DOMINION: DENIM STOCK IN CHECK
MONTREAL — Another major producer of denim fabrics — Dominion Textile Inc., parent of Swift Denim — has good news about the inventory situation.
In reporting sharply improved financial results for its fiscal first quarter, Dominion said Swift’s manufacturing facilities operated at full capacity in the period and its products sold well in the marketplace.
The company noted that retail sales of denim jeans in the U.S. were up 4 percent since the beginning of the year and that denim industry inventories in August were at the lowest level since December 1996 and 5 percent below year-ago levels.
Swift’s comments followed observations made by Cone Mills and Burlington Industries executives at Prudential Securities’ 1997 Textile and Apparel Conference held in New York two weeks ago.
As reported, J. Patrick Danahy, president and chief executive officer of Cone, told the conference that the production curtailments had corrected the oversupply problems that had plagued denim makers for over a year.
“With cotton prices down slightly and an expanding customer base, we see denim improving in 1998,” Danahy said.
Charles Peters Jr., Burlington’s senior vice president and chief financial officer, said, “We believe the denim glut is over. By the fourth quarter, we expect that most U.S. mills will be running at or near capacity.”
At Dominion, earnings in the quarter ended Sept. 30 nearly tripled to $4.5 million ($6.3 million Canadian), or 10 cents (13 cents Canadian) a share, while sales gained 2.3 percent to $199.3 million ($276.3 million Canadian).
In the quarter a year ago, the firm earned $2.1 million Canadian, or 2 cents Canadian, on sales of $270.2 million Canadian.
Discussing other areas of its business, Dominion reported Klopman benefited from its decision to move into new fabric markets in protective wear and casual apparel and is expected to continue to show improvement in these markets.
Apparel fabric sales were up 4 percent to $164.6 million ($228.2 million Canadian). DIFCO, the firm’s industrial fabrics business, also reported growth.
Earnings from operations in the quarter rose to $13 million ($18 million Canadian), or 6.5 percent of sales, compared with $10.2 million Canadian, or 3.8 percent of sales, a year earlier.
All business units showed revenue growth and improved operations “as they benefited from higher volume, cost reduction initiatives, restructuring programs resulting in higher productivity and manufacturing efficiencies, and lower raw material costs,” the firm said.
John A. Boland 3rd, president and ceo, noted the quarter’s results were the strongest since 1988.
“We exited last fiscal year with strong momentum, anchored upon strong operating fundamentals, and as anticipated, this momentum has continued,” he said.
He added that he expects “the current favorable trends will continue and that our quarterly earnings going forward will show noteworthy year-to-year improvement.”