BURLINGTON’S 2ND QUARTER SHOWS SLIGHT RISE DESPITE DENIM WOES
GREENSBORO — Although the denim inventory glut continues and will cut into earnings in the second half of the year, Burlington Industries’ net earnings in the second quarter were about level with the year-ago numbers.
In the quarter ended March 29, earnings rose to $21.1 million, or 34 cents a share, from $20.7 million, or 33 cents.
The results for the latest quarter included a one-time gain of 5 cents a share from the sale of Advanced Textiles, a non-core business, substantially offset by a 4 cent-a-share restructuring charge.
Total sales dropped 6.1 percent to $537.2 million from $572.2 million.
“We are encouraged that our results were equal to last year’s second quarter, despite the weakness in denim which is the result of inventory reductions in the supply chain.” George Henderson, president and chief executive officer, said in a statement. “Although the tone of the denim business is better, we expect that the denim inventory correction will continue into the September quarter and, as a result, hurt earnings for the remaining half of the fiscal year by 10 cents to 15 cents a share [against expectations].”
In the apparel division, operating earnings sank 15 percent to $33.6 million as sales declined 10.4 percent to $324.7 million from $362.2 million.
Jack Pickler, analyst at Prudential Securities, noted that excluding the special items in the latest period, results met his expectations, with strength in men’s apparel fabrics and at Klopman, which manufactures polyester and polyester and rayon, two areas that are gaining market share.
Looking ahead, he said the company’s problems with denim may continue into early 1998. He expects Burlington to earn $1.12 in 1997 and $1.30 in 1998. It earned $1.06 a year ago, before special items.
Additionally, Pickler said Burlington’s denim is currently operating at about 80 percent of capacity and should be at about 85 percent by the end of the third quarter and at full capacity sometime next year.
For the six months, earnings increased 7.1 percent to $30.5 million, or 49 cents, from $28.5 million, or 45 cents, after a $697,000 charge for early debt retirement.
Sales fell 6.6 percent to $1.01 billion from $1.1 billion. Apparel operating earnings dropped 13 percent to $51.5 million. Sales declined 10 percent to $597.7 million.
Separately, Burlington said it will spend $53 million to expand its Klopman Fabrics business and Madison Yarn.
The investment consists primarily of new equipment to be installed in five facilities in North Carolina, Virginia and Tennessee, and will result in about 190 new jobs.