jeans and Pro Player licensed sportswear,” said Richard C. Lappin, president and chief operating officer, in a statement.
Lappin added that FTL’s screen-printed activewear product line performed on plan.
He further noted that during 1996, Fruit of the Loom activewear gained 2 full percentage points of market share in both the T-shirt and fleece product categories, according to data accumulated by The Context Group.
William Farley, chairman and chief executive officer, noted in a statement, “Operating results for the quarter were consistent with our operating plan and investment community expectations.”
Lorraine D. Miller, apparel analyst at Robinson Humphrey, pointed out that the quarter was less reliant on revenue growth than margin improvement, deleveraging costs and growing market share.
Miller surmised that the decline in stock reflects some concern over promotions in the company’s screen-printed activewear business, but added that these markdowns have been ongoing since February.
Another factor which could be hurting the company’s stock price is some softness in fleece products at retail, which led to a disappointing first quarter for Russell Corp., she said. Russell reported particular weakness in its Jerzees and licensed products. However, FTL’s sales of fleece were up in the double digits in the quarter.
She expects FTL to continue to post solid earnings going forward and estimates the company will earn 88 cents in the second quarter against 63 cents a year ago.
In the full year, she looks for $2.55 a share against $1.98 in 1996.